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For China National Petroleum Corporation (CNPC), the country’s largest
oil and gas producer, ensuring stable and safe energy supply to fuel
the growth of the Chinese economy is its core social responsibility.

The company in March released its 2007 corporate social responsibility
(CSR) report, its second CSR report after the one in 2006. Comprising
five chapters - energy supply, safety and environment, career
development, public welfare, and features - the report stresses energy security.

CNPC increased its crude production by 1 million tons and natural gas
output by 10 billion cubic meters in 2007. “Last year we added crude
manufacturing capacity of 13.66 million tons, as well as natural gas
production capacity of 10.3 billion cubic meters,” Li Runsheng, assistant
president of CNPC, tells China Business Weekly.

In the upstream sector of oil and gas exploration, last year the
company invested around 100 billion yuan to step up oil exploration. “New
geological reserves of 830 million tons of oil equivalent were found last
year, and natural gas reserves of 429.4 billion cubic meters,” Li says.

In 2007, CNPC announced its biggest oil discovery in 30 years. Jidong
Nanpu Oilfield in Bohai Bay has combined proven, probable and possible
reserves of as much as 1.18 billion tons of oil equivalent.

“Priority must be given to the development of new oilfields as well as
stabilization of output of old ones in order to meet China’s rising
demand for the energy,” Li says.

CNPC also quickened its pace in the downstream sector of oil refining
and petrochemical production. This year the expected operation of four
refineries, each with a processing capacity of 10 million tons or more,
will greatly boost the growth of the company.

The four refineries are located in Dalian, Fushun, Dushanzi and
Guangxi. The first three are being expanded and the last is a new one being
built.

The company in 2007 processed 121.73 million tons of crude oil, up 5.1
percent over a year earlier. Facing fuel shortages in East and South
China in the fourth quarter of last year, CNPC has taken many measures to
increase its supply.

Facing high crude prices on the international market and
government-controlled refined oil prices, eastern and southern regions began to face
shortages in fuel such as gasoline and diesel from November. To ensure
supply, CNPC has improved oil distribution and increased oil imports.

In the fourth quarter of last year, the company saw an increase of 6.9
percent growth in its oil processing.

Clean energy

In line with the government’s efforts to use more clean energy, CNPC
has put more focus on the development of natural gas. The company’s
natural gas production has seen 20 percent growth in three consecutive
years.

The company has started the construction of the second West- to-East
natural gas pipeline, which will mainly carry natural gas from
Turkmenistan and China’s Xinjiang Uygur autonomous region to the Yangtze and
Pearl River deltas, the country’s two most developed regions.

Construction of the 9,102 km gas pipeline, which consists of a main
line and eight sub-lines, will regain an investment of 142.2 billion yuan.

With a designed gas transmission capacity of 30 billion cubic meters
per year, the pipeline would traverse 12 provinces and autonomous regions
before reaching the eastern municipality of Shanghai and southern
Guangdong province.

The company’s first massive project to pipe natural gas from the West
to East China was put into commercial operation at the end of 2004. It
ran from the Tarim Basin of Xinjiang to Shanghai.

With a targeted annual gas transmission capacity of 12 billion cubic
meters, the project has now ensured a stable gas supply for three years.

It has changed the energy structure of Shanghai, China’s industrial
hub, which earlier relied on coal as its main energy.

Statistics show that in the downstream areas of the project, coal
consumption was reduced by over 30 million tons and pollutant emissions by
1.4 million tons.

China has set a target of raising the proportion of natural gas in its
total energy consumption to 5.3 percent in 2010 from 2.8 percent in
2005, amid efforts to curb pollution. The two massive pipelines will
contribute much in attaining this target.

CNPC’s business on new energy also covers coalbed methane, oil shale,
oil sands and renewable energy such as wind and solar power, bio- and
geothermal energy. It will invest 10 billion yuan in building facilities
for new energy production by 2010.

The company will also take advantage of its resources, technology and
funds to closely follow the latest developments in hydrogen energy and
natural gas hydrate.

By Xiao Wan