WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 - WorldReginfo

CNOOC 2016 Annual Report , Beijing 100010, P. R. District, Beijing CNOOC Office for Policy Research CNOOC Office Address: Dajie, Dongcheng Building, No. 25 Chaoyangmenbei CNOOC E-mail: [email protected] Website: www.cnooc.com.cn BV-COC-010509 REPORT DESCRIPTIONS CNOOC Annual Report Contents Reporting Scope: 2016 The entire China National Offshore Oil Corporation (CNOOC) group of companies. BUSINESS Reporting Period: January 1 – December 31, 2016. Considering the consistency and comparability of the disclosed 02 Oil and Gas Exploration and Development 30 information, part of the information was extended with its disclosure time brought forward or CHAIRMAN’S LETTER Engineering and Technical Services 33 backward. PRESIDENT’S LETTER 04 Refining and Marketing 36 Principles of Preparation: MAIN ACHIEVEMENTS 06 Natural Gas and Power Generation 39 To meet the needs of stakeholders and the general public, by disclosing key information on the ABOUT US 08 Financial Services 42 Company in a true, objective, timely and comprehensive manner. Internationalization 44 Alternative Reference: China National Offshore Oil Corporation is hereinafter also referred to as CNOOC, the Company, CORPORATE GOVERNANCE MANAGEMENT the Corporation, “we”, “our” or “us”. Resumes of the Board Members 12 Technology Innovation 50 Data Used in the Report: Operation of the Board 14 Management Innovation 53 All disclosed financial data or information related to the Company is the final accounting data audited by third parties. Unless otherwise specified, all amounts are expressed in (RMB). 16 QHSE 54 Resumes of other Senior Executives 17 Informatization Progress 62 Information Sources: Human Resource Management 63 The Company’s official documents, statistical reports and our subsidiaries’ fulfilment of Corporate Culture 67 responsibilities. All information has been reviewed by our management, supervision department Corporate Citizenship 69 and the various subsidiaries.

Language: PERFORMANCE OVERVIEW This report is published in both Chinese and English. In case of discrepancies, the Chinese version shall prevail. Auditors’ Report 22 MILESTONES 2016 72 Consolidated Income Statement 23 Accessibility: GLOSSARY 75 Consolidated Balance Sheet 24 This report is available in print and electronic formats. The digital version can be downloaded from AGENCY DIRECTORY 78 the Company’s website at www.cnooc.com.cn. To obtain a print version of the report, please email Consolidated Cash Flows Statement 26 FEEDBACK 80 [email protected]. Notes to the Financial Statements 27

ABOUT THE COVER “Ya 13-1” Gasfield production platform WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT MAIN ACHIEVEMENTS

MAIN ACHIEVEMENTS Total Assets （Unit: RMB 100 million） Operating Revenue （Unit: RMB 100 million）

2016 11,578 2016 4,377

2015 11,624 2015 4,261

2014 11,194 2014 6,116

Total Profit （Unit: RMB 100 million） Net Assets （Unit: RMB 100 million）

2016 105 2016 6,750

2015 451 2015 6,692

2014 1,052 2014 6,439

Capital Investment （Unit: RMB 100 million） Taxes & Bonuses （Unit: RMB 100 million）

2016 811 2016 741

2015 1,057 2015 821

2014 1,550 2014 1,143

1.3% Total Profit in 2016 （Unit: RMB 1 billion）

20 14.1% 7.5% 15 17.06 23.6% 10 10.5% Total Operating Assets 49.1% Revenue in 5 in 2016 2016 3.24 0 26.3% 67.6% -5 -5.62 -9.23 -10

Upstream Upstream Upstream Mid-and downstream Mid-and downstream Mid-and downstream Engineering technologies and services Engineering technologies and services Engineering technologies and services Others Others Others

06 07 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT PRESIDENT’S LETTER

Our Vision Development Goals ABOUT US Energy for All International first class energy company with chinese characteristics China National Offshore Oil Corporation (“CNOOC”), the largest offshore oil & gas producer in China, is a mega state-owned company operating directly under the State-owned Assets Supervision and Administration Commission of the State Council of the People’s Republic of China (herein referred to as “SASAC” in the Report).

The Company was founded in 1982 and is headquartered in Beijing. After 30 years of reform and development, CNOOC has become an international energy company with promising primary businesses and a complete industrial chain, and business Development Principles covers more than 40 countries and regions. The Company has formed oil & gas exploration and development, engineering and technical services, refining and marketing, natural gas and power generation, financial services—five main business segments, Cooperation, steadiness, and differentiation and its sustainable development capacity has been significantly improved. In 2016, it was ranked 109th in Fortune Global 500 and 30th in Intelligence Weekly (PIW)’s World’s Top 50 Oil Companies, respectively down by 37 slots and up by 2 from the previous year. By the end of 2016, Moody’s and Standard & Poor’s rated the Company with credit ratings of Aa3 and A+.

Core Development Strategies Main Business Corporate Philosophy Synergetic development strategy Oil & Gas Exploration Technology-driven strategy and Development People-oriented, responsibilities, Talent development strategy ◆ Exploration win-win benefits, credibility, ◆ Development Cost-Priority strategy innovation ◆ Production Low-carbon green strategy

Financial Services ◆ Finance Company Engineering & ◆ Trust Technical Services ◆ Insurance ◆ Oilfield Services ◆ Financial and Strategic ◆ Offshore Oil Investment China National Engineering Services ◆ Finance Leasing Offshore Oil ◆ Professional Services Corporation (CNOOC)

Natural Gas and Power Generation ◆ LNG Receiving Terminals ◆ Natural Gas Pipelines ◆ Natural Gas-fired Power Generation Refining and Marketing ◆ Urban Gas Supply ◆ Oil Refining ◆ Vehicle/Vessel Gas ◆ Petrochemistry ◆ Natural Gas Liquefaction and ◆ Chemical Fertilizer Distribution ◆ Business Development & Marketing

08 09 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT CORPORATE GOVERNANCE

Resumes of the Board Members Zhang Chengjie Outside Director

Born in June 1953, Mr. Zhang Chengjie had served as Vice Party Committee Secretary of the CPC of North China Electric Yang Hua Power College, Vice President of North China Electric Power University (NCEPU), Party Committee Secretary of CPC of NCEPU Chairman and Party Leadership Group Secretary Baoding, Vice Party Committee Secretary of the CPC and Secretary of Commission for Discipline of NCEPU. Mr. Zhang was Born in May 1961, Mr. Yang Hua graduated from China University of Petroleum (the former East China Petroleum Institute) with a then appointed as Deputy Director and Party Branch Secretary of HR Department of China Guodian Corporation, Director of HR Bachelor of Science degree in Petroleum Engineering in August 1982. He received an MBA degree from Massachusetts Institute Department, Assistant President, Vice President and Party Leadership Group Member of China Guodian Corporation. Mr. Zhang of Technology in May 2004. He is a Sloan Fellow of MIT and professor-level senior economist. Mr. Yang joined CNOOC in August was appointed as outside director of CNOOC in April 2014. 1982 and had served in a number of positions including Manager of Field Development Department of CNOOC Research Center, Deputy Chief Geologist and Deputy Director of Overseas Development Department of CNOOC, President of Overseas Oil & Gas Corporation Ltd., and Senior Vice President, Chief Financial Officer and EVP, President, CEO, Vice Chairman of Xia Dawei Outside Director CNOOC Ltd., and Assistant President of CNOOC. In April 2010, Mr. Yang served as Vice President and Party Leadership Group Member of CNOOC. In August 2011, he served as CNOOC Director, President and Party Leadership Group Member. In April Born in 1953, Mr. Xia Dawei graduated from Changchun University of Technology with a Bachelor of Science degree in 2015, he took positions of Chairman of the Board of CNOOC and Party Leadership Group Secretary. In May 2015, he served Engineering Management in 1982 and received Master’s degree in Industrial Economics from Shanghai University of Finance as Chairman of CNOOC. He served as the CEO of CNOOC in June 2016, and the Chairman of Board of Nexen Energy ULC. in and Economics in 1985. Mr. Xia started his career in 1969, and had been a visiting researcher at Osaka City University, Dean October 2016. of the School of International Business Administration, Assistant President, Vice President and Executive Vice President of Shanghai University of Finance and Economics successively. Mr. Xia is currently President and Party Committee Secretary of Shanghai National Accounting Institute. He is a professor and an instructor for doctoral candidates Shanghai National Liu Jian Accounting Institute and an honorary professor of the Chinese University of . Mr. Xia also holds posts including Vice Director, President, Vice Secretary of Party Leadership Group President of Chinese Industrial Economic Association, consultant of China Accounting Standards Committee of the Ministry of Born in March 1958, Mr. Liu graduated from Huazhong University of Science and Technology with a Bachelor of Science degree Finance, member of the Corporate Internal Control Standards Committee of the Ministry of Finance and member of the Expert in Marine Internal Combustion Design in January 1982 and received his MBA degree from Tianjin University in 2000. Liu Jian is Committee for Listed Companies of Shanghai Stock Exchange. Mr. Xia assumed Outside Director of CNOOC in February 2012. a professor-level senior engineer. Mr. Liu joined Marine Petroleum Exploration Bureau in 1982 and successively served as Section Chief, Vice Director of Maintenance Center, Vice Mine Director. Since January 1994, he served as Vice Manager of Oil Production Company, Director of the Production Department of Bohai Corporation, Manager of Oil Production Company, Ju Zhanghua Outside Director and President of China Offshore Oil Co., Ltd. In July 1999, he was appointed as Deputy President of Tianjin Branch of CNOOC (China) Limited. In April 2001, he was successively appointed as Deputy President of Branch of CNOOC (China) Mr. Ju Zhanghua was born in September 1949. He was previously a Vice President of China Huaneng Group and a Member Limited and later President and Party Committee Secretary of Zhanjiang Branch. Since April 2003, he successively served as of the CPC Huaneng Committee. Before that, he served in many positions in the company, including Deputy Manager of Senior Vice President of CNOOC Ltd., President of the Development and Production Department of CNOOC Ltd., and Executive Administration Department, Manager of Securities and Financing Department, and Manager of Administration Department Vice President of CNOOC Ltd., in November 2006, Mr. Liu was appointed as Assistant President of CNOOC. From January 2009 of Huaneng International Power Development Corporation. He became Manager of General Administration Department and to September 2010, he also served as Vice Chairman of the Board, Chief Executive Officer, and Party Committee Secretary of Assistant President of Huaneng Group before he was appointed as Vice President of the company. Mr. Ju was appointed as COSL. In April 2010, Mr. Liu was appointed as Vice President and Party Leadership Group Member of CNOOC; in September Outside Director of CNOOC in April 2015. of the same year, he served as Chairman and Party Committee Secretary of COSL, and resigned from the CEO post. Since November 2010, he has also served as Chairman of the Board of COOEC In August 2015, he held post of CNOOC Director, President and Vice Secretary of Party Leadership Group. In December 2016, he served as the Deputy Chairman and Chairman Chen Wei of CNOOC. Employee Director Born in January 1958, Mr. Chen Wei graduated from China University of Petroleum (the former East China Petroleum Institute) with a Bachelor of Science degree in Petroleum Engineering in 1982 and received an MBA degree from Tsinghua University in 2002. Boon Swan Foo He is a professor-level senior engineer. Mr. Chen started to work in 1976 and joined CNOOC in 1984. He successively assumed a Outside Director number of positions including Vice Director of Development Department, Vice Director of Overseas Department, Vice Director of Born in 1955, Mr. Boon Swan Foo holds an MBA from the National University of Singapore. He served as CEO of ST Marine Information Department at CNOOC Research Center and then Vice Director of CNOOC Research Center, and General Manager & ST Aerospace, CEO & Deputy Chairman of ST Engineering Ltd, Managing Director of Singapore Agency for Science, of the Human Resources Department of CNOOC. In January 2002, Mr. Chen was appointed as Senior Vice President of CNOOC Technology and Research, Chairman of Exploit Technologies Private Limited, Director of China-Singapore Suzhou Industrial Ltd., he also served as General Manager of the Administration Department of CNOOC Ltd., General Manager of the Human Park Development Co., Ltd., Chairman of Singapore Changi Airport Enterprise Pte Ltd. Mr. Boon is the Chairman of Global Resources Department of CNOOC Ltd., Director and Party Committee Secretary of CNOOC Research Center, General Manager Investments Limited and Allgrace Investment Management Private Limited, Director of Shin Corporation Plc, MIH Holdings of the Technology Development Department of CNOOC, President and Party Committee Secretary of CNOOC Research Institute. Limited (South Africa) and Singbridge International Singapore Pte Ltd, Outside Director of Dongfeng Motor Corporation, Senior In February 2012, Mr. Chen assumed Employee Director of CNOOC. Since March 2013, he has served as Assistant President Advisor to Temasek Holdings (Private) Limited, Advisor to ST Engineering Ltd., Outside Director of China Huadian Corp. Mr. of CNOOC, Executive Vice President of CNOOC Ltd., from February to May 2016, he held the posts of Employee Director and Boon also holds an Adjunct Professorship at the Nanyang Technological University. He assumed Outside Director of CNOOC in Assistant to General Manager in the Head Office of CNOOC, and the Executive Vice-President in CNOOC. In May 2016, he February 2012. served as the Employee Director, Assistant to General Manager, General Counsel of CNOOC, and the Executive Vice-President, General Counsel and Compliance Officer of CNOOC.

12 13 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT CORPORATE GOVERNANCE

Operation of the Board

Board Meeting

Session Time Means Approved Proposal

Audited and approved 8 proposals including 2015 Accounting Plan, 2015 Profit Distribution Plan, 2016 Employment Plan of Financial Audit Institution, 2015 Internal Control Appraisal 9th Meeting of the Second Report, 2015 GM Report, 2015 Annual Report of the Board of Session of the Board of April 21 On the Spot Directors and Adjustment of the Board Secretary; debriefed Directors four reports including Implementation of Decisions from Board Meetings, Main Operational Achievements in the first quarter of 2016, Company Cash Flow and Cooperation with .

10th Meeting of the Second Audited and approved the proposal of no longer employing Mr. Session of the Board of June 21 Telecommunication Li Fanrong as Deputy GM of the Company. Directors

1th Meeting of the Second Session of the Board of July 1 Telecommunication Audited and approved the proposal on sponsoring programs. Directors

Debriefed 3 reports including implementation of decisions from 12th Meeting of the Second board meetings, production and running of the Company in The 20th meeting of the second session of the board of directors of CNOOC Session of the Board of July 21 On the Spot the first half year of 2016, and the operation in the first half year Directors of 2016, and the seminar on international oil and gas industry outlook held by Wood Mackenzie & Company.

Audited and approved four proposals of no longer employing 13th Meeting of the Second Mr. Wu Mengfei as Chief Accountant, employing Mr. Yuan Session of the Board of August 5 Telecommunication Guangyu as Deputy GM, Mr. Chen Bi as Deputy GM and Ms. Directors Wen Dongfen as Chief Accountant. Special Committee Meeting In 2016, the Strategic Development Committee, the Nominating Committee and the Audit Committee of the Board of Directors 14th Meeting of the Second September Session of the Board of Telecommunication Audited and approved proposal on investment programs. held one meeting, one meeting and three meetings respectively. 28 Directors In 2016, the first meeting of the Strategic Development Committee of the Board of Directors was held on December 20, which 15th Meeting of the Second Session of the Board of October 17 Telecommunication Audited and approved proposal on asset transfers. audited three proposals including the Five-Year Rolling Development Plan from 2017 to 2021, 2017 Production and Construction Directors Budget Plan and 2017 Operation Budget (including Financing Plan), and formed the audition opinions for the Board of Directors. 16th Meeting of the Second Audited and approved the proposal of 2017 Plan of the Board Session of the Board of October 20 On the Spot of Directors, and debriefed 3 reports including the production In 2016, the first meeting of the Nominating Committee of the Board of Directors was held on April 21, which audited 2 Directors and operation of the first three quarters in 2016. proposals on the board secretary adjustment and formed the audition opinions for the Board of Directors. 17th Meeting of the Second Session of the Board of October 28 Telecommunication Audited and approved the proposal on profit distribution. In 2016, the first meeting of the Audit Committee of the Board of Directors was held on April 21, which debriefed the report Directors from external audit institution on 2015 final account audit and audited 4 proposals including 2015 Accounting Plan, 2015 Profit 18th Meeting of the Second November Audited and approved the proposal on financing and guarantee Session of the Board of Telecommunication Distribution Plan, 2015 Internal Control and Appraisal Report and 2016 financial Audit institution Employment, and formed the 14 projects. Directors audition opinions for the Board of Directors. 19th Meeting of the Second December Audited and approved the proposal on modifying the Articles Session of the Board of Telecommunication In 2016, the second meeting of the Audit Committee of the Board of Directors was held on October 20, which debriefed 4 2 of Association of CNOOC. Directors reports including the conduction of financial leasing, foreign projects and 2015 final accounting audit. Audited and approved 6 proposals including the Five-Year 20th Meeting of the Second Rolling Development Plan from 2017 to 2021, 2017 Production December In 2016, the third meeting of the Audit Committee of the Board of Directors was held on December 19, which debriefed 2016 Session of the Board of On the Spot and Construction Budget Plan, 2017 Tibet Aid and Poverty 20 Directors Relief and Public Welfare Donation Plan and 2017 Operation internal auditing and 2017 internal auditing plan, audited 2 proposals on financial management, and formed the audition Budget (including Financing Plan). opinions for the Board of Directors.

14 15 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT CORPORATE GOVERNANCE

Wu Guangqi, Vice President, Party Leadership Group Member Lv Bo, Vice President, Party Leadership Group Member

Born in August 1957, Mr. Wu Guangqi is a professor-level senior economist, Certified Senior Enterprise Risk Manager. Mr. Wu Born in November 1962, Mr. Lv Bo received a Bachelor of Science degree in Management from China University of Mining and graduated with a Bachelor of Science degree from the University of China and was a master of Party and Government Technology and an MBA degree from China Europe International Business School in September 2005. Since 1985, he worked Administration from the Party School of the Central Committee of CPC. He also held a Master’s degree in Management from in the Ministry of Coal Industry, the Ministry of Energy and the Organization Department of the Communist Party of China Central China University of Petroleum and a Doctor’s degree in Management from Huazhong University of Science and Technology. Committee and served in a number of positions, including a Vice-Director-level official in the Personal and Labor Department Mr. Wu Guangqi joined CNOOC in 1982 and served as the Party Committee Secretary and Vice President of CNOOC Petro of the Ministry of Energy, Vice Director and Director of the First Office of Economic and Technology Officials Bureau of the Tech Services, Director of General Office, Party Committee Secretary, Discipline Inspection Secretary and Chairman of Labor Organization Department, Director of the First Office of the Fourth Officials Bureau and Director of the Second Office of the Union of CNOOC Research Center, Party Committee Secretary and Director of Ideological and Political Department of CNOOC, Fifth Officials Bureau of the Organization Department. Mr. Lv joined CNOOC in 2002 and in the same year he was appointed as and Assistant President of CNOOC. In 2002, Mr. Wu was transferred and appointed as a temporary leading position by the Director of the Human Resources Department of CNOOC. In November 2006, Mr. Lv became an Assistant President of CNOOC. Organization Department of the Communist Party of China Central Committee as the Deputy Director of the Engineering and In November 2007, he was appointed as a Party Leadership Group Member of CNOOC. In October 2008, he served as Party Construction Department of China Three Gorges Project Corporation. In August 2004, he served as CNOOC Party Committee committee secretary directly under CNOOC. In April 2010, he was appointed as a Vice President and a Party Leadership Group Leadership Group Member, and team leader of Party Discipline Inspection. In June 2005, he served as Director and Regulations Member of CNOOC. Since December 2012, he has also served as Chairman of the Board of CNOOC EnerTech. From May Director of CNOOC. In December 2011, he served as CNOOC Vice President and Party Leadership Group Member. In October 2015 to October 2016, he served as a President of CPC CNOOC Party School. He served as the Chairman of the Board in 2016, he served as the Vice President, Deputy Secretary of the Leading Party Members’ Group of CNOOC, the president of Offshore Oil Engineering Co., Ltd. and China Ocean Oilfields Services (Hong Kong) Limited in November 2016. He has served CPC CNOOC Party School, and the Party Committee Secretary of CNOOC in Beijing area. He now holds the posts of Member as Chairman of the Board in COSL since December 2016. of the Council for National Society for Party Building Studies (Member of the Committee of Party Building Studies in State- owned Enterprises, National Society for Party Building Studies), Executive Member of Research Institute for Party Building, Ideological and Political Work of central Enterprises, and Member of the Security Committee, State-owned Assets Supervision Yuan Guangyu, Vice President, Party Leadership Group Member and Administration Commission of the State Council. Born in April 1959, Yuan Guangyu obtained the Bachelor degree of Engineering in Drill Engineering from the Development School in East China Petroleum Institute, and MBA of CEIBS. He is a senior engineer of professor level. Joining in CNOOC in Li Hui, Vice President, Party Leadership Group Member August, 1982, he once acted as the Vice Manager of Bohai Oil Drilling Company, Vice General Manager of CNOOC North Drilling Born in October 1963, Mr. Li Hui obtained a Bachelor degree in foreign trade from University of International Business and Company, Vice Manager of Operation Department in CNOOC, General Manager and Party Committee Secretary of CNOOC Economics in August 1987. He is a senior international business engineer. From August 1987 to January 2000, Mr. Li Hui served North Drilling Company, General Manager and Party Committee Secretary of COSL, President and Deputy Party Committee in a number of positions in China National Metals & Minerals Import & Export Corp., including Deputy General Manager of Secretary of COSL and CEO, President and Party Committee Secretary of COSL. In November, 2006, he was appointed as the the trade unit and President of its South American unit. Meanwhile, Mr. Li also served as Deputy General Manager of Beijing Executive Assistant of CNOOC. In March, 2009, he was appointed as the Executive Vice-President of CNOOC. From April 2013 Economic-Technological Development Area from August 1998 to January 2000. From January 2000 to April 2010, Mr. Li served to June 2016, he successively took the positions of Head, Deputy Party Committee Secretary and Party Committee Secretary of in Group (named China National Chemicals Import & Export Corp. since October 2003). Meanwhile, he has served Bohai Oil Management Bureau of CNOOC and General Manager and Party Committee Secretary of Tianjin Branch of CNOOC. as Vice Director of Sinochem Oil Group, Assistant President of China National Chemicals Import & Export Corp, etc.; in May In June, 2016, he was appointed as the Chairman of CNOOC, President of COSL and General Manager of CNOOC (China). In 2001, he was appointed as a Vice President and a Party Leadership Group Member of China National Chemicals Import July, 2016, he was appointed as the Vice President, Party Leadership Group Member of CNOOC. and Export Corporation, and concurrently served as Director of Sinochem Oil Group and, General Manager of Sinochem International Oil Co. In April 2010, Mr. Li was appointed as a Vice President and a Party Leadership Group Member of CNOOC. From May 2011 to August 2016, he has also served as Chairman of the Board of China BlueChemical Ltd. And since November 2013, he assumed the position of Chairman of the Board of China Petrochemical Import & Export Co., Ltd. In December 2015, he concurrently served as Chairman of CNOOC Gas & Power Group Co., Ltd. In August 2016, he served as the Chairman of the Board in CNOOC Shanxi Energy Investment Limited, CNOOC-Datong Coal Mine Energy & Chemical Limited, CNOOC Inner Mongolia Energy Investment Limited and CNOOC Erdos Energy & Chemical Limited.

18 19 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT CORPORATE GOVERNANCE

Chen Bi, Vice President, Party Leadership Group Member Zhong Qingming, Party Leadership Group Member, Party Discipline Team Leader

Born in April 1961, Chen Bi is a Bachelor of Oil Production Engineering of the Development School in Southwest Petroleum Born in December 1963, Zhong Qingming received Bachelor degree of Political Economy of the Economics School, Zhengzhou Institute, Master of Petroleum engineer in Heriot-Watt University, MBA in the School of Economics and Management in THU University in 1987 and Master of National Economic Plan and Management of the Department of Economic Management, and is a senior engineer of professor level. Joining in CNOOC in February 1982, he acted as the Deputy Manager of Drilling Jilin University. He started to work from July 1990 and once acted as the principal staff in the Case-Management Section Engineering Department of West Company, Deputy Manager of South China Sea Oil Exploration Company, of Ministry of Supervision, principal staff in the Research Section of Case Hearing Department of the Central Commission Head and Deputy Manager of Development and Production Department of CNOOC, Deputy General Manager and General for Discipline Inspection, deputy-director-general-level Discipline Inspector and supervisor of Case Hearing Department of Manager of Development and Production Department of CNOOC, General Manager and Party Leadership Group Secretary the Central Commission for Discipline Inspection, Deputy Director of the Research Section of Case Hearing Department of Tianjin Branch of CNOOC (China) Ltd., Vice President and Vice Executive President of CNOOC Ltd. and the Chief Safety of the Central Commission for Discipline Inspection, Director of General Office of Case Hearing Department of the Central Director of CNOOC. In July 2016, Chen was appointed as Vice President, Party Leadership Group Member and Safety Director Commission for Discipline Inspection, Director of Review Office of Case Hearing Department of the Central Commission for of CNOOC. In August 2016, Chen also took the concurrent post of President of CNOOC Oil & Petrochemicals Co., Limited and Discipline Inspection, Director of Second Review Office of Case Hearing Department of the Central Commission for Discipline China BlueChemical Limited. Inspection, deputy-bureau-general-level Discipline Inspector, Special Supervisor and Director of Second Review Office of Case Hearing Department of the Central Commission for Discipline Inspection, deputy-bureau-general-level Discipline Inspector and Special Supervisor of Case Hearing Department of the Central Commission for Discipline Inspection, deputy-bureau-general- level Discipline Inspector and Special Supervisor of the First Discipline Inspection and Supervision Department of the Central Wen Dongfen, Chief Accountant, Party Leadership Group Member Commission for Discipline Inspection, deputy-bureau-general-level Discipline Inspector and Special Supervisor of the Fifth Born in September 1964, Wen Dongfen is a Bachelor of Business Management in Shanxi Finance and Economics College and Discipline Inspection and Supervision Department of the Central Commission for Discipline Inspection, Deputy Director of the a senior accountant of professor level. She started to act as the Deputy Director of Financial Planning Department of Seventh Discipline Inspection and Supervision Department of the Central Commission for Discipline Inspection, bureau-level in December 2001, Deputy Director for the Financial Department of Sinopec in May 2008, Director of Financial Department of Discipline Inspector, Special Supervisor and Deputy Director of the Seventh Discipline Inspection and Supervision Department Sinopec in March 2009, concurrent President of Shengjun International Investment Limited and Deputy President of Sinopec of the Central Commission for Discipline Inspection. In December 2016, he was appointed as the Party Leadership Group Finance Limited from May 2012 to December 2015. In December 2015, she was appointed as the Chief Financial Director Member, Party Discipline Team Leader of CNOOC. and Director of Financial Department of Sinopec. In July 2016, she became the chief accountant and Party Leadership Group Member of CNOOC. In August 2016, she took the concurrent post of President of CNOOC Insurance Ltd., CNOOC Investment Co., Ltd., CNOOC Finance Co., Ltd., Zhonghai Trust Co., Ltd. and CNOOC International Lease Finance Company. Xu Keqiang, Vice President

Born in April 1971, Xu Keqiang achieved Bachelor degree of Oil and Gas Geology from Northwest University, Master degree of Coal Field Oil and Gas Geology Exploration in 1996 and became a senior engineer. He started to work in August 1996 and once acted as the Deputy Director of President Office Secretariat of CNPC, deputy-director-general-level and director-level Secretary of Office Secretariat of CNPC. He was appointed as the Deputy General Manager of CNPC International (Russia) in April 2003 and Deputy General Manager of CNPC International (Kazakhstan) in April 2005. And in May 2005, he started to take concurrent posts of Project General Manager in Kyzylorda and General Manager of CNPC International (Aidan). Then he was appointed as Deputy General Manger and Party Committee Member of CNPC (KZ) and General Manager of Aktobe Oil and Gas in September 2008. In March 2014 he was appointed as General Manager and Deputy Party Committee Secretary of CNPC Tuha Oilfield Branch and Director of Tuha Oil Exploration and Development Direction Department. In March 2017, he started to act as the Vice President of CNOOC.

20 21 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT PERFORMANCE OVERVIEW

PERFORMANCE OVERVIEW Consolidated Income Statement

For the year ended 31 December 2016 Unit: RMB million

Auditors’ Report Items Period Prior Period

GTCNSZ (2017) No.110ZA3483-T 1.Revenue 437,741 426,079 To the Board of China National Offshore Oil Corporation: Including: Operating revenue 435,216 423,209 ∆ Interest income 1,506 1,603 We have audited the accompanying financial statements of China National Offshore Oil Corporation (“the Company”), which ∆ Premiums earned 250 404 comprise the consolidated and company balance sheets as at the year ended December 31 2016, and the consolidated and ∆ Fees and commissions income 768 862 company incomestatements, the consolidated and company cash flows statements, the consolidated and company statements 2.Total cost 440,680 397,587 of changes in owners’equity for the years ended 31 December2016 and notes to the financial statements. Including: Operating cost 362,384 326,064 Management’s Responsibility for the Financial Statements ∆ Interest expenses 2 8 ∆ Fees and commissions expenses 1 2 The Company’s Management is responsible for the preparation and fair presentation of these financial statements. This ∆ Net expenses of claim settlement 53 135 responsibility includes: (1) preparing these financial statements in accordance with Accounting Standards for Business ∆ Net provision for insurance contracts service 40 51 Enterprises issued by the Ministry of Finance of thePeople’s Republic of China, and fairly presenting them; (2) designing, ∆ Reinsurance expenses -17 -4 implementing and maintaining internal control which is necessary to enable that the financial statements that are free from Taxes and surcharges 19,495 29,471 material misstatement, whether due to fraud or error. Selling expenses 5,559 3,745 Auditor’s Responsibility Administrative expenses 14,314 14,254 Finance expenses 9,971 8,989 Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in Impairment on assets 21,446 4,927 accordance with China Standards on Auditing. These standards require that we comply with China Code of Ethics for Certified Other costs and expenses 7,431 9,943 Public Accountants and plan and perform the audit to obtain reasonable assurance about whether the financial statements are Add: Gain from changes in fair value ( “-” for loss) 133 215 free of material misstatement. Investment income ( “-” for loss) 5,782 12,121

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. ∆ Gain on foreign exchange ( “-” for loss) 60 49

The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of 3.Operating profits ( “-” for loss) 3,036 40,877 the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control Add: Non-operating income 8,743 5,862 relevant to the Company’s preparation and fair presentation of the financial statementsin order to design audit procedures that Less: Non-operating expenses 1,249 1,667 are appropriate in the circumstances, but not for the purpose of expressingan opinion on the effectiveness of the Company’s 4.Profit before tax ( “-” for loss) 10,530 45,073 internal control. An audit also includes evaluating the appropriateness of accounting policies used and reasonableness of Less: Income tax expenses 230 3,806 accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 5.Net profit ( “-” for loss) 10,300 41,266

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Net profit attributable to shareholders of the Company 11,642 28,959 *Profit attributable to minority shareholders -1,342 12,307 Opinion 6.Other comprehensive income after tax: 12,025 7,230 Other comprehensive income not to be reclassified to profit or loss 47 239 IIn our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated and company’s financial positions of the Company’s at 31 December 2016, and their financial performances and cash flows for the year then Other comprehensive income to be reclassified as profit or loss 11,978 6,992 ended in accordance with the requirements of Accounting Standards for Business Enterprises issued by the Ministry of Finance 7.Total comprehensive income 22,325 48,496 Total comprehensive income attributable to shareholders of the of the People’s Republic of China. 19,803 33,540 Company

Grant Thornton Certified Public Accountants *Total comprehensive income attributable to minority shareholders 2,522 14,956

Beijing, China Notes: * items for use in consolidation; ∆ items for financial entities only. 20 April 2017 22 23 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT PERFORMANCE OVERVIEW

Consolidated Balance Sheet Consolidated Balance Sheet(Continued)

For the year ended 31 December 2016 Unit: RMB million For the year ended 31 December 2016 Unit: RMB million

Items Closing Balance Opening Balance Items Closing Balance Opening Balance

Current Assets: Current liabilities:

Cash 97,164 109,810 Short-term borrowings 47,013 73,740 ∆ Deposits and placements from other financial institutions 167 338 Financial assets at fair value through profit and loss 1,698 6,066 Financial liabilities at fair value through profit and loss 212 207 Derivative financial assets 1,075 526 Derivative financial liabilities 867 483 Notes receivable 2,796 2,873 Notes payable 1,976 1,359 Accounts receivable 27,398 31,067 Accounts payable 60,499 51,074 Advances to suppliers 6,376 10,666 Advances from customers 8,425 8,490 ∆ Reinsurance premium receivables 157 277 Employee benefits payable 8,703 9,923 ∆ Reserve receivable for reinsurance 1,697 1,931 Taxes and surcharges payable 13,051 11,762

Interests receivable 495 1,289 Inerest payable 2,263 2,207

Dividends receivable 85 87 Dividends payable 52 92 Other payables 17,059 14,227 Other receivables 10,242 10,270 ∆ Reinsurance premium payable 140 227 Securities purchased under agreements to resell 376 ∆ Reserve of insurance contract 2,265 2,496 Inventories 29,769 28,141 Current portion of non-current liabilities 17,495 13,687 Current portion of non-current assets 38,488 2,499 Other current liabilities 4,578 632 Other current assets 18,691 16,530 Total Current Liabilities 184,766 190,943 Total Current Assets 236,507 222,032 Non-current Liabilities: Non-current assets: Long-term borrowings 47,155 57,905

∆ Loans and advances 7,251 2,520 Bonds payable 177,704 167,745 Long-term payable 1,812 3,051 Available-for-sale financial assets 70,798 84,594 Long-term employee benefits payable 420 322 Held-to-maturity investments 4,183 21,009 Grants payable 173 257 Long-term receivables 5,832 4,302 Provisions 54,002 51,496 Long-term equity investments 52,812 45,293 Deferred Income 5,174 5,185 Investment property 285 168 Deferred tax liabilities 11,538 16,304 Fixed assets 209,221 185,216 Other non-current liabilities 2 3 Construction in progress 38,518 58,674 Total Non-current Liabilities 297,980 302,266

Construction materials 1,031 2,303 Total Liabilities 482,746 493,210

Fixed assets pending for disposal 8 20 Equity: Paid-in capital 114,346 113,737 Oil and gas properties 445,029 457,543 Capital reserve 31,889 31,593 Intangible assets 17,717 18,129 Other comprehensive income 870 -7,291 Development disbursements 3 17 Specific reserve 1,031 945 Goodwill 15,732 18,263 Surplus reserve 312,891 23,354 Long-term deferred expenses 4,007 4,370 General risk reserve 1,542 Deferred tax assets 41,119 28,901 Retained profit 29,643 319,277 Other non-current assets 7,700 9,027 Equity attributable to shareholders of the Company 492,211 481,615

Total Non-current Assets 921,248 940,351 *Minority interests 182,797 187,559

Total Assets 1,157,755 1,162,383 Total Owners’ Equity 675,009 669,174 Total liabilities and owner’s equity 1,157,755 1,162,383

Notes: * items for use in consolidation; ∆ items for financial entities only. Notes: * items for use in consolidation; ∆ items for financial entities only.

24 25 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT PERFORMANCE OVERVIEW

Consolidated Cash Flows Statement Notes to the Financial Statements

For the year ended 31 December 2016 Unit: RMB million

Items Current Period Prior Period 1. Company Profile 1.Cash flows from operating activities: Cash received from sales and services 475,199 452,175 China National Offshore Oil Corporation (hereinafter referred to as“CNOOC” or“the Company”) is a state-owned oil company ∆ Net increase in deposits and placements from financial institutions -171 66 established on 15 February 1982 with the approval of the State Council of the People’s Republic of China. According to the ∆ Cash received from premiums of original insurance contracts 1 “Regulations of the People's Republic of China Concerning the Exploitation of Offshore Petroleum Resources in Cooperation ∆ Net amount of reinsurance business 972 1,519 with Overseas Partners” promulgated by the Chinese State Council, the Company is granted an exclusive right of operating the ∆ Cash received from interests, fees and commissions 2,013 2,039 Taxes and surcharges refunds 3,238 3,505 business of exploiting oil and natural gas resources in cooperation with partners offshore from the People’s Republic of China. Other cash receipts related to operating activities 7,008 14,082 The Company is also an investment institution authorized by the state. Total cash inflows from operating activities 488,258 473,387 Cash paid for goods and services 292,517 252,455 ∆ Net increase in loans and advances 1,701 1,199 2. The Basis Of The Preparation Of Financial Statements ∆ Net increase in deposits with central banks and other financial institutions 138 -3,073 The financial statements are prepared in accordance with the requirements of Accounting Standards for Business Enterprises– ∆ Cash paid for claim settlements on original insurance contracts 434 723 Basic Standards, specific standards and relevant regulations (hereafter referred to as ASBE collectively). ∆ Cash paid for interests, fees and commissions 3 9 Cash paid to and for employees 23,889 25,519 CNOOC Limited, COSL, CNOOC Insurance Ltd and other overseas subsidiaries of the Group are prepared in accordance with Taxes and surcharges cash payments 63,725 77,879 accounting standards of the country of incorporation. The consolidated financial statements have been adjusted according to Other cash payments related to operating activities 10,803 16,864 Total cash outflows from operating activities 393,209 371,575 relevant standards. Net cash flows from operating activities 95,049 101,812 2.Cash flows from investing activities: 3. Significant Accounting Policies Cash received from withdraw of investments 209,063 210,302 Cash received from investment income 6,983 9,813 1. Accounting Period Net cash received from disposal of fixed assets, intangible assets and 14,216 852 The accounting year of the Group is from 1 January to 31 December. other long-term assets Net cash received from disposal of subsidiaries and other business units -228 -270 2. Functional currency Other cash receipts related to investing activities 8,014 20,234 Total cash inflows from investing activities 238,048 240,931 The functional currency of the Group is Renminbi (“RMB”). Cash paid for fixed assets, intangible assets and other long-term assets 70,463 85,652 3. Measurement basis Cash payments for investments 190,589 225,993 Net cash paid for acquiring subsidiaries and other business units 1 50 The Group follows the accrual basis of accounting. The financial statements are prepared under the historical cost convention Other cash payments related to investing activities 2,107 23,104 except for certain financial assets and financial liabilities. If an asset is impaired, provisions shall be recognized. Financial assets Total cash outflows from investing activities 263,161 334,799 and liabilities at fair value through profit or loss, the Available-for-sale financial assets and derivative financial instruments are Net cash flows from investing activities -25,112 -93,868 3.Cash flows from financing activities: recognised at fair value. Inventories and fixed assets delayed in payment exceeding credit terms are recognised at present Cash received from investments by others 1,020 5,493 value of purchasing price. Inventories with impairment losses are recognised at net realizable value and the other assets are Cash received from borrowings 80,682 274,223 recognised at lower amount between recoverable amount and its fair value. Assete inventory profit should be recorded at Other cash receipts related to financing activities 66 14,903 the replacement cost. Non-current assets held for sale are recognised by the lower amount between fair value subtracting Total cash inflows from financing activities 81,769 294,619 Cash repayments for debts 118,972 242,875 estimated expenses and original book value when satisfying the held-for-sale condition. Cash payments for distribution of dividends, profit and interest expenses 27,655 35,158 Other cash payments related to financing activities 1,590 20,321 Total cash outflows from financing activities 148,218 298,353 Net cash flows from financing activities -66,449 -3,735 4.Effect of foreign exchange rate changes on cash and cash equivalents 1,263 789 5.Net increase in cash and cash equivalents 4,751 4,999 Add: Balance of cash and cash equivalents at 1 January 2016 84,844 79,845 6.Balance of cash and cash equivalents at 31 Decemer 2016 89,594 84,844

Notes: ∆ items for financial entities only.

26 27 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT BUSINESS

BUSINESS

Oil and Gas Exploration and Development 30 Engineering and Technical Services 33 Refining and Marketing 36 Natural Gas and Power Generation 39 Financial Services 42 Internationalization 44

28 29 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT BUSINESS

OIL AND GAS CNOOC always puts oil & gas exploration and development high on ll Efficiently completed the rating of 4 large- and medium- its agenda in an innovative manner to stabilize and further its business scale oilfields including “Kenli 16-1”, “Caofeidian 12-6/6-2”, EXPLORATION AND development. Guided by the idea of “seeking for new medium and large- “Penglai 20-2/20-3” and “Liuhua 21-2”. DEVELOPMENT scale oil & gas fields”, CNOOC makes extensive breakthroughs in the oil & gas exploration both at home and abroad, and takes the initiative to fulfill the ll The deep water natural gas exploration in southeast responsibility of supplying oil & gas so as to continuously satisfy people’s Qiong Basin achieved new progress, successfully evaluated ever-increasing consumption demands for petroleum and natural gas. the “Lingshui 25-1” structure and expanded the reserve scale of this structure.

Oil and Gas Exploration In China seas, the exploration workload of the Company ll The integration of exploration and development was continued to be fully achieved. 115 exploration wells were In 2016, the Company strengthened the integration of realized by using the current facilities and equipment, gained explored. In addition, 17 unconventional wells were completed exploration and development, allocated China seas with newly increased reserve in oilfields including “Jinzhou 25-1”, in China onshore. In 2016, 2,471 kilometers of 2D seismic priority and balanced the mature zones, rolling zones and “Caofeidian 6-4”, “Wenchang 13-6”, “Panyu 4-1”, “Xijiang 30- Ice resistance of an oilfield materials were collected under self-operation, and 11,347 new zones, and concentrated on overseas high-quality 1” and Weixinan Oilfield Group. square kilometers of 3D seismic materials were collected under blocks and conventional oil and gas resources. Meanwhile, The above exploration achievements further consolidated efficiency increasing. In addition, the Company further self-operation and foreign cooperation. The Company achieved the Company deepened the idea of value of exploration, the place of China seas as a core region for the Company improved the operation efficiency and reduced exploration 12 new discoveries in China seas and successfully rated 19 with the main line of seeking large- and medium-scale oil and displayed the unique advantages of the Company in cost by strengthening geological study, improving operation hydrocarbon-bearing structures. The success ratio of self- and gas fields, properly reduced the ratio of high risk and China seas. standards and refining the operation links. operation well exploration in China seas reached 52%-69%. high investment wells, and guaranteed the medium- and long-term sustainable development with relatively high The Company drilled 14 wells, collected 9,613 kilometers of In 2016, the Company continued to conduct active exploration Development and Production 2D and 23,980 square kilometers of 3D seismic materials workload. Furthermore, influenced by the sharp decrease strategies in China seas and led to abundant achievements, overseas. In 2016, there were 2 new discoveries in overseas In 2016, the Company completed the production goal and of international oil price in 2016, the Company maintained which mainly include: the oil and gas output reached the target set at the beginning a reserve replacement ratio of 8%, which was 145% after exploration and 6 successful ratings of hydrocarbon-bearing of the year. The Company organized operation resources eliminating economic correction. oil and gas structures. The main achievements include: and the construction went on well. Under the precondition of l Deepwater equipment l Successfully explored 5 appraisal wells in the Libra safety production, the development and production operation Project in Brazil, further confirmed the reserve scale. of the Company completed the annual development and production goals centered with cost reduction and efficiency ll Liza Oilfield in Guyana was successfully rated, which enhancement. expanded new bed series and reserve scale; Payara

Structure was successfully pre-explored again. In 2016, the Company produced 76.97 million tons of crude oil and 24.5 billion m3 of natural gas (including CBM). Among ll The exploration of Owowo West Structure in Nigeria which, the domestic crude oil production was 45.55 million achieved great success and was rated to be a large-scale tons and natural gas was 12.92 billion m3, while the overseas uncompartmentalized oil and gas reservoir, which improved crude oil was 31.42 million tons and the natural gas was the economic value of this region. 11.57 billion m3. The four new projects planned to be put into In 2016, the Company insisted on the idea of “improving production in 2016 were all put into production on schedule. exploration management” overseas, continued to optimize There are “Kenli 10-4” Oilfield, “Panyu 11-5” Oilfield, “Weizhou exploration asset portfolio and successfully transferred part of 6-9/6-10” Oilfield Integration Adjustment Project and the rights and interests of overseas blocks while gaining the “Enping18-1” Oilfield. new exploration opportunities, which brought more benefit for The development and production of the Company is driven the Company. by innovation, led by effectiveness and highlighted by benefit The Company kept being improved in exploration deployment and sustainable development. The major achievements in optimization, operation cost reduction and management 2016 include:

30 31 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT BUSINESS

ll Continued to keep high production efficiency through a combination of pipe gas sale, LNG sale and medium- ENGINEERING Engineering & technical services sector is the solid foundation for the delicacy management. tank wagon is seen, which accumulated benefiting sustainable development of the oil & gas business. The Company experience for the economic and high-efficiency exploration AND TECHNICAL adhered to “cost reduction and efficiency enhancement through safe, ll Consistently carried out special management on and development of tight gas. Notable results were also SERVICES quality and highly efficient operation, overall promotion of management, operation expenses, and notable result was achieved. The and ”, highlighted technology innovation, and enhanced achieved in CBM exploration and development. North blocks operation cost per barrel was decreased to 7.62 USD/boe equipment capacity, so that technical level was significantly improved, in Shizhuang applied hydrodynamic and fracturing which is the third consecutive year of oil price decrease. important breakthrough was achieved in operation capacity, international technology to shorten the gas breakthrough time, which built competitiveness and influence was enhanced in 2016. ll Deeply optimized the technological plan for the foundation for the construction of integration experimental base development projects and achieved notable result in cost for the next step. Panhe Demonstration Project increased over Oilfield Services production service ability from shallow water to deep water. It 3 reduction and efficiency enhancement. 50,000 m of daily output through the initiation of booster is now managing and operating 44 drilling platforms, among station compressor helical-lobe compressor equipped with Limited (COSL) has over fifty years which 7 are deepwater semi-submersible platforms, forming ll Decreasing the equipment and facility breakdown rate border group valve and other measures. South region in of experience in offshore oil and natural gas exploration, a complete deepwater echelon operation of 750, 1,500 and through the deep implementation of integrity management. Shizhuang South Project achieved the first CBM exploration development and production, with its business including 3,000 meters. permit and two gas gathering stations were built and on trial, geophysical prospecting, well drilling, oilfield technology and The brand reputation and client recognition in global market Unconventional Gas which enabled the export sales for the CBM in this region, ship. With the most powerful offshore oil service equipment are further increased. In Southeast Asia, it won the drilling Acceleration of the development and utilization of and projects in Liulin and Zaoyuan have been promoted group in Asia-Pacific regions, COSL can provide sole contract exclusively endowed by SAKA and the Indonesia unconventional gas is of great strategic significance for smoothly as planned. In 2016, the Company realized CBM business operation service as well as integrated packaged Tropic integration technology service project. In Middle East, energy structure optimization and energy supply guarantee. utilization equivalent to 940 million m3, increasing by 7.8% turnkey operation service. The business is expanded to COSL won the bid for two-to three-year long-term operation The Company tracked and researched the new development compared to that of last year. six major areas of Southeast Asia, Middle East, America, contract of two platforms in IOEC and the drilling service trend of unconventional gas in the whole world, meanwhile, Europe, Africa and Far East, covering over 30 countries and In 2016, there were changes in the demand and supply contract from Oman DNO and entered directional well market based on the development idea of “develop CBM, tackle regions in the world. The equipment capacity continues to be of global natural gas, and the price of natural gas was for the first time. In America, it won the tight gas, explore shale gas”, the Company insisted on the intensified, the technological results keep emerging, and the sharply decreased, which brought extreme challenge to the machine and shipping service contract from Pan Am, which principle of “integration of exploration and development, internationalized operation level is greatly improved. COSL profitability of unconventional gas. The Company confronted would build a solid foundation for the integration contracting integration of production and sales, integration of self- has become one of the largest comprehensive offshore the challenge and carried out comprehensive coping in the Gulf of Mexico. In Far East, four major operations of operation and external cooperation, integration of tight gas oilfield service providers in the world. strategy. Sales strategy has being constantly optimized, geophysical prospecting, drilling, oil technology and ship and CBM” to promote the exploration and development of the connection between production and marketing was Deepwater operation capacity continued to be improved entered the marked comprehensively for the first time. unconventional gas. strengthened, and the online transaction was expanded. steadily. COSL built the whole set of deepwater equipment The serialization and industrialization of independent Relying on the technology advancement, the Company Insisting on benefit making by scientific research, one group and studied the whole technological system for research technologies and products were accelerated. continued to intensify exploration and development, scientific research project and one demonstrative project deepwater exploration and development, trying to build In drilling and logging, COSL has realized the operation accelerated the development of unconventional gas industry independently undertaken by the Company were approved the first class deepwater operation team. At present, it ability of well logging during drilling and direction drilling and strived to create a new growth potential. Following by the government. The idea of “win-win” in foreign possesses the all-around exploration, development and technological equipment for two major sizes of wells 12- the guideline of “focusing on the key blocks to explore cooperation has won great support, which efficiently 1/4 inches and 8-1/2 inches. In drilling & completion and invest”, the domestic unconventional exploration was promoted the progress of cooperation projects and achieved “Nanhai No. 6” drilling platform fluids and well cementing, COSL successfully conducted focused on tight gas, and the new bed series exploration has the income and benefit growth. independent research on four kinds of deepwater drilling made breakthroughs in new zones. The tight gas reserves & completion fluids technologies and five kinds of well and production was increased, CBM production was cementing technologies, and it developed 30 kinds of core stabilized and accelerated, the unconventional gas output products, which steadily improved the operation ability continued to grow. Part of the well exploration and production in high , high pressure and ultra deepwater integration in Linxing tight gas pilot test zone was advanced environment. In terms of completion tools, it self-developed where exploration, fracture and operation were realized in the 42 kinds of top completing tools and 62 kinds of bottom same year, and the daily output of wells in operation reached sand control tools. Meanwhile, the drive-pipe well tool series over 200,000 m3, forming a rapid operation model where of 9-5/8 inches and 7 inches were further improved.

32 33 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT BUSINESS

In 2016, it was selected into “Top 500 Innovation Indexes of In 2016, the development of COOEC was widely accepted RMB 100 million of earnings. Relying on platinum network China A-Share Listed Companies” and awarded with “Violet by the capital market, and COOEC was selected as “Top 100 technological advantage, CNOOC Taiyuan Precious Metals Gold Innovation Award 2016”. In addition, it was chosen to Competitive Listed Companies of China” by Finance Limited extended its industrial chain, developed value-adding be the 2016 “Best Enterprise Management Team in Asia” by and awarded the “Pearl of Listed Company” prize. business and realized rising against the slowdown market. world-famous financial magazine Institutional Investor and Management innovation discovery showed its new drives. awarded the “Best Investor Relationship Listed Company” Professional Technical Services The deep blue innovation plan and oil circle project of the prize, and it is included into the component stocks of “Hang CNOOC EnerTech is dedicated in building an internationally Engineering Technology Companies, the sparkle plan of the Seng Sustainable Development Enterprise Index” for five competitive energy technology service company with Safety and Environment Protection company, entrepreneurship years successively. coordinated development of diversified industries, which is competition of the Information and Technology Company and integrated with technological research and development, other plans played great demonstrative effect, which further Offshore Oil Engineering Service Yamal Project module shipment product manufacturing and professional technology service activated the motivation for the staff to start new business. Centered on the project construction of offshore oil and and oriented by energy industry service. The businesses natural gas, LNG and others, targeted with “practical and cover most links from upstream to downstream of the oil and The effect of scientific and technological result was Project in Russia at the same time. The Yamal Project made delicate implementation of the whole project process”, gas industrial chain and is formed with four core business remarkable. Through major water treatment special project, high-end “Made in China” products enter the Arctic Pole cored with cost reduction and efficiency enhancement, as segments including energy technology services, FPSO it actively promoted the transformation from asset-driven to for the first time, which created the great performance of no well as service upgrade, CNOOC Offshore Oil Engineering production technology service, energy logistics service technology-driven. The Equipment Technology Company accidents for 38 million working hours. The offshore platform Co., Ltd. (COOEC) focuses on building the leading general and HSE and energy saving, which make it an innovative independently developed 8-inch leakage flux inner inspector of Burmese Zawtika 1B Project realized operation in advance contracting capacity of offshore oil project EPCI (engineering, enterprise with sustainable development ability and one-stop and inner inspection data processing software, with an and won high reputation from foreign owners. Meanwhile, the procurement, construction and installation) within the Asia- service. advanced international level. The engineering technology Brazilian FPSO Project was the first Petrobras project directly Pacific region. companies successfully developed “integrated window Withstood operation pressure and displayed new strength. undertaken by COOEC, which created the new record of sidetrack drilling tool”, which filled the shortage of China In 2016, the workload of COOEC decreased rapidly, but the In 2016, CNOOC EnerTech tried its best for promoting cost 11,800 sea miles of towing distance. offshore oil technology and is of great prospect. The Cener international project workload took almost 60%. 24 medium- reduction and efficiency enhancement and completed Tech Tianjin Chemical Research & Design Institute Co.,Ltd The market expansion made new breakthroughs. In 2016, and large-scale construction projects were implemented its annual operation goal. Its Oil Extraction Companies independently developed the whole set of technology for international market development of COOEC realized through the year, 126,000 structure tons of steel was operated various kinds of offshore facilities with safety aromatic hydrocarbon production with inferior diesel, which breakthrough with 179 signed/negotiated construction processed, 8,900 of ship days were put into operation, and high efficiency and played the mainstay effect in caused significant influence on oil refining. income contracts in total, among which, Qatar NAF EPCI 80 project milestones were totally completed and the oilfield production, meanwhile, “Hai Yang Shi You 301” Project was the first EPCI general contracting project engineering machinery completion were brought forward made foreign breakthrough and the operation in Indonesia independently undertaken in the whole Middle East market, 155 days cumulatively. gained over RMB 100 million of revenue, and the small- Shell SDA Project was the first EU project executed in scale FRSU market window was opened in Indonesia. The The operation ability and efficiency kept increasing. In 2016, Qingdao. Safety and Environmental Protection Company boosted the offshore projects were operated with high efficiency Technology-driven effect continued to be played. In 2016, the deep cooperation with the domestic and foreign and stability, and the “Weizhou 6-9/10” and other 8 projects 75 major scientific research projects of COOEC were famous enterprises. The third-party safety service model were completed. “Yacheng 13-1” Project realized permanent carried out through the year, 132 pieces of patents and 19 for government purchasing was popularized. Through pressure tapping operation with the application of domestic “Hai Yang Shi You 113” FPSO software copyright registration permits were authorized. integration of production increasing and general contracting, tapping machine for the first time, the gas pipeline realized Over 40 technology innovation results including pressure its Engineering Technology Company made breakthroughs recovery production 36 days in advance. The Chengbei tapping sealing technology were applied in production, in emerging market. Its Equipment Technology Company upgrading and reform project completed class-A offshore which brought great economic benefit, and 2 scientific and accelerated the strategic transformation of equipment major operation risk management and control work of technological platforms were preliminarily built, and the operation and maintenance industry, and the storage tank CNOOC, which created the new record in remold workload “Ocean Engineering Technology Center” was recognized as business entered the middle and downstream market of and difficulty. the national enterprise technology center, and the national refining. The research institutes in Tianjin and Changzhou The international projects achieved notable results. In 2016, level welding technique research and development platform solidified the old market and won the new market with COOEC operated 7 international projects including Yamal was built smoothly. technology transformation at the same time, keeping over

34 35 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT BUSINESS

REFINING AND The refining and marketing segment plays an important role in the industrial value chain and helps CNOOC stick to the market-oriented MARKETING reform direction, realize the scale economy effect, optimize the structure of energy products, and develop into a world class energy company. In 2016, the Company basically completed the reform and restructure of refining industry and formed the refining industry segment integrated with production, sales and scientific research, market operation, professional management and group operation.

Refining and Petrochemistry refined oil products, 1.07 million tons of ethylene, 2.25 million tons of sodium carbonate, 8.47 million tons of asphalt and In 2016, focusing on the theme of “reform and innovation, 750,000 tons of lubricating oil were produced. mechanism transformation, structure optimization, quality and benefit increasing”, CNOOC Oil & Petrochemicals CNOOC Oil & Petrochemicals Company strengthened Company comprehensively completed various production production plan management, made crude oil resource and operation tasks and the overall level of safety production jointing balance, production plan, sales arrangement and maintained steady. CNOOC Oil & Petrochemicals Company construction commencement and shut-down management insisted on the maximization of overall value in refining and confirmed the high-efficiency operation of the equipment. chemical industry, fully played the advantage of production The product structure was adjusted by market. 540,000 tons and sales integration, carefully organized production and of high value-added naphtha, 150,000 tons of jet fuel and operation, practically improved sales ability and drove the 1.02 million tons of white oil was increasingly produced. The Phase II Project of Refinery industry to a connotative development road. Annually, 32.31 Re-exportation business of refined oil product processed million tons of crude oil was processed, 7.38 million tons of with giving materials was actively developed; the annual

refined oil product export reached 2.25 million tons. Huizhou integrated utilization project of Daxie Petrochemical and Refinery expanded 8 kinds of crude oil suitable for refining, integration project of Taizhou Petrochemical were all put into CSPC which greatly reduced the crude oil processing cost, operation. And the Huizhou crude oil reserve project reached Daxie Petrochemical and Orient Petrochemical increased 97% of completion exceeding the plan. production load through foreign purchasing of ethylbenzene, The Phase II Project of Huizhou Refinery was completed which effectively utilized the spare capacity of styrene device. and rich international cooperation results were achieved. China Offshore Bitumen Co., Ltd. increased production in Based on the successful cooperation with the Shell in the high-grade, high value-added rubber oil, transformer oil and first phase of the project, the company further expanded the special asphalt product in asphalt lubricating oil business, cooperation with Shell to jointly construct the biggest ethylene ascending one of the first class domestic transformer oil production base. This project innovated the international manufacturer so as to increase product value. cooperation management model, introduced advanced CNOOC Oil & Petrochemicals Company completed the foreign technologies, upgraded integration value and formed refined oil quality upgrading task in advance under great “Banyan Effect” for the industrial park, which was listed pressure. The quality upgrading plan of 7 oil products was into the “Demonstrations for Introduction of Social Capital running smooth, whose quality and progress achieved of Central Enterprises in Major Projects”. On November 1, full appreciation from the National Energy Administration. 2016, the project was delivered and the related industrial and Among which, the acid-containing heavy oil integrated commercial registration changes and staff transfer were all utilization and product upgrading project of China Offshore completed. Meanwhile, the new management structure and Bitumen Co., Ltd., safety environmental protection and clean mechanism from CSPC after cooperation expansion was fuel upgrading project of Zhongjie Petrochemical, distillation implemented.

36 37 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT BUSINESS

With an emphasis on the safety and environmental refined oil product sales and marketing network covering “two NATURAL GAS Accelerating the development of natural gas and power generation is not only protection ideas of “safety first, people-oriented, facility deltas and one bay” (Yangtze River Delta, Pearl River Delta in line with the national strategy of energy consumption structure adjustment, well-equipped, environmental protection upmost”, CNOOC and Bohai Bay) and expanding along “one river and two AND POWER but also a practical way for the Company to conduct low-carbon motion, Oil & Petrochemicals Company strictly implemented the railways” (the Yangtze River, Beijing- and Beijing- GENERATION respond to Paris Agreement, correspond to energy revolution, supply clean energy and promote green development. Natural gas and power generation responsible subjects, strengthened safety risk control and Kowloon Railway) to central China. In addition, CNOOC Oil has become a significant plate in the mid- and downstream chain of the management, conducted investigation, carried out & Petrochemicals Company realized the sales of oil product Company and shows the greatest growth potential. special rectification, strengthened emergency disposal, and and chemical product up to 40.17 million tons, among which therefore, it realized the overall stable safety production. the sales of oil product was up to 14.65 million tons.

With the digging into market potential and improvement in its Marketing direct selling capacity, the Company increased sales volume In 2016, CNOOC Oil & Petrochemicals Company reorganized per station and total retail volume of the service station. And refining and chemical sales system. With production it also won favor from more customers with high-quality oil, enterprises being the resources radius, it founded three upgraded visual image of service station and considerate region sales companies including South China, East China services. The Company accelerated the construction of the and North China and practiced the optimized overall service stations, making the total quantity of service stations planning of “resources, market and benefit” in regional under control reached 828. Meanwhile, it kept enriching market, as a result, it realized the operation system of “close the product categories and gradually expanded the service to market, close to refining plant, close to government”, network of terminal products including asphalt, lubricating improved the management and operation efficiency of oil, fuel oil and others. production and sales integration and finally formed the

A CNOOC service station

Hainan LNG delivery

In response to global warming, natural gas is getting more receiving terminals and build the coastal natural gas channel and more important as key low-carbon clean energy. In 2016, to provide clean energy for the sustainable development of CNOOC Gas & Power Group strengthened the strategic the surrounding economy. In 2016, the natural gas business study on the natural gas, pushed forward the optimized and of the 13th “Five-Year Plan” achieved a great start, with 16.52 coordinated development of industrial chain and actively million tons of LNG import volume and 21.5 billion kWh of participated in studying and making significant policies power generating capacity. By the end of 2016, the natural including the national oil and gas system reform, the national gas business of CNOOC was distributed in 20 provinces 13th “Five-Year Plan of Natural Gas”, TPA of the natural gas, and 90 cities in China. Meanwhile, 7 LNG receiving terminals infrastructure, decentralization of newly-built LNG terminals were put into commercial operation and the annual LNG and the supervision and audition of pipeline transportation receiving capacity reached 27.8 million tons with 206 price cost. service stations, and the natural gas long-distance land transportation pipeline reached 4,513 kilometers. With an emphasis on the Yangtze River Delta, Pearl River Delta and Bohai Bay, CNOOC Gas & Power Group continued The development and sales of natural gas market kept to expand the natural gas supply network, construct LNG improving steadily. The Company successively intensified

38 39 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT BUSINESS

decreased the utilization of local coals and contributed Fujian and east . Meanwhile, the gas turbine actively to the local green ecology. operation and maintenance service went abroad for the first time, which accumulated experience and cultivated talents CNOOC Gas & Power Group actively built completed for the overseas project management. natural gas industrial chain service system and actively expanded the internal and external technology service market. Meanwhile, the means for creating technological achievements were diversified. The self-owned core technology big-scale storage tank was applied in two projects including Fujian LNG5/6# tank and Tianjin Replacement Construction, which brought forward the general contracting capacity construction of CNOOC in LNG industry. With its own technological advantages, team design and building capacity and high-quality construction performance, big-scale LNG Full Containment Storage Tank technology entered the domestic and overseas market and made a powerful step in engineering technology service field, and the operation of Fujian maintenance center has effectively upgraded the emergency rescue capacity of Gas station Main power house of Power Generation

the market development, actively sought for new increasing The natural gas power generation remained in safe and points in natural gas industry and prospectively conducted steady operation. The Company guaranteed the safe and innovative sales models study including electricity sales stable production and operation. It actively conducted the LNG tank car unloading at terminal stations company, natural gas distribution energy and “Internet+”. power direct supply and power sales company research at While keeping the natural gas market advantages in the same time. Jiaming Power Plant and Hainan southeast coast, it kept extending to north and inland China, Power Generation actively coordinated with the government realizing the expansion from coast to inland and from first- to increase power generation quota and kept the leading tier to second-tier cities. In 2016, the sales of natural gas of position in the whole province. Zhuhai Power Plan, the resource pool of CNOOC Gas & Power Group increased Power Plant and Putian Power Plant continued to optimize substantially with the annual sales of 14.8 billion m3 and operation model, reasonably arranged maintenance, and 19% of year-on-year growth. In the meantime, the regional actively tried new energy saving methods and deepened the sales increased rapidly, the liquid distribution of LNG potential digging, thus all economic indexes were increased. achieved relatively great performance. In addition, through CNOOC Gas & Power Group tried their best to fulfill the the strengthening of communication and coordination, political and social responsibility as a central enterprise. participation of transaction in Shanghai Oil and Natural Gas Trade and related receiving stations fully played their LNG Transaction Center, setting up internet sales platform, flexible emergency supply guarantee advantages to fully complete pricing and other measures, the Company expanded the the emergency supply guarantee task in Guangdong, LNG market comprehensively. The annual liquid distribution Zhejiang, Tianjin and other cities through emergency of LNG sales of the resource pool reached 2.41 million tons resources allocation, regional cooperation, staff allocation with 37% of year-on-year growth. strengthening and other measures, which vigorously

40 41 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT BUSINESS

FINANCIAL Based on the Company’s industrial development, our financial services located to assist CNOOC to expand overseas business, CNOOC International Lease Finance focus on the combination of industry and finance, strengthen the risk and plays the synthetic effect of production and financing, Company SERVICES control, actively innovate financial products and service models, expand decreases insurance cost for the insuring units and realizes Directed by the management guideline of “rely on CNOOC, the service network, optimize information system, strive to improve our coordinated development with the group entity industry, financial service brand, and keep the quality of financial capital and serve high-quality customers, compliance with laws and while accelerating indemnity recovery to help the insured profitability constantly increased. regulations, conduct sustainable and steady development”, units to recover production as soon as possible. CNOOC International Lease Finance Company lays a solid

By the end of 2016, CNOOC Insurance Ltd.’s total asset foundation to conduct business innovation, strengthen risk reached RMB 5.238 billion and net assets reached RMB prevention and control. Through the innovation of business CNOOC Finance Co., Ltd. 4.447 billion, with the newly increased non-performing assets 2.735 billion with 15% of year-on-year growth. The capacity modles, designing of diversified leasing products, construction kept to be zero. The trust business was conducted steadily. CNOOC Finance Co., Ltd. kept “zero record” of non- of under writing and corresponding to major disasters also of multiple forms of risk control structures, it provides low-cost At the end of the year, it maintained 380 trust plans and the performing assets and bad loans. For the qualified group continued to be intensified. In 2016, CNOOC Insurance Ltd. financing for the internal system units and vigorously supports trust assets reached RMB 345.343 billion. It realized RMB units, the service coverage rate has reached 93% and the kept great operation performance and the total profit was entity economy to reduce financing cost and effectively controls 1.383 billion operation revenue, RMB 1.210 billion total profit clients are distributed in 107 cities of 28 provinces. beyond expectation, which provided strong guarantee to the the risk. Confronted with new normal economy, CNOOC and RMB 1.042 billion net profit. development of group main businesses. International Lease Finance Company actively innovates In 2016, CNOOC Finance Co., Ltd. completed 224,000 It continued to improve the entity economy efficiency of leasing models and makes great effort in market expansion. settlements with the amount of RMB 2.34 trillion, and the financial services and accumulatively conducted RMB 44.83 The financing quality and level are improved and the great average daily self-support credit loan balance reached RMB CNOOC Investment Co., Ltd. billion asset securitization project, keeping a leading position credit is built. With full use of policies in the Shanghai Free 29.922 billion, which was 39.83% higher than last year, and In 2016, through intensifying strategic management and in the industry. Trade Zone, it achieved the new business qualification for the self-support credit loan balance by the end of the year strengthening stock value management, CNOOC Investment “investment+leasing”. was RMB 31.6 billion, 26.56% higher than the beginning Zhonghai Trust Co., Ltd. provides high-quality service for Co., Ltd. managed 15 stock rights and conducted 2 private of the year. The annual foreign exchange business income group units to improve capital benefiting level. With the equity investments on behalf of CNOOC. It managed the In 2016, CNOOC International Lease Finance Company was RMB 17.85 million with 29% of year-on-year growth. lowered oil price, it actively explores better financial service holding assets through equity dividend, audition participation signed 41 leasing contracts with total contract amount of The annual operation revenue was RMB 2.709 billion, supporting model to assist the group units to reduce of “three conferences” proposals, asset disposal loss stopping RMB 25.1 billion, among which, the internal system project which realized RMB 1.13 billion of profit after provision. By financial expenses and improve surplus fund income. Based and other ways, continuously kept great performance in asset loan was RMB 13.6 billion while the external loan was RMB 8 December 31, 2016, the total assets of financial company on the analysis and judgment on macro economy, currency quality, stock operation and management structure. By the billion. It has realized operation revenue RMB 913 million and reached RMB 113.8 billion. Self-support deposit and loan policies and other factors, it conducts reasonable assets end of 2016, CNOOC Investment Co., Ltd. reached RMB 5.468 total profit RMB 302 million with 52.52% of yearly growth and balances reached the highest level in the history. allocation and grasps the investment pace to provide high- billion total assets and RMB 4.864 billion net assets and RMB zero non-performing assets. quality capital management service for CNOOC enterprise 178 million total profit. Zhonghai Trust Co., Ltd. annuity and make stable increasing for the net value of Financial team By the end of 2016, Zhonghai Trust Co., Ltd.’s total assets enterprise annuity trust. It was also rated as the class-A trust reached RMB 10.733 billion and net assets reached RMB company by China Trustee Association.

CNOOC Insurance Ltd.

CNOOC Insurance Ltd. fully implements the group’s development strategic deployment, executes the centralized insurance policies of CNOOC and fully plays the professional functions of risk management to contribute itself to group balancing, insurance cost reduction and risk control and distribution, and finally realizes the effective integration of production and finance. It supports industrial development and provides vigorous insurance support for the overseas projects in sensitive political regions where they are

42 43 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT

Internationalization CNOOC focuses on the noticeable benefits and utilizes the innovative management to continuously deepen cooperation overseas, optimize its business arrangement and strengthen the soft power, steadily upgrades foreign business management level, pursuits economic output and improves foreign assets value and finally realizes the sustainable development of the overseas business.

Business Overseas extra long distance international sea towing operation with the voyage for about 11,800 sea miles, which set a new In 2016, CNOOC paid high attention to the stable operation record in the towing distance of COOEC. of overseas business, kept optimizing overseas business management mechanism and kept great operation CNOOC EnerTech basically completed overseas market performance. The overseas assets contributed to 38.8% of deployment. In 2016, the overseas external system income the total assets by the end of year. took 54% of total overseas income. it has founded 13 holding subsidiaries overseas, whose business covered CNOOC Ltd., continued to be well recognized by the over 20 countries. The Company successively pushed international capital market. It continued to be listed in the out 15 management regulations and methods and led the annual “Platts Energy Top 250” and was awarded again the overseas companies to set up corresponding internal control honorable titles of “The Best Investor Relations Company and management methods and details. There were many (China)”, “The Best Corporate Governance”, “The Best CEO in highlights in overseas market, realizing two breakthroughs: Asia (Investor Relations)” by the journal Corporate Governance large ship plate in Southeast Asia market, which was Asia in 2016. In addition, it was awarded the titles of “Annual operated smoothly and laid great foundation for further Enterprise Awards-Platinum Award” by “The Asset” and cooperation afterwards and the Singapore branch had “The Listed Company with the Most Valuable Brand Value” made breakthrough in logistics business, accumulated the of “Golden Bauhina Awards” in “Ta Kung Pao Newspaper”. experience in logistics organization and resources integration. The CNOOC President Yang Hua won the prize of “The Most

Influential Leader of the Listed Company” of “Golden Bauhina CNOOC Gas & Power Group operated its international Awards” in “Ta Kung Pao Newspaper”. In 2016, the overseas business steadily and soundly. The total annual LNG imports crude oil output of the Company was 31.42 million tons, and were 16.52 million tons with the year-on-year growth rate of the natural gas output was 11.57 billion m³. 26%, reached a historic high. It has constantly deepened the cooperation with the resource parties and other buyers. COSL highlighted the overseas business. The company entered three new markets in Russia, Saudi Arabia and Oman respectively and newly signed 128 overseas contracts with the total contracts amount up to RMB 4.41 billion, in Overseas staff presence which 10 contracts boast the contract amount of over RMB 100 million.

COOEC has constantly achieved good results in the international projects. The company is operating 7 international projects. The Yamal Project has set the record of safety without accident for 38 million working hours. The Burmese Zawtika 1B Project was put into operation ahead of schedule. The FPSO Project in Brazil has completed the

44 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 A3

C18 B9

A18 B14 C21 D8 C1 B11 C20 B3 A9 D13

A12 D7

C16 D11

A14 B4 D16

A7 D1 D4 C13 B15 C7 B12 C9 B5 D12 C10

C19 B16 D17 C6 B7 A16 B10 C25

B8 C14 D2 C15 C11 A4 A10

A5

A17 C17 B1 C24 D6 A15 D3 D14 A1 C4 C23 C22 A2 B6 D9 D15 A6 C2

A11 C12

A19 D10

D18

D5 C5 C8 C3 B2 A8

A13

A20 B13

2 5 6 9 11 15 16 18 20 21 25 28 30 32 41 43 44 1 3 4 7 8 10 12 13 14 17 19 22 23 24 26 27 29 31 33 34 35 36 37 38 39 40 42 45

Africa Oceania Europe Asia North America South America

40. Ecuador 1. Algeria 6.Angola 33. Australia 7. UK 14. Saudi Arabia 20. Oman 26. Thailand 31. Indonesia 37. Canada 41. Colombia 2. Nigeria 10. Egypt 34. Papua New Guinea 8. Iceland 16. Iraq 21. Pakistan 27. Vietnam 32. South Korea 38. United States 42. Argentina 3.Equatorial Guinea 11. Uganda 35. New Caledonia 9. Netherlands 17. Kuwait 22. India 28. Malaysia 39. Mexico 43. Trinidad and Tobago 4. Gabon 12.Kenya 36. New Zealand 13. Norway 18. Qatar 24. Myanmar 29. Brunei 44. Guyana 5. Congo (Brazzaville) 15. Madagascar 23. Russia 19. The United Arab Emirates 25. Singapore 30. China Hongkong 45. Brazil

CNOOC Ltd. COSL COOEC CNOOC EnerTech

A1. Indonesia A7. Algeria A13. Argentina A19. Brazil B1. Singapore B6. Indonesia B12. India C1. Netherlands C7. Saudi Arabia C13. Qatar C19. Myanmar D1. Kuwait D7. United States D13. Russia A2. Gabon A8. Australia A14. Iraq A20. New Zealand B2. Australia B7. Mexico B13. New Zealand C2. Kenya C8. New Caledonia C14. Thailand C20. Russia D2. Nigeria D8. Canada D14. Singapore A3. Iceland A9. Canada A15. Uganda B3. Canada B8. Thailand B14. UK C3. Madagascar C9. Egypt C15. Vietnam C21. Canada D3. Uganda D9. Indonesia D15. Ecuador A4. Nigeria A10. Trinidad and Tobago A16. Mexico B4. Iraq B9. Norway B15. Saudi Arabia C4. Indonesia C10. India C16. Iraq C22. Uganda D4. Pakistan D10. Brazil D16. South Korea A5. Guyana A11. Papua New Guinea A17. Colombia B5. The United Arab B10. Myanmar B16. Oman C5. Australia C11. Nigeria C17. Brunei C23. Malaysia D5. Australia D11. Iraq D17. China Hongkong A6. Congo (Brazzaville) A12. United States A18. UK Emirates B11. Russia C6. China Hong Kong C12. Brazil C18. Norway C24. Equatorial Guinea D6. Malaysia D12. The United Arab Emirates D18. Angola C25. Mexico WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 The Europe Middle East Russia Uzbekistan Tajikistan Japan CNOOC products win

Libya Italy Turkey Iraq Kazakhstan Great Prestige in the World

As an international energy company with a complete industrial chain, CNOOC provides products and services both at home and abroad. CNOOC ranks 16th in the “Top 50 Global Oil and Gas Brands in 2017” released by Brand Finance, a brand appraisal agency, thereby demonstrating its brand value. The Company-owned brands of “CNOOC 36-1”, “Haiji- ang”, “Awode”, “Yuandu”, “Baiqing” and “Zhonghai Jinzhou” enjoy a very high reputation in the international market, in which the “CNOOC 36-1” asphalt was ever South Korea used for the construction of the Brazil’s Olympic Stadium, the “Haijiang” lube has made great contribution Hong Kong to the construction of multiple projects of “The Belt and Vietnam Road Initiative”, the “Awode” coating has been applied to several strategic projects of Russia, Pakistan and other Singapore countries as a high-end coating, the marine chemicals of “Yuandu” and “Baiqing” are sold well in more than 10 countries, and “Zhonghai Jinzhou” pipelines have been exported for more than 30 tons.

CNOOC service brands include COSL, COOEC, and etc. The service includes the exploration, development, and production of conventional and nonconventional oil and gas fields. The business scope covers offshore and onshore services and products. Operation service ability covers shallow and deep water.

North Canada Brazil Uganda Pakistan Malaysia America USA South Africa Angola South Iran Oman India Indonesia Australia America Africa

Water Clarifier Diesel Jet fuel Gasoline Asphalt Lube Urea Demulsifier Defoamer

Coating for Nuclear Power Sodium Sodium Nitrate, Calcium Chloride Pipelines Catering Barrack Colored Sheets Coatings Carbonate Sodium Nitrite WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 BUSINESS

International Trade successfully put into operation, which efficiently pushed the healthy and coordinated development of the sales, trade, CNOOC Petrochemical Import & Export Co., Ltd. implements storage, transportation and finance integration strategy of the development strategy of integration of sales, trading, CNOOC Petrochemical Import & Export Co., Ltd. storage, operation and financing, pays high attention to trade quality improvement and actively and effectively The shipping companies invested by CNOOC Petrochemical expands market, therefore, its overseas trade makes new Import & Export Co., Ltd. mainly actively served the whole high. Processing exporting trade helps the Huizhou Refinery of offshore crude oil production, focused on improving products to increase value in exporting, and five business governing level, and intensified market expansion and segments, including oil and gas sales, oil products trading, increased delivery income in the precondition of safety storage operation, cruise transportation and financing, keep production, which made huge contribution to the offshore great development trend. oilfield production.

In 2016, CNOOC Petrochemical Import & Export Co., With the full use of the associate attributes of trade and Ltd. kept to deepen international oil product market and finance, CNOOC Petrochemical Import & Export Co., Ltd. strengthened internal and external integration operation. conducted elaborate financial management and prudently In addition, key indexes like trade volume and total profit selected financial products through expanding financing created new historic high. The annual trade volume channels, made financial combination and cooperated with exceeded 80 million tons. The sales income was nearly RMB financial institutes for special financing products and finally 180 billion, and the total profit set a new record and realized achieved stable financial benefit. the best performance since the company was founded. CNOOC Petrochemical Import & Export Co., Ltd. implemented Sales business vigorously upgraded oil and gas value. the idea of “Know It All, Strict Control and Semi-Bearing” CNOOC Petrochemical Import & Export Co., Ltd. fully played and realized zero major risk through the whole year. The its advantages in sales and trading integration, actively new trade system was launched by schedule, which greatly expanded market and effectively broadened sales channel. improved the level of futures and paper, broker reconciliation It conducted natural gas market research and judgment and quantitative risk management. and gas price negotiation to create new benefit, and applied innovative cascade rate settlement and decreased sales cost. Trade Volume of CNOOC Petrochemical Import & Export The oil product trade industry made new high. The crude oil Co., Ltd. （unit: ten thousand tons） trade aimed at the resources need of the Phase II Project of Huizhou Refinery in advance and signed cooperation 2016 年 8,196 framework agreement with foreign oil Companies. It also 2015 年 5,808 vigorously served refining market to build core client resource, and its refined oil product grasped the processing 2014 年 5,361 trade to realize win-win development and the trade profit made a historic high. Its chemical products realized highest trade volume and best revenue. Its Singapore branch realized the best performance in history based on “production and supply guarantee promotes trade”.

The connecting pipeline project of Daxie Storage and Daxie Petrochemical was completed and put into use, positioning to long-term client. The integration project in Yantai was

47 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT MANAGEMENT

MANAGEMENT

Technology Innovation 50 Management Innovation 53 QHSE 54 Informatization Progress 62 Human Resource Management 63 Corporate Culture 67 Corporate Citizenship 69

48 49 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT MANAGEMENT

Technology innovation is a strategic engine for an enterprise’s sustainable R&D investment and approved, among which the Xinjiang drilling test TECHNOLOGY （unit: 100 million） development. Serving as a global energy company, CNOOC is platform project completed the 4-well platform trial run INNOVATION championing efforts to supply high-quality energy and exploring new- drilling operation, conducted over 20 scientific research 2016 年 20.6 type marine energies continuously based on the oil & gas businesses equipment and instruments test and training for over 600 and driven by the technology innovation, with a view to providing an 2015 年 30.7 people. High temperature and high pressure oil & gas inexhaustible driving for sustainable development of the Company. 2014 年 33.0 development experimental platform project developed several experimental technologies including rock-electricity-

Authorized patents pressure simultaneous analysis at 200℃, 75-100MPa, which The Company vigorously implements “science and annually, among which RMB 2.06 billion was for R&D, （unit: piece） have been applied for over 1,500 times. The horizontal technology drive” strategy. According to the scientific and contributing to 1.1% and 0.47% of the main operation well test capacity construction project of mult-iple-branch 2016 年 834 technological working idea of “arrangement, highlight, business revenues respectively. Top-level designs of 35 diversion moderate sand control research and development normalization, upgrade”, the Company fully plays the major scientific and technological projects of the 13th “Five- 2015 年 999 condition platform built the first horizontal test well “JJSY- motivation and leadership of scientific and technological Year Plan” were completed, which further focused on the 2H” in China. The horizontal section of “JJSY-2H” was 401 2014 年 833 innovation, strives to make technological breakthroughs, core technology breakthroughs including high-efficiency meters which can meet the requirements of horizontal successively deepens the scientific and technological development of heavy oil, exploration and development of tools and technological test. The project of tight oil and Issued technological standards system and mechanism reform, comprehensively upgrades deepwater oil and gas fields, exploration and development （unit: item） gas reservoir exploration and development created a set scientific and technological management, then the scientific of offshore low-permeability natural gas and onshore of mature experimental technical systems with tight oil and and technological innovation mechanism is continuously unconventional oil and gas and other fields, brought 2016 年 108 gas reservoir exploration and development. The project improved and the independent innovation capacity is forward the implementation of scientific and technological 2015 年 135 of submarine pipeline high-efficiency welding technology obviously strengthened. In 2016, the Company implemented plans. It has arranged the organization and management and welding joint ECA evaluation technology platform 2014 年 166 the 13th “Five-Year Scientific and Technological Plan” of various levels of scientific and technological projects independently developed submarine pipeline high-efficiency and top-level design of major scientific and technological including major national special projects, key national welding technology including X65, CRA and X70. Scientific and technological awards (provincial and above) projects, deepened the scientific and technological research and development planning projects and CNOOC （unit: item） innovation operation mechanism study, successfully held major technological and scientific projects, meanwhile, Scientific and Technological Innovation the 8th Science and Technology Conference and the first 1,151 scientific research subjects at different levels were 2016 年 35 In 2016, 35 innovation results were awarded with provincial innovation meeting of CNOOC, strengthened various conducted through the year, including 96 national and 2015 年 59 and above level prize, among which 2 were national scientific functional work management cored with scientific and provincial projects, 416 company-level projects and 639 and technological prizes, 11 were provincial scientific and 2014 年 91 technological project management, which have all achieved subsidiary projects. It has innovated project approval and technological prizes and 22 were industrial scientific and great result. pre-audition method, conducted strict checking on project technological prizes. “Key Breakthroughs of Deepwater Oil approval of new tasks, in 2016, it has applied 100 tasks while Scientific and technological paper (core journal) （unit: piece） and Gas Geological Theoretical Technology Innovation and 68 tasks were actually approved. Management of Scientific Research Exploration in North Continental Margin of South China Sea”

Project 2016 年 578 won the second prize of National Scientific and Technological With continuous and stable scientific and technological Establishment of Scientific Research Progress Award. “A Deolefin Catalyst Manufacturing Method” 2015 年 533 capital investment, CNOOC invested RMB 4.78 billion Platform won the 18th Outstanding China Patent Award. 834 patents 2014 年 484 The construction of CNOOC top-level design of the scientific were authorized including 452 invention patents. Meanwhile, the Company completed the integration of standardized modification projects, upgraded standard quality and level, Sci-Tech investment research condition platform has been completed, which integrated 107 single standards to 75 with 30% of integration （unit: 100 million） formed the list of 14 key platforms construction deployment rate. 108 technological standards were issued (among which 17 including earth physical key laboratory. In 2016, the 2016 年 47.8 national standards, 30 industrial standards and 61 enterprises), scientific research condition platform construction achieved two international standards-“module drilling machine” and 2015 年 63.7 a series of results, 6 projects including “Xinjiang drilling “pipeline integrity management” were promoted. 2014 年 77.0 test platform construction” were successfully inspected

50 51 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT MANAGEMENT

International Technology Exchange research level and expanding the visions of researchers. MANAGEMENT Management innovation is an essential guarantee for companies to In 2016, the Company closely met the developmental strengthen their competitiveness and achieve sustainable growth. Under International technology exchange is a significant platform need of industry, actively organized and participated in 31 INNOVATION the current complex environment of scientific and technological evolution for the Company to build scientific and technological international and domestic communications, among which and profound changes in the operating environment, CNOOC must innovation soft power. The conduction of foreign scientific grasp new trends and requirements of management innovation, make 12 were international and 19 were domestic. 3,055 people and technological exchange is of advantageous effect for continuous management innovation, and incorporate the innovation in the were participated accumulately. introducing foreign advanced technologies, promoting core whole management process. technologies of CNOOC, upgrading company scientific

CNOOC intensifies the idea of leading development with dedicate, deep, practical”. It has further improved the innovation, practically transforms the innovation idea into enterprise management level and helped the corporate the Company strategy, system, procedure and culture and realize the cost reduction and efficiency enhancement target, Main Achievements in Scientific Research gathers the inexhaustible driving force for the Company fully completed the main production and operation tasks of development. In 2016, CNOOC held the first innovation the whole year. Name of Achievement Scientific and Technological Tackling Result meeting and made significant deployment for promoting Through value exploration, design optimization, “new Key vector processing technologies for multi- Completed the seismic data processing in Bohai and Weixinan region over 200 the scientific and technological innovation, management component seismic data. km2 and the imaging was significantly improved. techonlogy, new material, new technics, standalization, innovation and business model innovation in new trend. Interpretation technology of time-lapse seismic Successfully applied to the time-lapse data processing of “Xijiang 24-1” Oilfield, localization, facilitation” and refined production, CNOOC difference. the consistency of the time-lapse seismic marker layer reached 96%. pushed the whole process cost reduction, the discovery cost Management Innovation Achievements The research achievement on paleogene “clastic- per barrel reached a new low in the past ten years. COSL, carbonate deposits” high quality reservoir and Guided the projects of “Lvda 16-3N”, “Bozhong 27-2”, and “Kenli 16-1” to achieve Since CNOOC issued the Management Method of CNOOC analysis on its exploration potential in Bohai the key exploration goal. COOEC and CNOOC EnerTech vigorously expanded “two- offshore. Modernization Achievements Management, the innovation foreign” markets and strengthened organization with upstream Applied to the evaluation of the oilfield water flooded reservoir of “Weizhou 12- achievements for business management modernization Comprehension interpretation and evaluation business CNOOC Oil & Petrochemicals Company and 1”, realized the target of less than 15% of moisture content in the early production technology of well logging at water flooded layer has been kept emerging. By the end of 2016, the Company and successfully guided the adjustment of drilling of the oilfield of “Wenchang 13- CNOOC Gas & Power Group coordinated resource allocation, based on the dynamic mixed conductive model. 1/2”. rated totally 218 outstanding enterprise management optimized the product structure, actively expanded market Independent development of large flow downhole achievements at Compay level, applied and won 92 Successfully applied to Bohai Oilfield, broke the international technical monopoly and achieved new progress. CNOOC Petrochemical Import & oil and water separation technolgy with the 3 and filled the domestic gap in this field. industrial awards and 28 national awards (11 first prizes and processing load of 12 million m per day. Export Co., Ltd. and the financial segment actively promoted 17 second prizes). Applied in the field operation of 8 oil and gas fields in the waters at home and production and finance integration and innovated business Predication technology of driving and pulling of the abroad and 5 preliminary research projects. The on-site application prediction pile in self-elevating drilling platform. models to provide qualified service for the main operation. result consistency was over 94%. In 2016, the Company rated 25 business management The headqueter departments played their organized direction Intelligent testing and regulation technological modernization outstanding achievements at Company Applied in 4 wells of Bohai Oilfield with the testing and regulation efficiency achievement of water injection well in the offshore and coordinated support function through style changing, increased for more than 5 times. level. Applied and won 11 ministerial level management oilfield. quality strengthening and efficiency improving. The “Quality modernization innovation achievements, including 2 first Key technological achievement of debriscarrying Successfully applied in 14 high angle deviated wells in “Jinzhou 25-1” Oilfield with and Benefit Year” activity achieved over RMB 10 billion of drilling of high angle deviated well. the drilling operation safety increased greatly. prizes, 5 second prizes and 4 third prizes. The applied cost reduction and efficiency enhancement for successive management result of Construction and Implementation Independent development of integrated casing Broke the foreign technical monopoly and reduced the operation cost for more 3 years, which made great contribution to the production sidetracking tools. than 20%. of Comprehensive Energy-Saving Management won the and operation performance. In addition, the Company also Successful development of production and Widely applied in multiple oilfields like Liuhua Oilfield, created total production second prize of the 23rd national business management application technology of TS series oilfield water value of RMB 300 million and taxation of profit of RMB 110 million and saved over compiled the book: “Trend Reading, Confidence Building, modernization innovation achievement (national-level). treatment chemicals. 30% expenses. Bravery Tackling-Quality and Efficiency Increasing / Trend Independent development of TH series hydrogenation Applied in the internal and external refineries of the systems like Zhoushan Mission Education Manual for ‘Quality and Benefit Year’” and catalyst. Petrochemical. “Quality and Benefit Year” 3.0 held 8 “Home and Dream” themed tour report activities, which Successful development of the first domestic In 2016, the Company deepened the conduction of “Quality Applied in the Guangxi LNG projects, reduced expenses over 30% compared submersible pump in large-scale LNG storage tank conducted vigorous promotion and advertisement on the with imported devices. and Benefit Year” 3.0 activity cored with quality improvement with self-owned intellectual property. great experience in the activities and explored to build the cost and efficiency increasing and promoted the cost reduction Independent development of mid-low grade reduction and efficiency enhancement long-term mechanism. phosphorite selection technology and technique Improved phosphorus resource utilization rate. and efficiency increasing by the requirements of “refined, optimization.

52 53 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT MANAGEMENT

QHSE CNOOC attaches great importance to employees’ physical and mental product quality special movement to guarantee the product and clear classification, the Company not only enhances health, commits itself to creating safety production environment for quality. It also implements QC group activities, technical employees’ awareness of quality management, but also its employees through scientific management and efficient methods, competitions and so on to strengthen the quality awareness improves suppliers’ and contractors’ awareness of quality and devotes to providing the society with higher quality products and of all staff, focuses on cultivating “Spirit of Craftsmanship” management, so as to increase their quality management level. marketing services in safe, efficient and environment-friendly manners, and strengthening quality training to improve the professional so as to contribute its values to realize sustainable development of the quality and competence of staff. Occupational Health society and environment. CNOOC solidifies construction of brand management Adhering to the core QHSE philosophy of “people- system and devotes to building an internationally renowned oriented”, CNOOC always puts the safety and wellbeing of Quality Management brand. By refining the core values of “CNOOC” brand its employees at the forefront. We unremittingly strengthen In the control of quality, CNOOC adheres to the directives and revising the Company image brochure, the Company the occupational health management, actively improve the of “people-oriented, safety first, honest and law-abiding, comprehensively unifies both brand cultural connotation and operation environment, focus on the identification, analysis reinforcing foundation, innovation-driven and winning with image, and improves the world’s recognition on “CNOOC” and control of occupational disease factors in quality”. It pursues the quality objectives of “excellence brand. “CNOOC 36-1” asphalt, “Haijiang” lubricant, “Awode” workplaces and popularize occupational health promotion and leading to satisfy clients”, and implements the general painting, “Yuandu” salty products and “Lishen” batteries, as activities, so as to ensure the safety and health of the requirements of “emphasizing basis, ensuring safety, well as “Fudao”, “Tianye” and “Sakefu” fertilizers have been employees in an all-around way. stressing quality and increasing benefits”, so as to fully recognized by the society. China Oilfield Services Limited CNOOC focuses on the physical and mental health establish a quality management system and culture, (COSL) becomes an international renowned brand. and promotes health of its employees. Through “Health build quality management information system, issue Embraces CNOOC” health management system for all and practice CNOOC 13th “Five-Year Quality Plan” and CNOOC endeavors to launch quality management training its employees, the Company calls on all employees to continuously upgrade quality management level. CNOOC to strengthen quality management consciousness. Through Among which the “Hai Yang Shi You 981” drilling platform participate in walking and body building activities. It also obtains complete certifications for its products and quality management training with various forms, rich content of the Drilling Department of COSL won the second “China services, conducts strict quality supervision and control and Quality Award”, becoming the only winning unit in frontline constantly improves the quality of its products and services, teams. COOEC and Zhuhai LNG Terminal of CNOOC Gas & “Dongfang 1-1” Gasfield Spring Festival celebration establishing a good reputation in the international market. Power Group won the “Advanced Enterprise with Excellent CNOOC identifies quality risks and clearly recognizes quality Performance Model for State Implementation” from China priorities. In 2016, the Company held quality management Quality Association, and the Oilfield Chemical Department meeting and two terms of lab management trainings to of COSL won the “Quality Benchmarking Enterprise” from conduct benchmaking research and form comparison the National Petroleum and Petrochemical Industries analysis report for implementation. Association.

CNOOC implements special quality examination and CNOOC promotes the activities of quality management improves product quality. CNOOC conducted special groups to strengthen the quality culture constructions. In audition and approval on 6 labs, conducted “whole- 2016, CNOOC continued to promote quality theme activities coverage, whole process, identical-standard” special quality of “QC Group” to highlight its achievements of quality audition and approval on 44 service stations in Hunan culture constructions. 7 QC quality groups won the National Province, self-checked 480 service stations, 58 oil depots, Excellent QC Team awards and 259 primary QC groups won 27 transportation teams and discovered 1,534 issues, and Industrial QC Group awards. formulated and implemented the rectification plans. CNOOC also launches “Quality Month” activity and promotes CNOOC has carried out quality management activities and “Spirit of Craftsmanship”. The Company strengthens quality won various national awards. In 2016, the achievements of advertisement and creates atmosphere for pursuing quality, the Company emerged one after another in various quality it intensifies quality risk control and formulate counter activities, and three important national awards were gained. measures and carries out supervision spot checks and key

54 55 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT MANAGEMENT

launches basic mental health information services, and certification. It also compiled the test data bank for CNOOC Work Safety continues to expand the stress management and mental enterprise leaders and safety staff and successively organized CNOOC always implements the principle of “safety first, health services to the offshore employees at departments 8 terms of trainings and assessment for enterprise leaders prevention first, comprehensive management” and constantly of headquarters and institutes. In China waters, CNOOC and safety staff with 1,986 people trained in total. 10 safety strengths safety management system construction, continuously launches stress management services for online education courses were developed and about 74,000 intensifies key preventions and controls and works hard to employees working on its 77 offshore and onshore units to people signed up for learning with 87% completion rate. At create first-class safety production management to provide a positively release the pressure of employees and effectively present, 76 “safety object training classrooms” were put into safer working environment for its employees and contractors. contribute to health promotion. use and 1,842 terms of trainings were held through the year with 60,000 people completing the training. In 2016, CNOOC continued to strengthen the QHSE system, CNOOC has carried out occupational health monitoring adhered to systemic management model and upgraded and evaluation work, and improved health service quality. In 2016, CNOOC advocated the implementation and the whole version of QHSE internal control system. CNOOC In 2016, 44 pre-assessments projects deepening of CNOOC Safety Marking Behaviors Guide and modified 45 regulation documents and abolished 8 regulation and 54 occupational hazard prevention measures were extended to the primary levels. CNOOC conducted “Three- First emergency drill before Yuedong LNG trial run documents. It transformed 10 documents including overseas conducted by CNOOC, meanwhile, the regular inspection Ones” activity and promoted the implementation of safety project HSE management plan, public health event management of on-site occupational hazard factors realized all-around marking behaviors for leaders, organizations and staff and accident management into the QHSE internal control coverage and the occupational health inspection rate for through “One Behavior Suggestion”, “One Time Supervision regulations, and issued 6 management requirements including and others, completed 6 whole-system safety check like the staff who contact with occupational hazard factors and Inspection” and “One-Week Behavior Monitoring”. maintenance, start up and shut down, gas and service stations CNOOC safety production special supervision, organized reached 99.9%. In 2016, CNOOC held the essay contest of “Safety and dangerous chemicals tank. special inspection on the QHSE risk of 6 specified units, Management in Frontlines” to summarize and refine the and organized 885 units involving with on-site operation to Operational Safety CNOOC strengthens safety supervision measures to frontline safety management experience and promote complete self-inspection with information system to urge the effectively prevent major accidents from happening. CNOOC CNOOC puts operational safety as the base and lifeline of and advocate effective safety management measures. implementation of rectification. conducted the risk level control and management for overseas its sustainable development. Adhering to the core value 172 essays were received and 61 of them were published production facilities and downstream enterprises, promoted Cored with strengthening safety production system ideas of “safety first, environment utmost, people-oriented on the China Offshore Oil Press. CNOOC also organized the construction of downstream enterprise risk level control construction, CNOOC grasps the key points of overseas key and equipment intact” in environment protection and safety, “Safety Production Month” activity. During the activity, the and management system, and built comprehensive risk and new projects and concerns about the major changes CNOOC constantly improves its safe production guarantee subsidiaries held 2,884 safety production-themed seminars monitoring indexes including well control monitoring, project and potential risks in the process of different overseas system, enhances safety control in areas of personnel, and 72 online interviews, 56 forums, and released 638 construction major operation risk supervision and control operations to provide effective and timely risk pre-judgment production process and emergency response, and builds a comments and experiencing articles. They conducted 174 and etc, and strengthened frontline safety management, and technical support for the overseas units to guarantee the company with inherent safety. special editions and columns for publicity, released 51,936 pushed to build the post responsibility list, improved on- overseas projects to realize “intrinsic safety”. publicity materials, set up 2,630 panels and placards, and site tour check system and upgraded the on-site safety accepted 1,727 people for consulting. They held 78 speech In 2016, CNOOC further promoted its subsidiaries to protection guarantee ability. And it also tackled on the CNOOC advocates code of conduct for field operation, contests and made 241 cultural works and 2,017 pictures, build and improve the HSE management plan by regular hazards modification of oil and gas transportation pipelines, including “Conduct on Safety Signs” and “Five To-dos and held 1,281 training lectures, 281 competitions, 81 tracking of overseas project HSE risk and progress. continued to promote the rectification of pipeline hazards and Five No-nos”. Through conducting various forms of exhibitions and 3 art shows. In addition, it organized 539 CNOOC organized the HSE audition of head office of and guaranteed to uncontrollable risk or leakage in different safety education activities and strengthening safety basis inspection teams to deepen the safety inspection in 1,027 Nexen in Calgary Canada and Long Lake oil sands facilities, stages for the whole life cycle, continued to focus on the management, CNOOC constantly builds special safety frontline units. conducted safety audition on the CNOOC Southeast key spots, critical links and high-risk points for dangerous culture and the employees transform the safety culture Asia SES Oilfield extending project facility evaluation, and CNOOC actively leads the safety management of the chemicals safety management and promoted the high risk into their self-awareness and practical behaviors, so as to conducted pre-production safety inspection on QHSE cooperation partners. CNOOC and partners jointly organize link safety management like dangerous chemical storage effectively guarantee the implementation of safety culture management in Iraqi Missan Oilfield and new project. It also safety day themed activities and improve the safety tank, special operation and maintenance. and the personal safety of employees. paid high attention to the overseas security and strengthened awareness of the staff and promotes safety management CNOOC arranges the annual audition and inspection to the business communication with international security and In 2016, CNOOC improved safety training system construction. through safety education video, accident case sharing, team promote QHSE management. CNOOC organized to audit the emergency rescue , which effectively promoted the CNOOC conducted the whole process supervision from games, individual safety commitment and so on, to increase HSE management system of 8 units, conducted the special construction of overseas security information collection and outline, textbook, question bank, training and assessment to the safety awareness and promote safety management. auditions on quality, self-owned railways, diving contractors pre-warning mechanism.

56 57 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT MANAGEMENT

Emergency Management core issues globally in need of resolution, so as to reduce information system to carry out energy conservation and Centre” in the oil and gas industry of China. greenhouse gas emissions and protect the environment. emission reduction work in the various links of implementing Based on hazard identification and risk analysis, CNOOC Moreover, the Company implemented 52 energy conservation As a responsible international energy corporation, CNOOC production, products circulation and consumption. constantly improves the management system constructions, projects and invested RMB 406 million for the whole year. attaches great importance to the work of tackling climate integrates emergency management information system, In 2016, the Company strictly complied with the requirements As a result, it saved 230,000 tons of standard coals and change. It is the first central enterprise which has completed develop emergency management APP, improves ICS set out in the new “Environmental Protection Law” to intensify contributed continuously to the ecological civilization carbon self-inspection as per international standards. system construction and intensifies emergency training and the supervision and inspection of environmental protection, construction. drills to increase its systemic risk prevention capability and In 2016, the Company actively responded to climate changes. energy conservation and emission reduction. Moreover, it In 2016, the annual comprehensive energy consumption of minimize the impact of emergencies. It has been reducing greenhouse gas emissions through established the monthly tracking and feedback mechanism, CNOOC was 14.343 million tons of standard coal, the energy developing carbon emission monitoring and verification tracked and settled 50 environmental hazard events and In 2016, CNOOC strengthened the construction of consumption of production value per ten thousand yuan was technology besides constant research on CCUS. It strengthens specified the responsible units and personnel to make emergency maintenance bases and teams, promoted the 0.3519 ton of standard coal (comparable price in 2015). In carbon interrogation and promotes carbon trading, conducting correction within a definite time. It formulated and revised Phase I Project of the South China Sea Base, the Phase 2016, five units under CNOOC, including Huizhou Refinery carbon self-inspection according to the newly-launched 24 five energy conservation standards and conducted the II of Tanggu sea pipeline maintenance center and Fujian Branch, were awarded the “Energy Conservation Advanced standards, so as to have a clear idea of the current situation. overall revision of the systems, regulations and detailed rules pipeline maintenance center for COOEC to be included into Unit” of the petroleum and chemical industry of China. Multiple Chinese Certified Emission Reduction(CCER) projects of energy conservation management. It carried out “Energy national plan. CNOOC continued to conduct typhoon pre- CNOOC Energy Conservation and Emission Reduction were allowed to enter into the carbon market. The total amount Efficiency Frontrunner” and advanced energy conservation warning and emergency disposal, there were 25 typhoons Monitoring Centre and CNOOC Energy Conservation & of CCER exceeded 1 million tons. campaigns of 12th “Five-Year Plan” and the training activity in northwest Pacific Ocean and South China Sea, among Environmental Protection Service Co., Ltd. were awarded of energy conservation management personnel. It organized which 13 typhoons influenced the regular production and the “Excellent Service Unit of Energy Conservation” in Energy Conservation and Emission promotional activities by the names of Energy Conservation operation. To avoid influence of typhoon, CNOOC timely national petroleum and chemical industry. The Company Reduction Week and National Low Carbon Day. It concentrated in activated emergency plan and applied 779 helicopters, 62 takes “Energy Efficiency Frontrunner” activity as a long- conducting energy audit, “Green Factory”, formulation of Guided by the main ideology of “green development, low ships and 16,732 safety operation staff which successfully term mechanism. The ethylene, methanol and synthetic the construction scheme of energy management centre, carbon and innovation”, CNOOC always advocates green prevent any casualties. ammonia of the affiliated enterprises were each awarded the optimization of energy system, investigation of the boiler and low-carbon production, living and consumption patterns. honourable title of “Energy Efficiency Frontrunner”. CSPC energy conservation potentials, renovation of variable It controls energy consumption of new projects from the Environmental Protection was awarded the title of “Energy Efficiency Frontrunner” in frequency pump and water and electricity conservation of source through exploring energy conservation potentials With the principle of developing a green, low carbon, clean 2016 national ethylene industry and ranked second. circulating water system to promote the overall improving of of the existing facilities, planning energy distribution within and renewable economy in mind, CNOOC makes great the energy conservation. the region and continuous investment of the special With great importance attached to the policy of “focusing efforts to become a “resource-conserving and environment- fund of energy conservation and emission reduction. It on resource development and energy conservation and friendly” company. Based on the control principles “control In 2016, CNOOC was awarded the 4th term of “Excellent promotes the work of energy conservation and emission prioritizing conservation”, and based on the core of after the event is inferior to control during the event, control Energy Conservation and Emission Reduction Enterprise” reduction depending on technical progress. It also uses improving the utilization rate of water resource, CNOOC during the event is inferior to control before the event, and issued by State-owned Assets Supervision and Administration energy conservation and emission reduction management places emphasis on technological progress and innovations, control before the event is inferior to whole process control”, Commission (SASAC) as its 30 affiliated key energy- increases efforts on technology reforms, intensifies CNOOC has continuously improved its environmental consumption units all accomplished the “Ten Thousand supervision management, strengthens wastewater management system, constantly enhanced the whole process Whale sharks visit Weizhou Oilfield of Enterprises” energy conservation task assigned by comprehensive treatment and recycling, and enhances environment management for its projects and incorporated National Development and Reform Commission(NDRC). water resource management in the round. environment protection into its routine production and The Establishment and Implementation of Comprehensive operations. As a result, CNOOC effectively reduces the Energy Conservation Management won the first prize In 2016, CNOOC clarified the water conservation tasks and environmental risk hazards, becomes a “resource-conserving of national petroleum and petrochemical “Excellent targets to all subsidiaries and promoted the implementation and environment-friendly” company and realizes sustainable Achievement of Enterprise Management Modernisation”. of water conservation. CNOOC actively conducted water development as well for the environment. The energy conservation and emission reduction monitoring conservation advocating and strengthened danger centre of the head office was rated by Ministry of Industry awareness of water resource and water conservation, Tackling Climate Change and Information Technology as the only one “Industrial organized a series of water conservation management and Energy Conservation and Green Development Assessment As global warming is increasing, it has become one of the technology measures to realize water-saving, implemented

58 59 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT MANAGEMENT

Zitongmu Village in Weizhou Island. It has carried out the village road reconstruction, centralized construction of waste water and rainwater and environmental protection campaign among others. It has protected the biological resources and ecological environment of Weizhou Island and the surrounding sea area, improved the villagers’ level of awareness of natural environmental protection and made a positive contribution to the construction of beautiful Weizhou Island.

Chinese White Dolphins belong to the first level protected species in China, and are listed in the near threatened species by IUVN. Influenced by human activities, their Release hobby number and diversity are continuously reduced. Their population in Pearl River Estuary and Xiamen appears production technical optimization and continued to decrease efforts to create better ecological conditions for building a Distribution and protection of the finless population differentiation in genetics. CNOOC proposes to make the fresh water consumption for unit product, and saved beautiful China. quantity, breeding migration in the Huanghai Sea and the constructive protection strategies for the protection object valuable water resources through reusing of reclaimed Bohai Sea. The finless porpoise is listed among the Class CNOOC has carried out the three-year project of Bohai Sea of Chinese White Dolphins in the water areas of Fujian, water, sea water desalinization and other measures. CNOOC II Endangered and Protected Wildlife Species of China penaeus orientalis enhancement capacity research. It has Guangdong, Hainan and Guangxi. It comprehensively consumed 84 million tons of fresh water through the year and in Convention on International Trade in Endangered thrice launched comprehensive investigation on Bohai Sea’s masters the information of population quantity and and realized 674,000 tons of conservation. Species of Wild Fauna and Flora, and faces the severe nekon, benthos and plankton, etc., besides embarking on a distribution range of them in China sea area and then living condition under the double pressure of deteriorative voyage of basic productivity survey. Through such extensive defines the potential and key habitats of them. It is planned Ecological Protection ecological environment and overfishing. In order to grasp basic researches, it has determined the evaluation method firstly to take one year’s time to conduct the small population the population dynamics of finless porpoise group and its As a proactive advocate for the protection of marine of penaeus orientalis enhancement capacity based on dynamic monitoring and of them in individual behaviour in the Huanghai Sea and the Bohai Sea, ecological environment, CNOOC always attaches great Ecopath model. Xiamen City, and City, etc. and then complete the CNOOC formulated the constructive strategy of protecting importance to the protection of biodiversity in the area investigation of their distribution range and core habitat. finless porpoise and funds to conduct a 5-year research surrounding the operation zone. Protecting the environment The protection and research of various larga seals in the project. is the Company’s unwavering commitment during all phases Dalian Larga Seal National Nature Reserve has become Nexen assisted in the protection of ancient mankind the characteristic ecological protection project funded historical sites. The protection of biological diversity not only of a project life cycle. In order to maintain a harmonious Research on protection and restoration technology of by CNOOC for four consecutive years during which the refers to the protection of other plants and animals, but also balance between the economic projects and ecological typical coastal zone ecological environment and resources Company conducted more than 30 times animal rescue covers the protection of human’s culture and lifestyle and environment, the Company always makes it a point to in Shandong. The Company has organized to conduct the activities and successfully rescued 11 larga seals and understands the human being’s way of life and influence pre-assess environmental risks, so that it can identify the species selection for key biological resources remediation. one finless porpoise. It assists the construction of Lvshun in the natural environment as a biological population. In an environmentally sensitive targets in the vicinity of the project It researches the key technology of remediation of the Shuangdao Larga Seal Monitoring Station and has archaeological activity in 2016, the archaeologists discovered and avoid environmental risks. coastal wetland vegetation and constructed the science completed the construction of holding pond of larga seals the relics of ancient human activities near the Nexen’s assets popularisation exhibition room of marine ecological In addition, through the platform of CNOOC Marine 3 with volume of 300 m to provide hardware basis for the in British Columbia, Canada. After learning the news, Nexen environmental protection. It carries out further study on Environmental and Ecological Protection Public Welfare protection of larga seals. It also raised awareness on larga immediately sent a team formed by environment experts and the current situation of genetic resources of the biological Foundation, we have actively committed ourselves to the seal protection through releasing activities and popular surface land experts to actively assist the archaeologists remediation species in Shandong typical sea areas to make ecological diversity research and protection project, promoting science campaign at the scenic spots, communities, to unearth and protect the historical sites and was highly the protection policies of coastal wetlands and vegetation. resource restoration and environment improvement in the area fishing zones and school districts. Moreover, it has appraised by the archaeological team. where the project is located and establishing characteristic been continuously carrying out the scientific research of The construction project of eco-village in the beautiful projects, such as “protection of larga seal” and “enhancement investigation and observation of larga seals distribution on Weizhou Island. CNOOC positively supports the healthy and releasing”. In the meanwhile, the Company has positively the ice and larga seal physiological research, among other development of villages in the Weizhou Island, financing and participated in environmental protection compaigns, making activities. planning the layout of environmental protection facilities of

60 61 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT MANAGEMENT

INFORMATIZATION CNOOC continues to adhere to the policy of “application driven by HUMAN RESOURCE CNOOC firmly believes that employees are the most valuable resource business, innovation led by information technology” and actively for its sustainable development and upholds the “people-oriented and PROGRESS implements the innovation-driven development strategy of the enterprise MANAGEMENT caring for employees” concept. The Company fulfills its responsibilities based on the construction principle of “Platform Profound and Application to employees, respects their legal rights and interests, improves their Simplifying”, deepens IT and business integration and conducts a series professional development, improves their working environment, cares for of fruitful achievements in application foundation tamping, “Internet+” their physical and mental health, and promotes the integration of local innovation development, overseas business sharing support, information and foreign employees, so as to realize common development in the security guarantee and other aspects. Company and its employees.

Enhancing Fundamental Capabilities gas consumption business and by completing with its Employee Salary and Benefits cross-business card application construction. Also, 53 gas CNOOC released the “13th Five-Year” informatization The Company adheres to the principle of “gender equality stations of the CNOOC Gas and Power Group implemented planning, raised to put great effort on the construction of and equal pay for equal work”, and treats the staffs equally the system, which made CNOOC the first enterprise which “Interconnected CNOOC” based on the constant promotion without discrimination in terms of recruitment, training, realized the sharing set of retail management system between of “Digital CNOOC”, and actively moved to “Smart CNOOC”. promotion and salary, regardless of race, nationality, faith, gas station and oil station from the group level in the industry. Based on “Two sites Three centers” idea, after four years gender, age, marital status and special legal protection. In the field of terminal sales, CNOOC conducted cooperation of design and construction, five “green energy saving” with the third party internet companies and completed the CNOOC strictly complies with the applicable laws and data centers and campus infrastructure network in Beijing, CNOOC e-commerce platform application construction. policies of the jurisdictions where it operates, and on basis Shanghai, Tianjin and Shenzhen all completed and put into of the principles of market labour management, monetization operation for resource sharing and integration. CNOOC of allocations and socialization of benefits, gradually Staff presence gradually promoted the transformation from traditional shaft- Quickening Overseas Resources Sharing establishes a distribution system which matches the market well to “common service platform” of cloud architecture. Based on successful trial construction and stable operation mechanism and is closely connected to value contribution, In the meantime, the group cloud management platform, in Singapore Asia-Pacific center, CNOOC summarized the insurance and maternity insurance), the Company also and forms a standardized and competitive salary and Domino cooperative office platform and mobile application experience and selected Dubai as the core joint to conduct provides supplemented insurance (personal accident benefits framework. development platform went online successively and the the construction in the Middle East and African region in insurance, commercial supplementary medical insurance, “common service platform” capacity was preliminarily Far East by the local conditions. CNOOC also conducted The Company establishes a comprehensively effective and juvenile children supplementary medical insurance) and verified. The integration of informatization and operation overseas customized version development on call center, employee welfare system, and constantly increases the occupational pension and housing allowance. management business initiated the implementation of operation and maintenance service management ITSM and multiple layers, dimensions and comprehensiveness of CNOOC also provides physical examination, special physical group contract management system and scientific and other systems. employee insurance framework. examination for special types of work, paid leave, difficulty technological management system, promoted the statistical Besides social basic insurance (endowment insurance, assistance, emergency relief, critical illness relief and various system construction based on data analysis and the Safeguard Information System Security medical insurance, employment injury insurance, unemployment other benefits as part of our efforts to help them solve any selection of group financial sharing center, promoted the CNOOC completed shut-off of 116 outlets and fortification worries that employees may have. group fund management system to support the business for of current outlets, which made the on-line behaviors more Staff presence better achievement of group management and control. controllable and secure; through the deployment and By the end of 2016, the workforce reached 106,000. optimization of dynamic password management platform, Promoting “Internet+” Innovation Application CNOOC established cluster disaster recovery structure and Career Development improved the reliability, completed the deployment of head CNOOC promoted the innovation of “Cloud computing, Big CNOOC complies with a scientific talent strategy, treats its offices and of main secondary level unit, carried out the Data, IoT and Mobile” and other new technologies, enabled employees as its wealth, and strives to create a fair and internet and information security risk evaluation on 8 local and enhanced the business by providing private cloud open promotion environment and clear career development area networks, security monitoring on 5 regional internet capability; meanwhile, CNOOC set up mobile application paths. CNOOC has designed three career development outlets and a new round of third-level information system development platform to achieve the mobile access of accesses: management, technology and work, besides security appraisal, conducted on-site inspection on the collaborative OA and other system, and verified the quick establishing a training system of “four in one” with respect to network and information system safety orperation of nearly updating and development ability of mobile applications. selection, training, assessment and promotion & qualification 20 units as well. What’s more, the CNOOC card was extended to natural authentication.

62 63 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT MANAGEMENT

CNOOC adheres to the overall idea of “controlling total promotes exchanges between department at headquarters The Company effectively promotes skill appraisal. We have amount, adjusting structure and improving qualification”, and frontline cadres. CNOOC makes full use of multiple organized the development or revision of test libraries on steadily makes the human resource planning in the 13th opportunities of rotation and exchange, front line training, 12 types of work, laying a solid foundation for training and “Five-Year Plan” period, constructs a dynamic human local secondment and aiding constructions in areas under appraising skilled employees. In the meanwhile, appraisals resource management system, and forms human resources harsh conditions, which select young managers to practice of junior, semi-senior, senior, technician and senior technician policies and systems of strategic planning, leadership and work under harsh conditions and undertake urgent, levels were organized for 70 types of work, with the number management, talent development, employment and hard, dangerous and major tasks and work at the frontline. of appraisals totalling 8,490 person-time. compensation performance. CNOOC realizes full coverage The Company enhances the level of competitive selection The Company attaches great importance to the cultivation of e-HR system which increases the working efficiency. and strengthens inspecting and examination; CNOOC and selection of high-skilled talent by holding technician CNOOC standardizes the recruiting and management of also enhances efforts to train, select, exchange, supervise, innovation training class and organizing skills and innovation employees, strictly controls recruiting quantity and quality, control cadres and hold those in charge accountable, Skill competition exchanges. We actively participated in national and industrial builds a worker transfer platform for employees, and improves the selection and appointment quality of managers innovation leading talent for “Ten-Thousand Talents Program”. skill competition with the outstanding achievements. Therein, promotes reposition and settlement and connection of and maintains the purity and capabilities of leading cadres. It selected technical and skillful experts, as well as 38 people four individuals, including Chen Keying from CNOOC supply and demand for employees in the reorganized units, as the third batch of Headquarters technical experts, and 17 Ltd., Zhanjiang branch, were awarded the title of national effectively utilizing internal human resources. Professional Expertise people as the third batch of skillful experts in the affiliated units technical experts. Moreover, the competitors dispatched by The Company actively participates in the selection of national CNOOC continuously deepens the reform of the cadre of the Head Office. the Company were awarded No.1 individual for two items, and personnel system. The Company founds the head- high-end talents. In 2016, as many as 19 individual candidates No.2 and No.3 individual for one item and second group The Company continues to promote the scientific and office talent leadership group and builds head-office party were recommended for special government allowance, prize in 2016 (the 4th) “Jiake Cup” International Welding Skills technological young talents cultivation project and provide member contact experts system to actively promote the 4 individual candidates for national technical experts, 3 Competition. dual tutors to the first batch of 136 young talents. It organized reform of talent utilization and assessment guarantee candidates for participating in Central Enterprise Outstanding two periods of trainings for them and held five professional mechanism. It increases its efforts for cadre selection and Young Talents Support Plan, 2 candidates for Chinese Skills Employee Training young talent forums of exploration, development, drilling exchanges, pays attention to training of young cadres and Award, and one was selected as a scientific and technological CNOOC actively promotes the learning organization and well completion, offshore engineering, refinery & constructions, and encourages employees to set up the petrochemical and gas power to provide the opportunity for concept of lifelong learning. CNOOC improves the talent the young talents to communicate with the high level experts training system at different levels and stages, broadens Offshore frontline staff presence and rapidly develop them to be professional technical training plan and enlarges training investment systematically, leaders and medium- and high-end technical management creating a platform for capability building and potential talents, so as to realize the strategic succession of talents in development of employees. CNOOC training focuses on the Company. long term training and highlights short term efficiency at The Company reinforces management on occupational the same time. CNOOC adheres to the principle of “up qualification. We improve the certification policies of internal for strategy and down for performance” and continues to occupational qualification, perfect occupational qualification conduct long-term cultivation on key groups. management system, and strictly implement Company’s CNOOC continues to implement Key Training Plan. For Management Rules of Professional Technical Qualification the semi-senior and senior management talents, through as well as 6 supporting detailed rules, constantly improving subdivision of professional talents, CNOOC carries out talent evaluation level. In 2016, 646 individuals were qualified targeted training in rotation; for mid-age and young for the positions of senior technical professional. In terms of management talents, CNOOC carries out off-job training exploration, borehole and drilling and completion operation, for three months, so as to train young management teams 25, 62, 7, 9 and 439 individuals were qualified for senior who are capable of shouldering important tasks; for high- general supervisor and general supervisor, senior project level technological experts, CNOOC comprehensively manager or above level, senior project manager and project arranges professional and technological training sessions in manager and below level positions, respectively.

64 65 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT MANAGEMENT

exploration, development and production and well drilling; CORPORATE Corporate culture is the soul for a company and the power source for the CNOOC also holds Young Scientific Talent Training Session corporate development. In 2015, facing the severe challenges brought to train technological management talents in fields of deep- CULTURE by international oil price slide, CNOOC fully played the leading role of water, unconventional and reservoir geophysics, seismic data corporate culture, enhanced confidence and gathered strength, with the vision of “Energy for All” in mind, on basis of the carrier of “Quality and processing, production technologies, high-temperature and Benefit Year”, CNOOC effectively advanced corporate culture building and high-pressure gas fields and intactness of equipment and fully guaranteed its survival and development. facilities, and improves their core professional technological capabilities and scientific research innovation capabilities; for high-level skill talents, CNOOC holds Comprehensive CNOOC Spirit CNOOC strengthens culture carrier construction, plays the Capabilities Improvement Session of Mid-aged and Young effect of Offshore Oil Industrial Exhibition Hall as “National CNOOC advocates its spirit, sets advanced models, inspires Technicians to improve on-site management skills, innovation The written test of the skill competition Ocean Awareness Educational Base”, and constantly the passion of the whole staff for devotion and practical capabilities and capabilities of “apprentice follow master”. conducts “Opening Day” activities. In addition, CNOOC innovation and shapes great image of the Company. continues to promote “Ocean and People” campus science Average Traing Hours Per Capita employees and specifically implements it in the individual CNOOC dedicatedly compiled CNOOC 2016 Party Building popularization image exhibition and fully completes the （Unit: hour/person） performance evaluation system and training system, so as Annual Report which comprehensively displayed the project of touring exhibitions in five middle high schools and to ensure that professional level and overall capabilities are corporate party building achievements. CNOOC founded primary schools. 2016 年 86 increasing steadily. the “CNOOC E-Party” WeChat enterprise ID covering over 2015 年 81 2,300 frontline party branches in the whole system, pushed Culture Promotion CNOOC implements knowledge management project to 2014 年 88 out many special activities including “A Letter to Party accelerate the knowledge sedimentation and inheritance. Centered on the development of the enterprise, CNOOC Branch Secretary, Yang Hua” and built the “direct train” The Company built and improved training equipment and pushed out a series of external campaigns step by step. The between the Party and the frontline Party branches. CNOOC facilities and the knowledge management system and quantity and quality of reports attained new breakthroughs. also conducted “Frontline Party Branch Work” surveys In 2016, the Company carried out 46,522 training courses, training resources management system including internal and researches and attained rich and detailed first-hand In 2016, CNOOC focused on the themes of “Innovation and with 822,900 person-time, 8,215,376 hours of training and on and external teachers and courses system to realize materials. Development”, pushed out 30 key news reports, promoted knowledge accumulation, experience inheritance and average 86 hours per person, in which the international talent to form multiple climaxes. There were altogether over 3,800 resources sharing. It initiated featured courses development The subsidiaries of CNOOC achieved fruitful results in training was carried out for 14,556 hours per person. plane and internet media reports and 150 TV reports, among and internal tutor training project, collected courses and cultural construction. The deepwater drilling and completion which 63 were CCTV broadcasting news and 7 were CCTV Supported by a training course system with various outstanding tutors in multiple ways based on “CNOOC Great team of Wesrern South China Sea Oil Management Bureau news. CNOOC completed the key news of “Typical State- classifications, grades and systems, for its employees, Courses and CNOOC Great Teachers” competitions which was awarded the 2015 “National Ocean Figure” and Owned Enterprises Reform” of the Propaganda Department CNOOC formulates Individual Development Plan (IDP), rated 40 wide, influential and CNOOC featured courses and the “Front Engineer with impressive stories” in central of the Central Committee of the CPC. Multiple mainstream analyzes comprehensive and professional training needs of trained a professional and experienced internal teachers; enterprises. The team deeds were written into the second central media broadcasted CNOOC in prime time and key CNOOC also explored the way for professional talent series of Front Heroes. And with the opportunity of “Hai pages which caused intense responses. training, built professional course systems and successively Yang Shi You 981” winning “China Quality”, The Company Emergency Drill Experience promoted the professional training system construction in vigorously promotes the “Spirit of Craftsmanship” of The internal news is lively and vivid. Centered on the leadership, purchasing and drilling and completion which excellence pursuing. Meanwhile, the deeds of general two major themes of strict party governance and cost has achieved great training result. research institute and China Asphalt were selected in decreasing and efficiency increasing, China Offshore Oil Spiritual Civilization Heroes in Central Enterprises; CNOOC Press conducted key reports and organized and planned a CNOOC broadens the channels of informatization frogmen participated in the Open Your Door for Good Luck series of deep reports including “Typical Characters for Cost training for employees and introduces various models, show of CCTV and showed great images of CNOOC staff, Decreasing”, “Creativity Survey on Youth Science Research including “Internet+”. The Company actively promotes the which made great advertisement. COSL built “Boatman” Personnel” and “Double Innovations”. CNOOC pushed out construction of “online+offline” “mobile+PC” mixed training culture, CNOOC EnerTech held the fourth “Annual Character” video news, completed media channels and realized sub- models and Constructed E-learning platform. It completed assessment, CNOOC Enterprises Co., Ltd held “Ten Stars” public communication and 3D publicity. the type selection of the online study platform and conducted achievements tour forum, which set examples for the staff. trial run in pilot units.

66 67 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT MANAGEMENT

CNOOC strengthens the application of new media, the Cultural & Sports Activities CORPORATE The development of a company requires strong support from the whole official WeChat of CNOOC successively won “2016 Most society, which, in turn, requires active contributions from companies in CNOOC advocates “Happy Work and Happy Life”. CNOOC Influential New Media of Central Enterprise”, “2015-2016 CITIZENSHIP order to develop. As making full efforts to guarantee energy supplies, enriches employees’ cultural life through various activities. Innovation Award of New Media of China Newspaper” enhancing environment protection and creating economic values, CNOOC The Company has carried out the “Health Embraces always focuses on livelihood and complies with its obligations and and “Top 100 WeChat of Energy Enterprises”. The official CNOOC” health promotion event, actively promoting the responsibilities of a corporate citizenship, promoting social progress with WeChat also ranked No.12 for the WeChat influence ranking idea of health and exercise and enhancing the management its real actions. In 2015, the Company continued to commit to humanitarian among 70 companies in China Newspapers and ranked of physical and mental health of employees; CNOOC has engagements and voluntary service, making joint efforts to build the No.1 among oil industry. The official WeChat of CNOOC first promoted the secondary units to establish Basketball and community with an investment of RMB 136.08 million in 2016. entered Tou Tiao in 2016 and has sent 18 terms by now. Badminton Association, and conducted small-scale and diverse mass cultural and sports activities favoured by staff. Humanitarian Engagement of China Women’s Development Foundation. In 2016, the “drinking- in the schools”, the “beautiful villages” CNOOC actively advocates and adheres to the simultaneous and “small-size water conservancy” engineering construction fulfilment of financial, environmental and social responsibilities. of “Mother Water Cellar” project was implemented. In CNOOC Marine Environmental and Ecological Protection addition, 6 schools in the fixed-point poverty alleviation Public Welfare Foundation is the unified management programme in the Zhuozi County were provided with 6 platform for public welfare programmes, such as charity and solar water purification equipment through “dringing-water environmental protection carried out by CNOOC. We made safety in schools” project to solve the problem of excessive efforts to fixed-point poverty alleviation, caring for students, bacteria in school’s water. special public welfare and other philanthropies.

Since 2003, CNOOC has been supporting the “Cataract CNOOC has made consistent investment in the past 21 Patients Supporting Project” of the Lifeline Express and has years and dedicates to improving living conditions and accumulatively donated nearly RMB 16 million. Two eye centres Beijing staff football match education environment in poverty areas. CNOOC helps were constructed under the assistance of the Company in fixed-point poverty alleviation cities and counties in Hainan Gansu Province and the Inner Mongolian Autonomous Region. Province, Gansu Province, the Inner Mongolia Autonomous They provided services radiating to the cooperative cities and Region and the Tibet Autonomous Region to carry out Xiahe County of Gansu Province and Zhuozi County of the accurate poverty alleviation. By the end of 2016, CNOOC Inner Mongolian Autonomous Region of CNOOC fixed-point has invested poverty alleviation funds of exceeding RMB poverty alleviation programme. The three treatment centres 150 million and dispatched 24 talents for poverty alleviation have provided cataract operations to 17,347 poor cataract accumulately; has invested over RMB 270 million to aid the patients with the reduced operation fee or for free. Tibet Autonomous Region and dispatched 12 managers

accumulately. In 2016, CNOOC continued to support “1+1 Legal Volunteer Programme” implemented by China Legal Aid Foundation in CNOOC, by aiding the construction of Hope Schools, the no-lawyer counties in remote and border areas. Therein, funding needy college students and others, reduced the the Baoting County of Hainan Province received the key financial pressure on students from impoverished families. legal assistance. “CNOOC University Educational Assistance Fund” jointly set CNOOC actively devotes itself into autistic children healing, by CNOOC and China Soong Ching Ling Foundation, has deaf children rehabilitation, baby food aid in poor regions seen operated for 13 years. A total of RMB 40 million has and other fields. On October 20, 2016, “Hearing Rebuilding been invested for funding more than 13,000 needy students Audition Initiation” project held its donation ceremony in in 37 universities. China Hearing and Speech Rehabilitation Center, CNOOC CNOOC continues to support “Mother Water Cellar” project Public Welfare Fund donated RMB 500,000 to China Disable

68 69 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT MANAGEMENT

People Union to subsidize 50 hearing impairment children meetings, partnership activity, regular meeting of consulting Voluntary Services voluntary supporting agriculture, charity sales and community for artificial cochlea implantation surgeries. committee and other means to actively respond to the services, etc. CNOOC, together with the medium and large- CNOOC consistently advocates and promotes voluntary opinions, complaints and suggestions from the community and scale institutions and social media, has launched projects services. In 2016, the Company actively engaged in practically promote the community relationship management. of large-scale survey on maritime consciousness of the Integration into Community various voluntary service activities through Labor Union, In accordance to the requirements in environmental and Chinese youth along with the youth micro-public welfare We constantly carry out the heart-warming projects to Youth League Committee and Women’s Organization. It social influence report, CNOOC Uganda organized and action of “Blue Force, Love Marine”, so as to promote the help communities cope with difficulties, improve the local has utilized various forms to help social disadvantaged conducted the popular environmental and social influence conservation of marine environment. Since 2015, “Blue ecological environment, lead cultural constructions in local groups, popularize maritime knowledge and provide caring reduction projects such as traffic safety campaign, AIDS Force” volunteer service teams have been financed by communities and effectively improve the communities’ living services. Aimed at promoting environmental protection and infectious diseases prevention publicity, sapling CNOOC Marine Environmental and Ecological Protection standards, so as to build a better home. CNOOC establishes and public welfare projects for scientific and development planting and distribution. We set up CNOOC Performance Public Welfare Foundation and have carried out all kinds of the periodic communication with community and listens to and protection of , hundreds of “Blue Force” young Scholarship which has benefited over 300 students. CNOOC micro public welfare activities more extensively. rationalization proposal of local governments and community volunteer service teams and thousands of young volunteers also sponsored CNOOC Amasaza football competitions for residents. In 2016, the Company, taking advantage of its took part in the CNOOC “Blue Force”, which has built the In 2016, CNOOC “Blue Force” continued to adhere to the successive five years, which successfully promoted the local resources, was actively participating in marine rescue on the communication bridge between young staff and enterprise strategy of “serving enterprises and contributing to the sports development and talent cultivation. premise of ensuring the operation safety. COSL participated and between the enterprise and society. society” and drove the voluntary service to standardization, in 22 marine rescue missions, dispatching its ships for 24 CNOOC Southeast Asia built roads for the villages around normalization and branding. It innovated the means of With the goal of establishing harmonious family, mining area times to rescue 17 ships and 33 people. the operations sites to protect fish ponds and offshore voluntary service and developed “Blue Force” youth and the Company, CNOOC encourages the employees passages near the platforms to provide convenient resting voluntary service APP and built the “Internet+” public welfare CSPC has adopted an active public communication to actively participate in the voluntary services and public places for the fishers; it also sponsored 3 village primary and model. In 2016, CNOOC “Blue Force” was selected in the strategy, in addition to the “CSPC Open Day” activity held charity activities. It carried out activities, such as cleaning middle schools to complete their remolding and decoration; Top Ten Voluntary Service Brands of Central Enterprises. in the communities for different objects. It has conducted the beach, campaign of environmental protection, planting conducted 3 terms of training on 90 education workers in 10 the educational support programmes of “Scholarship for of corals, closing to Blue Force, supporting education, Tomorrow”, “Realizing the Gardeners’ Dream”, “English villages to improve education quality; provided skill trainings Corner in the Community” and “Sunshine Classroom”, jointly including cake bakery, marine and cultural cultivation for with functional government departments, schools and other the local fishers and housewives to help the local residents units. Besides, CSPC has proactively conducted the sharing make full use of the local resources and increase income activities of “Traffic Safety Funny Day”, “Defensive Driving through product additional value increasing; donated “Blue Force” volunteers were cleaning the beach Learning Activity”, “Road Safety Patrol Inspection System”, medical facilities and conducted training on related staff etc. for many times, jointly with Daya Bay government and for the hospital around the operations to improve medical petrochemical industrial park. service quality and provided free medical services to the villages; built toilets and public sanitation facilities and etc. Adhering to the concept of “respect, mutual trust and win- win”, CNOOC actively involves into local communities. Nexen continues to provide charitable donations and Through a series of long-term and systemic community voluntary services to Canadian “Anti-Domestic Violence building activities, such as charitable contributions, voluntary Association”, “YWCA Childcare Center”, Calgary Hedge activities and education funding, The Company benefits local Center, Asylum Association and Food Relief Office. Nexen people. It dedicates to leading local economic development also donated USD 65,000 to the communities for community by project investment and provides job opportunities and bus, and USD 250,000 to Canada Western Summer Games. economic benefits for the countries or regions where its Nexen has continued to donate to the Bill Woodward School projects are located, profoundly influencing the livelihood of near the Long Lake Project to expand school buildings and local people. establish scholarship. Nexen donated USD 300,000 in total to the School of Business of University of British Columbia, to The community relationship team of CNOOC Uganda train local economy & management talents; Nexen donated actively shares information with the communities through USD 600,000 to support the project of “Adopt-a-room daily communication, regular visits, special communication Program”, which has benefitted 450 people till now.

70 71 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT MILESTONES 2016

MILESTONES 2016 Date Event

June 27-July 1 President Yang Hua visited UK, France and Netherland and conducted research in Nexen Petroleum UK, met and talked with the high-levels of BP, Tullow, Total, Schlumberger and Shell, and met Lord Price, the State Secretary of Office of Government Commerce and communicated with the Chinese Date Event ambassador in the UK, Liu Xiaoming, on the investment in the UK.

July 14 6 key national oil and gas projects and 2 demonstrative projects in the 12th “Five-Year Plan” key January 8 “Key Technologies and Application for Improving Recovery Efficiency of Offshore Heavy Oil Polymer national oil and gas projects undertaken by CNOOC were inspected and approved by the state and Flooding” recommended by CNOOC won the second prize for National Prize for Progress in Science took the top 3 in offshore project group. and Technology.

July 15 CNOOC ranked class A for successive 12 years and 4 sessions in assessment. February 5 CNOOC signed a strategic Letter of Intent with Baidu.Inc (Beijing). Both parties shall conduct all-

around cooperation like internet information technology and oil and gas business to jointly promote July 22 The fifth Tibet aid project team won “Social Poverty Relief Advanced Team” award in Tibet, which the innovative development of “internet+”. made it the only team won this award among five Tibet aid central enterprises.

February 27 CNOOC Ltd., Zhanjiang Branch signed Letter of Intent with Zhanjiang Government to jointly develop August 9 “Hai Yang Shi You 720” deepwater geological vessel completed the 3D seismic exploration operation Wushi Oilfield group. This is the first time for CNOOC to develop offshore oil and gas fields with a in Barents Sea in the North Pole, enabling China to conduct 3D seismic exploration operation in local government. global seas.

March 29 “Hai Yang Shi You 981” won the second China Quality Award. August 10 CNOOC officially initiated “Management Levels Condensing, Legal Persons Decreasing”, “Zombie Enterprises Disposal” and special poverty enterprises management. April 9 The first core process module of Yamal LNG project constructed by COOEC was shipped and

delivered to the overseas clients. This was the first time for China to export LNG core process September 3-4 Yang Hua attended B20 and conducted broad communications with the delegates on key global module, marking the entrance of “Made in China” in international high-end oil and gas equipment economic issues and economic and financial management. During B20, Yang Hua met the Bob market. Dudley, BP CEO.

April 26 CNOOC Ltd., was selected into the “Top 100 Hong Kong Stocks in HK Listed Companies” for September 23 “ 18-1” self-supported oilfield was put into operation; CNOOC owns 100% equity and acts as successive 6 years. CNOOC ranked No.17 this year and the net profit ranked No.9 in opT 10. operator.

May 3 The construction of two new 160,000 LNG storage tanks in Fujian LNG Terminal was officially September 26 CNOOC completed the rectification for 144 hidden risks in oil and gas pipeline a year in advance, commenced. This was the first big-scale LNG full containment storage tank project completely which was supervised by the State Council. applied with independent technologies for design, construction and management in China.

October 20 CNOOC Marine Environmental and Ecological Protection Public Welfare Fundation donated RMB May 10 CNOOC “Blue Force” was selected into the Top Ten Voluntary Service Brands of Central Enterprises. 500,000 to China Disabled Union to sponsor 50 hearing impairment children for artificial cochlea implantation. June 8 Deepwater drilling and completion team of Western South China Sea Oil Management Bureau was

selected as “2015 Ocean Character”. October 26 CNOOC Gas & Power Group published the information of natural gas infrastructures, marking CNOOC marching the first step to the complete publishing of natural gas infrastructures. June 17 35,000 tons of Australian specification diesel for the first ship in Huizhou Refinery was shipped in

Huizhou Harbor, marking Huizhou Refinery successfully opened the refined oil product high-end November 1 CNOOC and Shell constituted wiht CSPC with 50% of stock was approved by the government for market. capital increase; the Phase II Project of Huizhou Refinery was officially delivered.

72 73 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT GLOSSARY

Date Event GLOSSARY

November 12-20 President Liu Jian visited Indonesia, Singapore and Australia. During that time, he visited the Indonesian Minister of Energy and Mining Ministry, Colin Barnett of Western Australia and other foreign government officers and conducted work communication with Xie Feng, the Chinese Drilling Platform ambassador in Indonesia. Offshore drilling platforms are marine structures used mainly for drilling exploratory wells. Such platforms, generally divided November 15 CNOOC Ltd., won the “Best Environmental Responsibility Award” in “2016 Annual Enterprises into mobile and fixed platforms, are essential for offshore oil & gas exploration and development operations and house drilling, Awards” held by Treasury. power, communications, navigation and other equipment, as well as lifesaving and accommodation facilities.

November 23 CNOOC won the “The Listed Company with the Most Valuable Brand Value” of “Golden Bauhina Heavy Oil Awards” in “Ta Kung Pao Newspaper”. The CNOOC President Yang Hua won the prize of “The Most Heavy oil is highly viscous crude oil that contains a relatively high level of asphaltenes and resins. This usually refers to those Influential Leader of the Listed Company” of “Golden Bauhina Awards” in Ta“ Kung Pao Newspaper”. with ground densities greater than 0.943 and underground viscosities greater than 50 centipoises.

December 12 President Xi Jinping met 300 civilized families who won the “National Civilized Family”; Zhao Yao, who is an employee in the Xijiang Oilfield operation zone in Eastern South China Sea Oil Oil Reservoir Management Bureau, together with his wife Liu Ping, were among these 300 families. This is the smallest unit for the storage of oil. Oil reservoir layer or oil layer in short refers to the porous strata for the storage of oil. Not every part of an oil layer will contain oil. Oil reservoir refers to those independent oil-containing areas within an oil layer. December 18 CNOOC imported 100 million tons of LNG in total for 10 years. Exploratory Well December 27 CNOOC won “2016 China Benefit Corporation” award. Exploratory wells refer to wells drilled within an oil or gas field for acquiring the necessary geological data to determine the existence, delineate the boundaries, and perform industrial evaluations of oil or gas reservoirs. Those drilled during the exploration phase can be further divided into prospecting, preliminary exploration and detailed exploration wells.

Adjustment Well

Adjustment wells refer to scattered or clustered wells drilled, in addition to existing well clusters, for improving the development of oilfields.

Well Logging

Well logging usually refers to geophysical well loggings, in which different forms of well loggers made based on electrical, magnetic, acoustic, thermal, nuclear and other physical principles, enter wells through the use of well logging cables, to allow the ground electrical measuring instruments to record continuously along the well bore the various parameters that change with changes in depth. Underground rock formations, including oil, gas, water, and coal layers and metal deposits, can then be identified through curves representing these parameters.

Fracking

Fracking, also known as hydraulic fracturing, refers to a technique used to create fractures in the oil layer using hydraulic pressure. The process involves the use of a fracking device, to inject a large volume of viscous fluid under high pressure into the oil layer and then fill the resulting fractures with proppants such as quartz sand to increase the permeability of the oil layer and in turn, increase the amount of water injected or oil produced.

74 75 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT GLOSSARY

Oil Spill Response CNOOC Ltd.

Oil spill response is the formulation of plans and adoption of measures to control and prevent oil spills and reduce pollution CNOOC Limited (Hong Kong: 00883, New York: CEO, Toronto: CNU, www.cnoocltd.com). damage, based on the environment and resources in the potential spill sources and waters within the designated sea areas. This sees common use in offshore oil exploration and development activities. COSL

China Oilfield Services Limited (SSE: 601808, HKEx: 02883, www.cosl.com.cn) LNG

Liquefied natural gas or LNG in short refers to the liquid that forms when natural gas extracted from gas fields cools to a COOEC low temperature under high pressure after undergoing the fluid and acid removal, drying and distillation processes. LNG is CNOOC Offshore Oil Engineering Co., Ltd. (SSE: 600583, www.cnoocengineering.com) predominantly methane and is colourless, odourless, non-toxic and non-corrosive. China BlueChemical QHSE China BlueChemical Ltd. (HKEx: 03983, www.chinabluechem.com.cn) The abbreviation QHSE stands for Quality, Health, Safety and Environmental. Established based on the principles of compatibility of similarities and complementarity of differences, and on the basis of the ISO 9001 and ISO 14001 standards, CNOOC Gas & Power Group GB/T 28000 family of standards and SY/T 6276 Petroleum and Natural Gas Industries – Health, Safety and Environmental CNOOC Gas & Power Group Limited (gaspower.cnooc.com.cn) Management System, the QHSE management framework usually refers to the framework that directs and controls the quality, health, safety and environmental aspects of an organisation. CNOOC EnerTech

Coalbed Methane (CBM) CNOOC Energy Technology & Services Limited

Coalbed methane, which is a coal-associated mineral resource and considered an unconventional form of natural gas, refers Oil & Petrochemicals Company to a kind of hydrocarbon gas (predominantly methane) found trapped within coal beds, mainly adsorbed to the surface of coal matrix particles, and partly dispersed in the porosity of coal or dissolved in the coalbed water. CNOOC Oil & Petrochemicals Co., Ltd.

Shale Gas CNOOC and Shell Petrochemicals Company Limited (CSPC)

Shale gas specifically refers to an unconventional form of natural gas found trapped within shale formations. CNOOC and Shell Petrochemicals Company Limited (CSPC)

Tight Gas

Tight gas is an unconventional form of natural gas found in sandstone formations with permeability less than 0.1 millidarcy.

Deepwater Semi-Submersible Drilling Platform

Deepwater semi-submersible drilling platform refers to a semi-submersible drilling platform that can operate in deep waters. Semi-submersible drilling platform, also known as column-stabilised drilling platform, is a kind of mobile drilling platform with small waterplane area and a large part of the floating structure submerged under water.

FPSO

FPSO (Floating Production Storage & Offloading), namely floating production storage & offloading device, which is an oil & gas production device combined with production processing, storage output and livelihood & power supply. Its complex in system and price are far higher than that in oil tanker with same shipping tons. As an important part for marine oil & gas development system, FPSO device constitutes a complete set of production system generally with underwater oil production devices, and becomes a high-tech product among offshore engineering vessels at present.

76 77 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT AGENCY DIRECTORY

CNOOC Oil & Petrochemicals Co., Limited CNOOC Insurance Ltd.

AGENCY DIRECTORY Address: Kaikang CNOOC Mansion, No. 15 Sanqu, Address: Unit 1-3A, 38/F, 148 Electric Road, North Point, Anzhenxili, Chaoyang District, Beijing, P. R. China Hong Kong, P. R. China Post Code: 100029 Fax: 00852-21644878 Fax: 010-84527003

CNOOC International Lease Finance Company CNOOC Ltd. CNOOC Donghai Petroleum Administration China BlueChemical Limited Address: No. 6 Dongzhimenwai Xiaojie, Dongcheng District, Address: No. 25 Chaoyangmenbei Dajie, Dongcheng Bureau Address: Kaikang CNOOC Mansion, No. 15 Sanqu, Beijing, P. R. China District, Beijing, P. R. China Address: Offshore Oil Tower, No. 388 Tongxie Road, Anzhenxili, Chaoyang District, Beijing, P. R. China Post Code: 100027 Post Code: 100010 Changning District, Shanghai, P. R. China Post Code: 100029 Fax: 010-84528731 Fax: 010-64602600 Post Code: 200335 Fax: 010-84527218 Fax: 021-22830040 CNOOC Investment Co., Ltd. CNOOC Research Institute CNOOC Gas & Power Group Co., Ltd. Address: No. 6 Dongzhimenwai Xiaojie, Dongcheng District, Address: CNOOC Building, No. 6, Taiyanggong South China United Coalbed Methane Corporation Ltd. Address: CNOOC Building, No. 6, Taiyanggong South Beijing, P. R. China Street, Chaoyang District, Beijing, P. R. China Address: No. 88 Andingmen Dajie, Dongcheng District, Street, Chaoyang District, Beijing, P. R. China Post Code: 100027 Post Code: 100027 Beijing, P. R. China Post Code: 100027 Fax: 010-84528731 Fax: 010-84523731 Post Code: 100011 Fax: 010-84526583 Fax: 010-64298388 China Ocean Oilfields Services (Hong Kong) CNOOC Bohai Petroleum Administration CNOOC Petrochemical Import & Export Co., Ltd. Limited Bureau China Oilfield Services Limited Address: No. 6 Dongzhimenwai Xiaojie, Dongcheng Address: Room 2507, 25/F, Harcourt House, 39 Gloucester Address: Tower A, Bohai Petroleum Administration Bureau, No. Address: No. 201, Haiyou Avenue, Yanjiao Economic & District, Beijing, P. R. China Road, Wanchai, Hong Kong, P. R. China 2121 Haichuan Road, Binhai New District, Tianjin, P. R. China Development Zone, Sanhe, Hebei Province, P. R. China Post Code: 100027 Fax: 00852-25640309 Post Code: 300459 Post Code: 065201 Fax: 010-84521437 Fax: 022-66501777 Fax: 010-84522133 84522294 84522246 CNOOC Enterprises Co., Ltd. CNOOC Finance Co., Ltd. CNOOC Nanhai West Petroleum Administration Offshore Oil Engineering Co., Ltd. Address: No. 6 Dongzhimenwai Xiaojie, Dongcheng District, Address: No. 25 Chaoyangmenbei Dajie, Dongcheng Beijing, P. R. China Bureau Address: No. 199, 15th Haibin Road, Baoshui District, Tianjin District, Beijing, P. R. China Post Code: 100027 Address: No. 22 Mailbox, Potou District, Zhanjiang, Port, Tianjin, P. R. China Post Code: 100010 Fax: 010-84525020 Guangdong Province, P. R. China Post Code: 300461 Fax: 010-84523878 Post Code: 524057 Fax: 022-59898000 Fax: 0759-3901918 Zhonghai Trust Co., Ltd. CNOOC Energy Technology & Services Limited Address: 36/F, No. 763 Mengzi Road, Huangpu District, CNOOC Nanhai East Petroleum Administration Address: No. 6 Dongzhimenwai Xiaojie, Dongcheng District, Shanghai, P. R. China Bureau Beijing, P. R. China Post Code: 200023 Address: Tower A, CNOOC Building, No. 3168 Houhaibin Post Code: 100027 Fax: 021-63086136 Road (Shenzhen Bay Section), Nanshan District, Shenzhen, Fax: 010-84525111 Guangdong Province, P. R. China Post Code: 518000 Fax: 0755-26683184

78 79 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 CNOOC 2016 ANNUAL REPORT BUSINESS

FEEDBACK

In order to improve the quality of CNOOC Annual Report on an on-going basis, we would like to hear your thoughts, which will form an important basis for us to do better. We hope that you could spare some time to give us your valuable feedback on the report and our work.

Your Information: Name: Company:

Tel: E-mail:

Your Feedback:

1. What is your overall opinion on the report?

□ Very good □ Quite good □ Average □ Quite poor □ Very poor

2. What do you think of the information disclosed in the report?

□ Very abundant □ Quite abundant □ Fair □ Quite little □ Very little

3. What do you think of the quality of the information disclosed in the report?

□ Very high □ Quite high □ Average □ Quite low □ Very low

4. What do you think of the report structure?

□ Very reasonable □ Quite reasonable □ Fair □ Quite poor □ Very poor

5. What do you think of the design of the report layout?

□ Very reasonable □ Quite reasonable □ Fair □ Quite poor □ Very poor

Contact Us: CNOOC Office for Policy Research Address: CNOOC Building, No. 25 Chaoyangmenbei Dajie, Dongcheng District, Beijing 100010, P. R. China Tel: 86 (10) 84523487 Fax: 86 (10) 64602830 E-mail: [email protected]

Designed by Beijing Ideal Media Corp. http://www.bjideal.com

80 81 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 WorldReginfo - 141d18af-e9bf-4fda-9ca5-ac22d2606311 - WorldReginfo

CNOOC 2016 Annual Report District, Beijing 100010, P. R. China District, Beijing CNOOC Office for Policy Research CNOOC Office Address: Dajie, Dongcheng Building, No. 25 Chaoyangmenbei CNOOC E-mail: [email protected] Website: www.cnooc.com.cn BV-COC-010509