As an oil company, resources are the foundation of the company. The development of oil and gas is most important to sustainable growth of the company. Maintaining stable growth of oil and gas business offshore China, we moved with our first step to deepwater exploration and made notable progress. By the end of the Eleventh Five-year Plan period, CNOOC will produce 48-50 million tons of oil equivalent offshore China and 20-25 million tons from overseas, which will become a substantial foundation for the company to have an energy supply capacity of 100 million tons of oil equivalent to Chinese market by 2010.

CNOOC Limited is CNOOC’s vehicle engaged in exploration, development, production and marketing of oil and gas. CNOOC Limited was listed in both Hong Kong and New York Stock Exchange in February 2001.

As one of the world’s largest independent company, CNOOC Limited has four major producing areas offshore China, namely, Eastern South China Sea, Western South China Sea, Bohai Bay and East China Sea. In 2006, CNOOC Limited had 50 oil and gas fields in production, 23 independently operated and 27 operated in partnership with international oil companies. It was also the largest offshore oil producer in Indonesia, with 5 fields under production. In addition, CNOOC Limited had equity interest in the NWS project in Australia.

In 2006, CNOOC Limited achieved excellent results in exploration. It had 10 commercial discoveries, adding geological reserves by 200 million cubic meter oil and 140 BCM gas. The company completed appraisal of 6 oil bearing structures, adding proved reserves of 332 million BOE, with replacement ratio at 199%.

The company brought 7 fields into production in the past year, overcoming difficulties caused by frequent typhoons. Production from Bohai Bay reached 15 million cubic meters and Eastern South China Sea pumped out 10 million cubic meters of oil for the 10th consecutive year, making them two major energy-producing sites in China.

CNOOC Limited substantially expanded its worldwide business in the past year. Its business is located in the Asia and Pacific Rim, Africa and North America. It produced 40.33 million tons of oil equivalent in China and had net production of 5.57 million tons from overseas. At the end of 2006, it had net proved reserves of 2.53 billion BOE, including 418 million BOE from its overseas assets.

Acquisitions helped CNOOC Limited to quickly increase its overseas reserves and production. It acquired 45% equity interests of OML 130 in Nigeria with USD2.27 billion in cash, and will acclaim net production of 8 million tons when the oilfield reaches peak production.

CNOOC Limited realized aggressive expansion of overseas business, building up potential for long-term growth. It has established presence in 10 countries.

Thanks to its transparent corporate governance, strong profitability and growth potential, CNOOC Limited has received wide recognition in international capital market. In 2006, it successfully issued new shares and USD 2 billion corporate bonds, the largest financing activity since its public listing. By the end of 2006, the share price of CNOOC Limited had increased by 510% as compared with IPO and its market capitalization reached HK$ 320.2 billion.

CNOOC Limited operates to international standards and makes precise information disclosure timely. It has been awarded the Best Managed Chinese Company by the magazine Finance Asia for six consecutive years, and was selected as the Outstanding Energy Supplier by Capital Magazine.