On August 27, 2020, China National Petroleum Corporation [hereinafter referred to as the "Company", (Hong Kong Stock Exchange stock code: 0857; New York Stock Exchange depositary stock code: PTR; Shanghai Stock Exchange stock code: 601857)] announced In the first half of 2020, in the face of the severe shrinking demand for oil and gas and chemical products caused by the new crown pneumonia epidemic, and the sharp drop in international oil prices, the company coordinated and promoted epidemic prevention and control, resumption of production, production and operation, and reform and development. Vigorously promote the improvement of quality and efficiency, strictly control costs and capital expenditures, and strive to reduce the losses caused by the epidemic and low oil prices, and maintain the overall smooth operation of the oil and gas industry chain.

Interim performance review

Fully promote the improvement of quality and efficiency, and the overall financial situation is stable. According to International Financial Reporting Standards, in the first half of 2020, the company achieved operating income of 929.045 billion yuan (RMB, the same below), a year-on-year decrease of 22.3%; a net loss attributable to shareholders of the parent company was 29.983 billion yuan, of which the second quarter loss was compared to the first quarter. The business trend is steadily improving. The exploration and production segment achieved an operating profit of 10.351 billion yuan; the refining and chemical segment achieved an operating loss of 10.54 billion yuan, of which the refining business lost 13.644 billion yuan, and the chemical business achieved an operating profit of 3.104 billion yuan; the sales segment achieved an operating loss of 12.892 billion yuan; the natural gas and pipeline segment Realized operating profit of 14.372 billion yuan. The company strictly controls expenses and capital expenditures, and its financial status is generally stable. In the first half of 2020, capital expenditures were 74.761 billion yuan, a year-on-year decrease of 11.0%. Capital expenditures for the whole year of 2020 are expected to be 228.50 billion yuan, a decrease of 23.0% from 2019's 296.776 billion yuan. The board of directors took overall consideration of operating performance, financial status, cash flow, expected income from pipeline reorganization and other factors, and decided to distribute an interim dividend of 0.08742 yuan per share for 2020, with a total dividend of 16.00 billion yuan in return for shareholders.

Highlight the scale-efficient exploration and effectively control the cost. The company continues to strengthen the three-in-one management of investment, reserves and costs, strives to control and reduce investment, strictly control operating costs, and increase reserves through efficiency. In the first half of the year, the company optimized its exploration deployment, and made important discoveries and progress in domestic risk exploration and concentrated exploration. The Tarim Manshen 1 well obtained high-yield oil and gas flow, achieving a major breakthrough in ultra-deep oil and gas exploration in the central basin; Sichuan Pengtan 1, Tarim round exploration 1, A batch of risk exploration wells such as Shatan 2 in Junggar have achieved new breakthroughs and opened up new areas of oil and gas exploration. The overseas oil and gas business made steady progress, and the risk exploration of the Chad project and the rolling exploration of the Kazakhstan PK project made new breakthroughs and new progress. At the same time, continue to do a good job in the management of existing projects in the Middle East, Central Asia, America, Asia-Pacific and other cooperation zones to ensure high-quality and efficient development. In the first half of the year, the company achieved 475 million barrels of crude oil production, a year-on-year increase of 5.2%; marketable natural gas production was 2.15 trillion cubic feet, a year-on-year increase of 9.4%; and oil and gas equivalent production was 834 million barrels, a year-on-year increase of 7.0%. The company continued to strengthen its cost control. Oil and gas operating costs in the first half of the year were US$9.64 per barrel, a year-on-year decrease of 14.0%.

Resolutely implement oil reduction and increase, and strive to increase production of high-efficiency products. The company’s refining and chemical business actively responded to the unfavorable situation of declining market demand and reduced equipment load, optimizing production and operation, market-oriented, optimizing the allocation of crude oil resources, timely adjusting the processing load, and vigorously reducing and increasing oil; continuously optimizing product structure and flexibility Adjust the diesel-gas ratio, strive to increase the production of high-efficiency products, and increase the direct sales rate of chemical products; orderly promote the construction of key projects such as the integration of Guangdong petrochemical refining, Tarim and Changqing ethane to ethylene. In the first half of 2020, the company processed 568 million barrels of crude oil, down 4.9% year-on-year; produced 52.085 million tons of refined oil, down 8.2% year-on-year. The output of chemical products was 13.847 million tons, an increase of 9.5% year-on-year; the output of ethylene increased by 4.0% year-on-year; the output of synthetic resin and synthetic rubber increased by 3.7% and 4.7% respectively.

Make every effort to strengthen fine marketing and improve the value chain efficiency. The company actively responded to the severe situation of shrinking consumption in the refined oil market and high inventories, made every effort to strengthen the connection between production and sales, actively seized the favorable opportunities for resumption of production and spring ploughing, increased product marketing efforts, increased price in place, and strived to promote sales expansion in key areas , To ensure the smooth flow of the back of the refinery and the overall smooth operation of the crude oil industry chain, while optimizing the pace of refined oil export, promoting the integration of domestic and international markets, and improving the overall efficiency of the value chain. In the first half of 2020, the company sold 76.569 million tons of gasoline, kerosene and diesel, of which 48.572 million tons were sold domestically.

Continue to optimize the gas source structure and improve the ability of natural gas terminal sales. The company implements precise policies to reduce procurement costs, develops natural gas terminal markets, further optimizes customer structure, and vigorously improves terminal retail capabilities. According to changes in market demand, it continues to optimize gas source structure, realizes the linkage of gas source and price mechanism, and coordinates and optimizes resource allocation and sales structure. At the same time, continue to strengthen pipeline safety upgrade management to ensure the safe and stable operation of the oil and gas pipeline network.

Future outlook

Looking forward to the second half of the year, although the global epidemic prevention and control situation is still severe, there are still uncertainties in the recovery of the world economy and the recovery of the crude oil market, but with the gradual recovery of domestic economic operations, oil and gas demand will also stabilize. The company will maintain strategic determination, strengthen bottom-line thinking, adhere to high-quality development, follow the corporate governance guidelines of professional development, market-oriented operation, lean management, and integrated coordination, continue to deepen the construction of oil and gas production, supply, storage and marketing systems, and deepen reforms Innovation, pay more attention to green and low-carbon development, pay more attention to digital transformation and intelligent development, pay more attention to value creation, and make every effort to complete the annual production and operation goals and tasks.