20-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 20-F

(Mark One)

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

or

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2017.

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

or

☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report                     

For the transition period from                      to                     

Commission File Number 1-15006

(Exact name of Registrant as specified in its charter)

PetroChina Company Limited

(Translation of Registrant’s name into English)

The People’s Republic of China

(Jurisdiction of incorporation or organization)

9 Dongzhimen North Street

Dongcheng District, Beijing 100007

The People’s Republic of China,

(Address of principal executive offices)

Wu Enlai

Telephone number: 8610 59986270

Facsimile number: 8610 62099557

Email address: jh_dong@petrochina.com.cn

Address: 9 Dongzhimen North Street, Dongcheng District, Beijing 100007, The People’s Republic of China

(Name, telephone, e-mail and/or facsimile number and address of registrant’s contact person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of Each Class	Name of Each Exchange on Which Registered
American Depositary Shares, each representing 100 H Shares, par value RMB1.00 per share* H Shares, par value RMB1.00 per share	New York Stock Exchange, Inc. New York Stock Exchange, Inc.**

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

A Shares, par value RMB1.00 per share***	161,922,077,818(1)
H Shares, par value RMB1.00 per share	21,098,900,000****

(1) Includes 151,088,693,528 A Shares held by CNPC and 10,833,384,290 A Shares held by the public shareholders.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☒    No  ☐

If this is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    Yes  ☐    No  ☒

Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) or the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☐    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large Accelerated Filer  ☒                Accelerated Filer  ☐                Non-Accelerated Filer  ☐                Emerging Growth company  ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.  ☐

The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

            ☐  U.S. GAAP ☒  International Financial Reporting Standards as issued by the International Accounting Standards Board ☐  Other            

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.    Item 17  ☐    Item 18  ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    Yes  ☐    No  ☐

*	PetroChina’s H Shares are listed and traded on The Stock Exchange of Hong Kong Limited.
**	Not for trading, but only in connection with the registration of American Depository Shares.
***	PetroChina’s A Shares became listed on the Shanghai Stock Exchange on November 5, 2007.
****	Includes 789,355,600 H Shares represented by American Depositary Shares.

Table of Contents

			Page
Certain Terms and Conventions				1
Forward-Looking Statements				5
		Part I
Item 1	—	Identity of Directors, Senior Management and Advisors		7
Item 2	—	Offer Statistics and Expected Timetable		7
Item 3	—	Key Information		7
		Exchange Rates		7
		Average Noon Buying Rates		7
		Selected Financial Data		8
		Risk Factors		10
Item 4	—	Information on the Company		17
		Introduction		17
		Exploration and Production		20
		Refining and Chemicals		29
		Marketing		33
		Natural Gas and Pipeline		36
		Competition		38
		Environmental Matters		40
		Legal Proceedings		41
		Properties		41
		Intellectual Property		41
		Regulatory Matters		42
Item 4A	—	Unresolved Staff Comments		49
Item 5	—	Operating and Financial Review and Prospects		49
		General		49
		Operating Results		53
		Liquidity and Capital Resources		62
		Off-Balance Sheet Arrangements		67
		Long-Term Contractual Obligations and Other Commercial Commitments and Payment Obligations		67
		Research and Development		68
		Trend Information		69
		Other Information		71
Item 6	—	Directors, Senior Management and Employees		71
		Directors, Senior Management and Supervisors		71
		Compensation		82
		Board Practices		83
		Employees		85
		Share Ownership		85
Item 7	—	Major Shareholders and Related Party Transactions		85
		Major Shareholders		85
		Related Party Transactions		86
		Interests of Experts and Counsel		88
Item 8	—	Financial Information		89
		Financial Statements		89
		Dividend Policy		89
		Significant Changes		90
Item 9	—	The Offer and Listing		90
		Nature of the Trading Market and Market Price Information		90
Item 10	—	Additional Information		91
		Memorandum and Articles of Association		91

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			Page
		Material Contracts		92
		Foreign Exchange Controls		92
		Taxation		92
		Documents on Display		98
Item 11	—	Quantitative and Qualitative Disclosures about Market Risk		99
Item 12	—	Description of Securities other than Equity Securities		103
		Part II
Item 13	—	Defaults, Dividends Arrearages and Delinquencies		103
Item 14	—	Material Modifications to the Rights to Security Holders and Use of Proceeds		103
Item 15	—	Controls and Procedures		104
Item 16A	—	Audit Committee Financial Expert		105
Item 16B	—	Code of Ethics		106
Item 16C	—	Principal Accountant Fees and Services		106
Item 16D	—	Exemptions from Listing Standards for Audit Committees		106
Item 16E	—	Purchases of Equity Securities by the Issuer and Affiliated Purchasers		107
Item 16F	—	Change in Registrant’s Certifying Accountant		107
Item 16G	—	Corporate Governance		107
Item 16H	—	Mine Safety Disclosure		109
		Part III
Item 17	—	Financial Statements		109
Item 18	—	Financial Statements		109
Item 19	—	Exhibits		109

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CERTAIN TERMS AND CONVENTIONS

Conventions Which Apply to this Annual Report

Unless the context otherwise requires, references in this annual report to:

• “CNPC” or “CNPC group” are to our parent, China National Petroleum Corporation and its affiliates and subsidiaries, excluding PetroChina, its subsidiaries and its interests in long-term investments, and where the context refers to any time prior to the establishment of CNPC, those entities and businesses which were contributed to CNPC upon its establishment.

• “PetroChina”, “we”, “our”, “our company”, “the Company” and “us” are to: PetroChina Company Limited, a joint stock company incorporated in the People’s Republic of China with limited liability and its subsidiaries and branch companies.

• “PRC” or “China” are to the People’s Republic of China, but does not apply to its Hong Kong, Macau and Taiwan for purposes of this annual report.

We publish our consolidated financial statements in Renminbi or RMB. In this annual report, IFRS refers to International Financial Reporting Standards as issued by the International Accounting Standards Board.

Conversion Table

1 barrel-of-oil equivalent	= 1 barrel of crude oil	= 6,000 cubic feet of natural gas
1 cubic meter	= 35.315 cubic feet
1 ton of crude oil	= 1 metric ton of crude oil	= 7.389 barrels of crude oil (assuming an API gravity of 34 degrees)

Certain Oil and Gas Terms

Unless the context indicates otherwise, the following terms have the meanings shown below:

“acreage” The total area, expressed in acres, over which an entity has interests in exploration or production. Net acreage is the entity’s interest, expressed in acres, in the relevant exploration or production area.

“condensate” Light hydrocarbon substances produced with natural gas that condense into liquid at normal temperatures and pressures associated with surface production equipment.

“crude oil” Crude oil, including condensate and natural gas liquids.

“developed reserves” Under the reserves rules of the Securities and Exchange Commission, or SEC, developed reserves are reserves of any category that can be expected to be recovered:

(i) through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and

(ii) through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well.

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“development cost” For a given period, costs incurred to obtain access to proved reserves and to provide facilities for extracting, treating, gathering and storing the oil and gas.

“finding cost” For a given period, costs incurred in identifying areas that may warrant examination and in examining specific areas that are considered to have prospects of containing oil and gas reserves, including costs of drilling exploratory wells and exploratory-type test wells. Finding cost is also known as exploration cost.

“lifting cost” For a given period, costs incurred to operate and maintain wells and related equipment and facilities, including applicable operating costs of support equipment and facilities and other costs of operating and maintaining those wells and related equipment and facilities. Lifting cost is also known as production cost.

“natural gas liquids” Hydrocarbons that can be extracted in liquid form during natural gas production. Ethane and pentanes are the predominant components, with other heavier hydrocarbons also present in limited quantities.

“offshore” Areas under water with a depth of five meters or greater.

“onshore” Areas of land and areas under water with a depth of less than five meters.

“primary distillation capacity” At a given point in time, the maximum volume of crude oil a refinery is able to process in its basic distilling units.

“proved reserves” Under the SEC reserves rules, proved reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible — from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations — prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.

(i) The area of the reservoir considered as proved includes:

(A) The area identified by drilling and limited by fluid contacts, if any, and (B) Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible oil or gas on the basis of available geoscience and engineering data.

(ii) In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons (LKH) as seen in a well penetration unless geoscience, engineering, or performance data and reliable technology establishes a lower contact with reasonable certainty.

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(iii) Where direct observation from well penetrations has defined a highest known oil (HKO) elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering, or performance data and reliable technology establish the higher contact with reasonable certainty.

(iv) Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when:

(A) Successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and (B) The project has been approved for development by all necessary parties and entities, including governmental entities.

(v) Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.

“reserve-to-production ratio” For any given well, field or country, the ratio of proved reserves to annual production of crude oil or, with respect to natural gas, to wellhead production excluding flared gas.

“sales gas” Marketable production of gas on an “as sold” basis, excluding flared gas, injected gas and gas consumed in operations.

“undeveloped reserves” Under the SEC reserves rules, undeveloped reserves are reserves of any category that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion.

(i) Reserves on undrilled acreage shall be limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances.

(ii) Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances, justify a longer time.

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(iii) Under no circumstances shall estimates for undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, or by other evidence using reliable technology establishing reasonable certainty.

“water cut” For a given oil region, the percentage that water constitutes of all fluids extracted from all wells in that region.

References to:

• BOE is to barrels-of-oil equivalent,

• Mcf is to thousand cubic feet, and

• Bcf is to billion cubic feet.

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FORWARD-LOOKING STATEMENTS

This annual report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. These forward-looking statements are, by their nature, subject to significant risks and uncertainties. These forward-looking statements include, without limitation, statements relating to:

• the amounts and nature of future exploration, development and other capital expenditures;

• future prices and demand for crude oil, natural gas, refined products and chemical products;

• development projects;

• exploration prospects;

• reserves potential;

• production of oil and gas and refined and chemical products;

• development and drilling potential;

• expansion and other development trends of the oil and gas industry;

• the planned development of our natural gas operations;

• the planned expansion of our refined product marketing network;

• the planned expansion of our natural gas infrastructure;

• the anticipated benefit from the acquisition of certain overseas assets from CNPC, our parent company;

• the plan to continue to pursue attractive business opportunities outside China;

• our future overall business development and economic performance;

• our anticipated financial and operating information regarding, and the future development and economic performance of, our business;

• our anticipated market risk exposure arising from future changes in interest rates, foreign exchange rates and commodity prices; and

• other prospects of our business and operations.

The words “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “seek”, “will” and “would” and similar expressions, as they related to us, are intended to identify a number of these forward-looking statements.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will occur in the future and are beyond our control. The forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance. Actual results may differ materially from information contained in the forward-looking statements as a result of a number of factors, including, without limitation, the risk factors set forth in this annual report and the following:

• fluctuations in crude oil and natural gas prices;

• failure to achieve continued exploration success;

• failures or delays in achieving production from development projects;

• continued availability of capital and financing;

• acquisitions and other business opportunities that we may pursue;

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• general economic, market and business conditions, including volatility in interest rates, changes in foreign exchange rates and volatility in commodity markets;

• liability for remedial actions under environmental regulations;

• the actions of competitors;

• wars and acts of terrorism or sabotage;

• changes in policies, laws or regulations of the PRC, including changes in applicable tax rates;

• the other changes in global economic and political conditions affecting the production, supply and demand and pricing of crude oil, refined products, petrochemical products and natural gas; and

• the other risk factors discussed in this annual report, and other factors beyond our control.

You should not place undue reliance on any forward-looking statements.

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PART I

Item 1 — IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

Not applicable. However, see “Item 6 — Directors, Senior Management and Employees — Directors, Senior Management and Supervisors” and “Item 16C — Principal Accountant Fees and Services”.

Item 2 — OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

Item 3 — KEY INFORMATION

Exchange Rates

The following table sets forth the high and low noon buying rates between Renminbi and U.S. dollars for each month during the previous six months and the most recent practicable date:

	Noon Buying Rate(1)
	High		Low
	(RMB per US$)
October 2017		6.6533		6.5712
November 2017		6.6385		6.5967
December 2017		6.6210		6.5063
January 2018		6.5263		6.2841
February 2018		6.3471		6.2649
March 2018		6.3565		6.2685
April 2018 (ending through April 20)		6.3045		6.2655

(1) The exchange rates reflect the noon buying rates as set forth in the H.10 statistical release of the Federal Reserve Board. On April 20, 2018, the exchange rate was RMB6.2945 to US$1.00.

Average Noon Buying Rates⁽¹⁾

The following table sets forth the average noon buying rates between Renminbi and U.S. dollars for each of 2013, 2014, 2015, 2016 and 2017, calculated by averaging the noon buying rates on the last day of each month during the relevant year:

	Average Noon Buying Rate(1)
	(RMB per US$)
2013		6.1412
2014		6.1701
2015		6.2869
2016		6.6549
2017		6.7350

(1) The exchange rates reflect the noon buying rates as set forth in the H.10 statistical release of the Federal Reserve Board.

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Selected Financial Data

Historical Financial Information

You should read the selected historical financial data set forth below in conjunction with our consolidated financial statements and the notes and “Item 5 — Operating and Financial Review and Prospects” included elsewhere in this annual report. The selected consolidated statement of comprehensive income (except for ADS data) and cash flow data for the years ended December 31, 2015, 2016 and 2017 and the selected consolidated statement of financial position data as of December 31, 2016 and 2017 set forth below are derived from our audited consolidated financial statements included elsewhere in this annual report. The selected consolidated statement of comprehensive income data (except for ADS data) and cash flow data for the years ended December 31, 2013 and 2014 and the selected consolidated statement of financial position data as of December 31, 2013, 2014 and 2015 set forth below are derived from our audited financial statements not included in this annual report. Our consolidated financial statements were prepared in accordance with IFRS as issued by the International Accounting Standards Board. The financial information included in this section may not necessarily reflect our results of operations, financial position and cash flows in the future.

	As of or for the Year Ended December 31,
	2013			2014			2015			2016			2017
	RMB			RMB			RMB			RMB			RMB
	(In millions, except for per share, per ADS data and percentages)
Consolidated Statement of Comprehensive Income Data
Revenue		2,258,124			2,282,962			1,725,428			1,616,903			2,015,890
Total operating expenses		(2,069,482	)		(2,113,129	)		(1,646,176	)		(1,556,268	)		(1,948,168	)
Profit from operations		188,642			169,833			79,252			60,635			67,722
Profit before income tax expense		178,063			156,759			57,815			45,140			53,089
Income tax expense		(35,789	)		(37,731	)		(15,726	)		(15,768	)		(16,296	)
Profit for the year		142,274			119,028			42,089			29,372			36,793
Attributable to:
Owners of the Company		129,599			107,172			35,517			7,857			22,798
Non-controlling interests		12,675			11,856			6,572			21,515			13,995
Basic and diluted earnings per share attributable to owners of the Company(1)		0.71			0.59			0.19			0.04			0.12
Basic and diluted net earnings per ADS(2)		70.81			58.56			19. 41			4.29			12.46
Consolidated Statement of Financial Position Data
Total current assets		430,953			391,308			349,344			381,665			425,162
Total non-current assets		1,911,157			2,014,165			2,044,500			2,014,986			1,979,450
Total assets		2,342,110			2,405,473			2,393,844			2,396,651			2,404,612
Total current liabilities		645,489			579,829			471,407			499,263			576,667
Total non-current liabilities		426,686			507,863			578,403			524,653			446,626
Total liabilities		1,072,175			1,087,692			1,049,810			1,023,916			1,023,293
Equity attributable to owners of the Company		1,132,735			1,175,894			1,179,716			1,189,024			1,193,520
Non-controlling interests		137,200			141,887			164,318			183,711			187,799
Total equity		1,269,935			1,317,781			1,344,034			1,372,735			1,381,319
Other Financial Data
Dividend declared and proposed per share		0.32			0.26			0.09			0.06			0.13
Dividend declared and proposed per ADS		31.87			26.35			8.73			5.93			13.00
Capital expenditures		318,696			291,729			202,238			172,386			216,227
Return on net assets (%)(3)		11.4			9.1			3.0			0.7			1.9
Consolidated Statement of Cash Flow Data
Net cash flows from operating activities		288,529			356,477			261,312			265,179			366,655
Net cash flows used for investing activities		(266,510	)		(290,838	)		(215,879	)		(175,887	)		(243,546	)
Net cash flows used for financing activities		(12,239	)		(44,312	)		(45,439	)		(67,007	)		(94,725	)

(1) As of December 31, 2013, 2014, 2015, 2016 and 2017, respectively, basic and diluted earnings per share were calculated by dividing the profit attributable to owners of the Company by 183.021 billion, the total number of shares outstanding in each of these financial years.

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(2) Each ADS represents 100 H Shares. The basic and diluted earnings per ADS were calculated with the same method as that used for the calculation of the basic and diluted earnings per share.

(3) Return on net assets is calculated as “Profit for the year attributable to owners of the Company” divided by “Equity attributable to owners of the Company”.

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Risk Factors

Our business is primarily subject to various changing competitive, economic and social conditions. Such changing conditions entail certain risks, which are described below.

Risks Related to Macro Economic Conditions

Our operations may be adversely affected by international and domestic economic conditions. As the oil and gas industry is sensitive to macro-economic trends, oil and gas prices tend to fluctuate along with changes in macro-economic conditions. We may experience pricing pressure on our refined products in recessionary periods, which would have an adverse effect on our profitability. In 2017, the domestic economy was undergoing transformation and adjustment, which affected the demand for certain of our products. These factors may also lead to intensified competition for market share, with consequential potential adverse effects on sales volumes. Inflation may lead to increase in our operating costs. Notwithstanding the measures taken by the PRC government to control inflation, China may experience an increase in inflation in the future and our operating costs may become higher than anticipated. The financial and economic situation may also have a negative impact on third parties with whom we do, or may do, business. Any of these factors may adversely affect our financial condition, results of operations and liquidity.

Risks Related to Competition

The oil, gas and petrochemicals industries are highly competitive. There is strong competition, both within the oil and gas industry and with other industries, in supplying the fuel needs of commercial, industrial and residential markets. In recent years, with further diversification of the market players in China’s petroleum and petrochemical industry, we have been facing increasingly intense competition from privately-owned companies, foreign-invested enterprises and other state-owned enterprises that recently entered the refinery, chemical, sales and oil and gas service sectors. In addition, the rapid development of unconventional oil and gas resources, new energy sources and new products also poses competition with the conventional energy and petrochemical industries. Competition puts pressure on product prices, affects oil products marketing and requires continuous management focus on identifying new trends, reducing unit costs and improving efficiency. The implementation of our growth strategy requires continued technological advances and innovation, including advances in exploration, production, refining, petrochemicals manufacturing technology and advances in technology related to energy usage. Our performance could be impeded if competitors developed or acquired intellectual property rights to technology that we required or if our innovation lagged the industry.

The Eastern and Southern regions of China have a higher demand for refined products and chemical products than the Western and Northern regions. Although we have strived to increase our refinery capacity in the Southern regions of China over recent years, most of our refineries and chemical plants are located in the Northeastern and Northwestern regions of China. We incur relatively higher transportation costs for delivery of our refined products and chemical products to certain areas of the Eastern and Southern regions from our refineries and chemical plants in Western and Northern China. We face strong competition from other traditional domestic oil companies, local independent refineries and other competitors. As a result, we expect that we will continue to encounter difficulty in increasing our sales of refined products and chemical products in these regions.

Risks Related to Outbound Investments and Trading

We are subject to various political, legal and regulatory environments in foreign developing countries where we operate, some of which are known to be unstable and differ in certain significant respects from those prevailing in developed countries. The main factors affecting our outbound investments include unstable political situations, unstable tax policies and unstable regulatory regimes. CNPC, our controlling

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shareholder, and its affiliates and subsidiaries may choose to undertake, without our involvement, overseas investments, operations and trading in the oil and gas industry, including certain exploration and production of oil and gas, refining, transportation, trading, engineering construction and technical services, operations of pipelines and liquefied natural gas, or LNG projects, or other business activities in certain countries or with certain entities that are subject to U.S. sanctions, including Iran, Cuba, Syria, Myanmar, Russia and Venezuela.

Since July 2014, the United States has adopted economic sanctions against certain Russian persons and entities, including various entities operating in the financial, energy and defense sectors, such as Rosneft, Gazprom, OAO Novatek and Yamal LNG. These sanctions prohibit U.S. persons from transacting in, providing financing for or otherwise dealing in debt issuance by certain of these entities, or restrict exports and transfer of technologies to certain of these entities.

CNPC had certain pre-existing trading and investment relationships with some of these sanctioned Russian entities. For example, CNPC entered into a long-term agreement with Rosneft to import crude oil from Russia in June 2013 and a long-term agreement with Gazprom to import natural gas from Russia in May 2014. CNPC has resold, and will for the foreseeable future resell, all or a substantial portion of the imported crude oil from Rosneft under the crude oil agreement to us. CNPC also indirectly holds 20% equity interest in OAO Yamal LNG, which is a subsidiary of OAO Novatek, another sanctioned Russian entity. In May 2014, we entered into a long-term LNG import agreement with a subsidiary of OAO Yamal LNG to import LNG from Russia.

In August 2017, the United States imposed economic sanctions against the Government of Venezuela and certain state-owned entities, including Petroleos de Venezuela, S.A. (“PdVSA”). These sanctions prohibit U.S. persons from transacting in, providing financing for or otherwise dealing in “new debt” issued by these entities on or after August 25, 2017, with certain exceptions for short-term debt. Neither CNPC nor PetroChina purchased such new debt securities issued by the Government of Venezuela or by PdVSA, nor did they provide any assistance to third parties in this regard. CNPC has longstanding trading and investment activities in Venezuela. In 2017, based on certain pre-existing contract obligations, we purchased refined oil from PdVSA for resale and we sold propane to PetroMar A.V.V., which is a subsidiary of PdVSA. Our revenue generated from such dealings accounted for approximately 0.3% of our total revenue in 2017. In 2008, CNPC Exploration and Development Company Limited (“CNPC E&D”), a joint venture held as to 50% by us and 50% by a wholly-owned subsidiary of CNPC, acquired 40% stake in the Carabobo block in Monagas State, Venezuela. The other 60% stake of the block is held by PdVSA, which also serves as the operator of the block. The block produces and sells heavy oil. For the year ended December 31, 2017, the share of profit generated from the block accounted for approximately 1.4% of our total profit. CNPC E&D currently does not plan to discontinue the business or dispose of the interest in this block.

We closely monitor the possible impacts of U.S. sanctions, including sanctions against these Russian and Venezuelan entities which have trading or investment relationships with CNPC or us. We do not believe that our activities, nor those of CNPC, with these entities are in violation of applicable economic sanctions administered by the United States. However, we cannot assure you that current or future regulations or developments related to economic sanctions will not have a material adverse impact on our business or reputation. Certain U.S. based investors may not wish to invest and have proposed or adopted divestment or similar initiatives regarding investments in companies that do business with countries and entities that are subject to U.S. sanctions. These investors may not wish for CNPC or us to make investments or conduct activities in the countries or with the entities that are the subject of U.S. sanctions and may divest their investment in us because of our relationship with CNPC and its investments and activities in those countries or with those entities that are the subject of U.S. sanctions. As a result, the trading prices of our ADSs may be adversely affected.

In July 2012, the U.S. Treasury Department’s Office of Foreign Assets Control, OFAC, added Bank of Kunlun Co., Ltd., or Kunlun Bank, an affiliate of our company due to common control by CNPC, to its “List of Foreign Financial Institutions Subject to Part 561” pursuant to the Comprehensive Iran Sanctions,

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Accountability, and Divestment Act of 2010. OFAC reported that Kunlun Bank provided financial services to at least six Iranian banks that were on OFAC’s sanctions list during 2012. These financial services included holding accounts, making transfers and paying letters of credit on behalf of the designated banks. Kunlun Bank has not informed us of the revenue and profit it generated from such activities in relation to Iran or whether it will discontinue such activities. Our company has no involvement in or control over such activities of Kunlun Bank or CNPC and CNPC subsidiaries and affiliates, and we have never received any revenue or profit derived from these activities.

Risks Related to Government Regulation

Our operations, like those of other PRC oil and gas companies, are subject to extensive regulations and control by the PRC government. These regulations and control affect many material aspects of our operations, such as exploration and production licensing, industry-specific and product-specific taxes and fees and environmental and safety standards. As a result, we may face significant constraints on our ability to implement our business strategies, to develop or expand our business operations or to maximize our profitability. Our business may also be affected by future changes in certain policies of the PRC government with respect to the oil and gas industry.

Currently, the PRC government must approve the construction and major renovation of significant refining and petrochemical facilities as well as the construction of significant crude oil, natural gas and refined product pipelines and storage facilities. We presently have several significant projects pending approval from the relevant government authorities and will need approvals from the relevant government authorities in connection with several other significant projects. We do not have control over the timing and outcome of the final project approvals.

Because PRC laws, regulations and legal requirements dealing with economic matters continue to evolve, and because of the limited volume of published judicial interpretations and the non-binding nature of prior court decisions, the interpretation and enforcement of these laws, regulations and legal requirements involve some uncertainty. Because the PRC Company Law is different in certain important aspects from company laws in the United States, Hong Kong and other common law jurisdictions, and because the PRC securities laws and regulations are still at a stage of development, you may not enjoy the shareholders’ protections that you may be entitled to in other jurisdictions.

Risks Related to Controlling Shareholder

As of December 31, 2017, CNPC beneficially owned approximately 82.71% of our share capital. This ownership percentage enables CNPC to elect our entire board of directors without the concurrence of any of our other shareholders. Accordingly, CNPC is in a position to:

• control our policies and management affairs;

• subject to applicable PRC laws and regulations and provisions of our articles of association, affect the timing and amount of dividend payments and adopt amendments to certain of the provisions of our articles of association; and

• otherwise determine the outcome of most corporate actions and, subject to the regulatory requirements of the jurisdictions in which our shares are listed, cause our company to effect corporate transactions without the approval of minority shareholders.

CNPC’s interests may sometimes conflict with those of some or all of our minority shareholders. We cannot assure you that CNPC, as our controlling shareholder, will always vote its shares in a way that benefits our minority shareholders.

In addition to its relationship with us as our controlling shareholder, CNPC by itself or through its affiliates also provides us with certain services and products necessary for our business activities, such as

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construction and technical services, production services, materials supply services, social services and financial services. The interests of CNPC and its affiliates as providers of these services and products to us may conflict with our interests.

Risks Related to Pricing and Exchange Rate

Our operations are affected by the volatility of prices for crude oil, refined products and natural gas. We set our crude oil median prices monthly based on the international trading prices for crude oil.

In recent years, international prices for crude oil have declined substantially in response to changes in global and regional economy, politics and supply and demand for crude oil. In 2017, international crude oil prices increased but still remained at a low level in general. We do not have, and will not have, control over factors affecting international prices for crude oil. Fluctuations in crude oil prices have a significant impact in our results of operations. A decline in crude oil prices may reduce revenues from, and may result in a loss in, our exploration and production segment. Further, if crude oil prices remain at a low level for a prolonged period, our company has to determine and estimate whether our oil and gas assets may suffer impairment and, if so, the amount of the impairment. An increase in crude oil prices may, however, increase the production costs of refined products reduce demand for our products and affect our operating profits.

Since 2008, the PRC government has gradually improved its refined oil pricing mechanism. When there is a change in the average crude oil price in the international market during a given time period, the PRC government can adjust refined oil prices. When international crude oil price experiences sustained increases or becomes significantly volatile, the PRC government may increase its control over the refined oil prices. As a result, the regulation on refined product prices by the PRC government may reduce our profit and cause our refining assets to suffer impairment.

We negotiate the actual settlement price with natural gas users within the ceiling of citygate price permitted by the PRC government. When the price ceiling set by the government is lower than the international natural gas price, the cost of our imported natural gas will be higher than the sales price of our natural gas, which may reduce our revenues and profit, or result in losses, cause our natural gas assets to suffer impairment.

We receive most of our revenues in Renminbi. A portion of our Renminbi revenues must be converted into other currencies to meet our foreign currency obligations. The existing foreign exchange limitations under the PRC laws and regulations could affect our ability to obtain foreign exchange through debt financing, or to obtain foreign exchange for capital expenditures. The value of Renminbi against U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in China’s political and economic conditions. The PRC government has implemented a floating exchange rate system to allow the value of the Renminbi to fluctuate within a regulated band based on market supply and demand and by reference to a basket of foreign currencies. Because most of our imports of crude oil, equipment and other materials and our outbound investments are settled in foreign currencies, the exchange rates between RMB and U.S. dollars and any other relevant foreign currencies may have an effect on our crude oil purchase costs and our investment costs.

Risks Related to Environmental Protection and Safety Production

Compliance with changes in laws, regulations and obligations relating to environmental protection and safety production could result in substantial expenditures and reduced profitability from increases in operating costs. In recent years, China has implemented environmental protection and safety production laws and regulations and has gradually improved refined oil standards which have stricter requirements for our business, and led to an increase in our operating costs. In the future, China will implement more stringent environmental protection and safety production regulations and impose higher standards on refined oil products. Compliance with these new regulations and standards will increase our costs and expenses.

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Our oil and gas exploration and production activities shall comply with relevant PRC environment protection laws and regulations governing abandonment and disposal processes for oil and gas exploration and production activities. We have established standard abandonment procedures pursuant to these laws and regulations. We have included under our asset retirement obligations the costs for these abandonment activities and this asset retirement obligation is based on our best estimate of future abandonment expenditures. In addition, PRC national or local governments may enact stricter environmental protection regulations and our abandonment costs may increase as a result.

Exploring for, producing and transporting crude oil and natural gas and producing and transporting refined products and chemical products involve many hazards. These hazards may result in fires, explosions, spills, blow-outs and other unexpected or dangerous conditions causing personal injuries or death, property damage, environmental damage and interruption of operations.

Some of our oil and natural gas fields are surrounded by residential areas or located in areas where natural disasters, such as earthquakes, floods and sandstorms, tend to occur more frequently than in other areas. As with many other companies around the world that conduct similar businesses, we have experienced accidents that have caused property damage and personal injuries and death.

Significant operating hazards and natural disasters such as earthquake, tsunami and health epidemics may cause partial interruptions to our operations and property and environmental damage that could have an adverse impact on our financial condition.

Risks Related to Climate Change

In recent years, the oil industry has faced an increasingly severe challenge imposed by global climate change. Numerous international, domestic and regional treaties and agreements that restrict the emission of greenhouse gas have been executed and become effective. China and some other countries in which we operate have adopted, or are considering the adoption of, regulatory frameworks to reduce greenhouse gas emissions. These include adoption of carbon emission quota and trade regimes, carbon taxes, increased efficiency standards, and incentives or mandates for renewable energies. These requirements may lead to a substantial increase in our expenditures, make our products more expensive, lengthen our project time, reduce the demand for hydrocarbons, and shift hydrocarbon demand toward relatively low carbon sources such as natural gas. Current and pending greenhouse gas regulations may also increase our compliance costs, such as those for monitoring or sequestering emissions. As a result, our results of operations and our strategic investment may be adversely affected.

China is a signatory country to the Paris Agreement which has taken effect since November 2016. China is expected to reach the peak level of carbon emissions by 2030. In 2017, China rolled out the national carbon quota trading system. As a result, a majority of our subsidiaries operating in China will be subject to mandatory requirement with respect to carbon emission quota and trading, which could increase our costs of operations.

Risks Related to Insurance

Due to the fact that oil industry is susceptible to high and industry-specific risks in nature, the current ordinary commercial insurance cannot cover all the business areas in which we operate. We maintain insurance coverage against some, but not all, potential losses. We may suffer material losses resulting from uninsurable or uninsured risks or insufficient insurance coverage.

Risks Related to Oil and Gas Reserves

The crude oil and natural gas reserves data in this annual report are only estimates. The reliability of reserves estimates depends on a number of factors, assumptions and variables, such as the quality and quantity of our technical and economic data and the prevailing oil and gas prices applicable to our

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production, some of which are beyond our control and may prove to be incorrect over time. Results of drilling, testing and production after the date of estimates may require substantial upward or downward revisions in our reserves data. Our actual production, revenues and expenditures with respect to our reserves may differ materially from these estimates because of these revisions.

We are actively pursuing business opportunities outside China to improve our international operations. We cannot assure you, however, that we can successfully locate sufficient, if any, alternative sources of crude oil supply due to the complexity of the international political, economic and other conditions. If we fail to obtain sufficient alternative sources of crude oil supply, our results of operations and financial condition may be materially and adversely affected.

Risks Related to Liquidity

We have made best endeavors to ensure an appropriate level of liquidity and financing ability. However, as we are currently making our efforts to find high-quality large-scale reserves, strengthening capacity building in key areas, constructing new, and expanding some existing, refinery and petrochemical facilities and constructing several natural gas and oil pipelines, we may have to make substantial capital expenditures and investments. We cannot assure you that the cash generated by our operations will be sufficient to fund these development plans or that our actual future capital expenditures and investments will not significantly exceed our current planned amounts. If either of these conditions arises, we may have to seek external financing to satisfy our capital needs. Our inability to obtain sufficient funding for our development plans could adversely affect our business, financial condition and results of operations.

Risks Related to Effectiveness of Internal Control over Financial Reporting

The SEC, as required by Section 404 of the Sarbanes-Oxley Act of 2002, has adopted rules requiring every public company in the United States to include a management report on such company’s internal control over financial reporting in its annual report, which contains management’s assessment of the effectiveness of our internal control over financial reporting. In addition, an independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Although our management concluded that our internal control over our financial reporting for the fiscal year ended December 31, 2017 was effective, and our independent registered public accounting firm has issued an attestation report, which concluded that our internal control over financial reporting was effective in all material aspects as of December 31, 2017, we may discover other deficiencies in the course of our future evaluation of our internal control over our financial reporting and may be unable to remediate such deficiencies in a timely manner. If we fail to maintain the adequacy of our internal control over financial reporting, we may not be able to conclude that we have effective internal control over financial reporting on an ongoing basis, in accordance with the Sarbanes-Oxley Act. Moreover, effective internal control is necessary for us to produce reliable financial reports and is important to prevent fraud. As a result, our failure to maintain effective internal control over financial reporting could result in the loss of investor confidence in the reliability of our financial statements, which in turn could harm our business and negatively impact the trading prices of our ADSs, H Shares or A Shares.

Risks Related to Audit Reports Prepared by an Auditor who is not Inspected by the Public Company Accounting Oversight Board

As a company with shares registered with the U.S. Securities and Exchange Commission, or the SEC, and traded publicly in the United States, our independent registered public accounting firm is required under the laws of the United States to be registered with the Public Company Accounting Oversight Board, or the PCAOB, and undergo regular inspections by the PCAOB to assess its compliance with the laws of the United States and professional standards. The PCAOB, however, is currently unable to inspect a registered public accounting firm’s audit work relating to a company’s operations in China where the documentation of such audit work is located in China. Accordingly, our independent registered public accounting firm’s audit of our operations in China is not subject to the PCAOB inspection.

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The PCAOB has conducted inspections of independent registered public accounting firms outside of China and has at times identified deficiencies in the audit procedures and quality control procedures of those accounting firms. Such deficiencies may be addressed in those accounting firms’ future inspection process to improve their audit quality. Due to the lack of PCAOB inspections of audit work undertaken in China, our investors do not have the benefit of the PCAOB inspection of our independent registered public accounting firm’s audit work and audit quality control procedures.

Risks Related to SEC Litigation Against the “Big Four” PRC-based Accounting Firms

On January 22, 2014, Judge Cameron Elliot, an SEC administrative law judge, issued an initial decision suspending the Chinese member firms of the “Big Four” accounting firms, including our independent registered public accounting firm, from, among other things, practicing before the SEC for six months. In February 2014, the initial decision was appealed. While under appeal and in February 2015, the Chinese member firms of “Big Four” accounting firms reached a settlement with the SEC. As part of the settlement, each of the Chinese member firms of “Big Four” accounting firms agreed to settlement terms that include a censure, undertakings to make a payment to the SEC, procedures and undertakings as to future requests for documents by the SEC and possible additional proceedings and remedies should those undertakings not be adhered to.

If the settlement terms are not adhered to, the Chinese member firms of “Big Four” accounting firms may be suspended from practicing before the SEC, which could in turn delay the timely filing of our financial statements with the SEC. In addition, it could be difficult for us to timely identify and engage another registered public accounting firm to audit and issue an opinion on our financial statements and our internal control over financial reporting. A delinquency in our filing of the annual report with the SEC may result in the NYSE initiating delisting procedures, which could harm our reputation and have other material adverse effects on our overall growth and prospect.

Risks Related to Employee Misconduct

We may not be able to detect or prevent employee misconduct, including misconduct by senior management, and such misconduct may damage our reputation and could adversely affect the trading price of our ordinary shares and ADSs.

We have gradually reinforced and enhanced our internal control and corporate governance policies and procedures in order to strengthen our ability to detect and prevent employee misconduct. We cannot assure you, however, that we will be able to detect or prevent such misconduct in a timely fashion, or at all. If we fail to prevent employee misconduct, our reputation may be harmed, and the trading price of our ordinary shares and ADSs could be adversely affected.

Risks Related to Cyber Security

Our activities depend heavily on the reliability and security of our information technology (“IT”) systems. If the integrity of our IT systems were compromised due to technical failure, cyber attack, computer intrusions and viruses, power or network outages or natural disasters, our activities and assets could sustain serious damage, material intellectual property could be divulged and, in some cases, personal injury, environmental harm and regulatory violations could occur, potentially having a material adverse effect on our business and financial conditions.

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Item 4 — INFORMATION ON THE COMPANY

Introduction

History and Development of Our Company

Our legal name is “ ” and its English translation is PetroChina Company Limited.

We are the largest oil and gas producer and seller occupying a leading position in the oil and gas industry in the PRC and one of the largest companies in the world. We are engaged in a broad range of petroleum and natural gas related activities, including the exploration, development, production and marketing of crude oil and natural gas; the refining of crude oil and petroleum products, as well as the production and marketing of basic petrochemical products, derivative chemical products and other chemical products; the marketing of refined oil products and trading; and the transmission of natural gas, crude oil and refined oil products as well as the sale of natural gas.

Currently, substantially all of our crude oil and natural gas reserves and production-related assets are located in China. Our exploration, development and production activities commenced in the early 1950s. Over more than six decades, we have conducted crude oil and natural gas exploration activities in many regions of China.

We commenced limited refining activities in the mid-1950s. Our chemicals operations commenced in the early 1950s. In the early 1960s, we began producing ethylene. Our natural gas transmission and marketing activities commenced in Sichuan in Southwestern China in the 1950s.

We have increased our efforts to pursue attractive business opportunities outside China as part of our business growth strategy to utilize both domestic and international resources to strengthen our competitiveness. Since 2005, we have acquired interests in various oil and natural gas assets in several countries, which significantly expanded our overseas operations and effectively increased our oil and gas reserves and production volumes. We are currently assessing the feasibility of making further investments in international oil and gas markets. At the same time, we have been maintaining certain proportion of imported crude oil and natural gas in accordance with our needs. In 2017, we imported approximately 572.5 million barrels of crude oil, as compared to 488.6 million barrels and 486.1million barrels of crude oil in 2015 and 2016, respectively.

We were established as a joint stock company with limited liability under the Company Law of the PRC on November 5, 1999 as part of a restructuring in which CNPC transferred to us most of the assets and liabilities of CNPC relating to its exploration and production, refining and marketing, chemicals and natural gas businesses.

On April 7, 2000, we completed a global offering of H Shares and ADSs. In September 2005, we completed a follow-on offering of over 3 billion H Shares at the price of HK$6.00 per share. In October 2007, we issued 4 billion A Shares at an issue price of RMB16.7 per share. The A Shares were listed on the Shanghai Stock Exchange on November 5, 2007. As of December 31, 2017, CNPC beneficially owned 151,380,211,528 shares in us, which included 291,518,000 H Shares indirectly held by CNPC through Fairy King Investments Limited, an overseas wholly owned subsidiary of CNPC, representing approximately 82.71% of the share capital of us.

For a description of our principal subsidiaries, see Note 18 to our consolidated financial statements.

Our headquarters are located at 9 Dongzhimen North Street, Dongcheng District, Beijing, China, 100007, and our telephone number at this address is (86-10) 5998-6223. Our website address is www.petrochina.com.cn. The information on our website is not part of this annual report.

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Our Corporate Organization Structure

The following chart illustrates our corporate organization structure as of December 31, 2017.

(1) Indicates approximate shareholding.

(2) Indicates approximate shareholding, including the 291,518,000 H Shares indirectly held by CNPC as of December 31, 2017 through Fairy King Investments Limited, a wholly owned overseas subsidiary of CNPC, and not including the 5,881,000,000 A shares transferred to and held in a trust account as collaterals for the exchangeable bonds issued by CNPC.

(3) Includes PetroChina Planning & Engineering Institute, PetroChina Exploration & Development Research Institute, IT Service Center, PetroChina Petrochemical Research Institute and several other companies.

Acquisitions and Divestment

For material acquisition and divestment, please see “Item 7-Major Shareholders and Related Party Transactions-Related Party Transactions”.

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Exploration and Production

We engage in crude oil and natural gas exploration, development and production. Substantially all of our total estimated proved crude oil and natural gas reserves are located in China, principally in Northeastern, Northern, Southwestern and Northwestern China. Meanwhile, we have enhanced our overseas cooperation and expanded our strategic presence in five major overseas oil and gas cooperation regions by conducting new project development. In the year ended December 31, 2017, the crude oil and natural gas produced by us at overseas regions accounted for 16.2% and 7.9% of our total production of crude oil and natural gas, respectively.

We currently hold exploration and exploitation licenses for oil and gas (including coal seam gas) covering a total area of approximately 316.5 million acres, including the exploration licenses covering a total area of approximately 286.8 million acres and the exploitation licenses covering a total area of approximately 29.7 million acres.

The following table sets forth the financial and operating data of our exploration and production segment for each of the years ended December 31, 2015, 2016 and 2017:

	Year Ended December 31,
	2015		2016		2017
Revenue (RMB in millions)		475,412		412,484		505,430
Profit from operations (RMB in millions)		33,961		3,148		15,475
Proved developed and undeveloped reserves
Crude oil (million barrels)		8,521.1		7,437.8		7,481.3
Natural gas (Bcf)		77,524.7		78,711.8		76,887.6
Production
Crude oil (million barrels)		971.9		920.7		887.0
Natural gas for sale (Bcf)		3,131.0		3,274.5		3,423.4

Reserves

Our estimated proved reserves as of December 31, 2017 totaled approximately 7,481.3 million barrels of crude oil and approximately 76,887.6 Bcf of natural gas. As of December 31, 2017, proved developed reserves for crude oil and natural gas accounted for 74.8% and 51.0% of our total proved crude oil and natural gas reserves, respectively. Total proved hydrocarbon reserves, including our overseas crude oil reserves of 859.4 million barrels and overseas natural gas reserves of 2,185.5 Bcf, decreased by 1.3% from approximately 20,556.4 million BOE as of December 31, 2016 to approximately 20,295.9 million BOE as of December 31, 2017. Natural gas as a percentage of total proved hydrocarbon reserves decreased from 63.8% as of December 31, 2016 to 63.1% as of December 31, 2017.

We prepared our reserves estimates as of December 31, 2015, 2016 and 2017 on the basis of the reports prepared by independent engineering consultants, namely DeGolyer and MacNaughton, Ryder Scott Company L.P., GLJ Petroleum Consultants and McDaniel & Associates Consultants Ltd. Our reserves estimates include only crude oil and natural gas which we believe can be reasonably produced within the current terms of our production licenses or within the terms of the licenses which we are reasonably certain can be renewed. See “Regulatory Matters — Exploration Licenses and Production Licenses” for a discussion of our production licenses. Also see “Item 3 — Key Information — Risk Factors — Risks Related to Oil and Gas Reserves” for a discussion of the uncertainty inherent in the estimation of proved reserves.

Our reserves data in 2015, 2016 and 2017 were prepared in accordance with the SEC’s final rules on “Modernization of Oil and Gas Reporting”.

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Internal Controls Over Reserves Estimates

We have appointed a Reserves Assessment Directing Team, or the RAD Team. The leader of the RAD Team is our vice president in charge of our upstream business.

In recent years, we have been implementing a practicing professional certification regime to supervise our employees engaged in oil and gas reserves evaluation and auditing functions. We have set up a team of reserves auditors covering our headquarter office and regional companies to perform reserves evaluation and audits. Meanwhile, we have established a special reserves management department in our exploration and production segment. Each of the officers and employees of that department has over 20 years’ experience in oil industry and over 10 years’ experience in SEC-guided reserves evaluation. All of the members of that department have national-level registered qualifications in reserves expertise. Each regional company has established a reserves management committee and a multi-disciplinary reserves research office. Mr. Duan Xiaowen, the head of the Reserves Administration Division of the exploration and production segment, is the person in charge of our reserves estimation. Mr. Duan holds a bachelor’s degree in geology and a master’s degree in business administration. He has over 25 years of work experience in oil and gas exploration and development industry and has been engaged in reserves estimate and management for a long time. Since 2008, Mr. Duan has been involved in the supervision of reserves estimation and management in our company. In 2016, Mr. Duan became the division head primarily responsible for overseeing the preparation of the reserves estimates, estimation technology and management. The reserves research offices of the regional companies are responsible for estimating newly discovered reserves and updating the estimates of existing reserves. The results of our oil and gas reserves assessment are subject to a two-level review by both the regional companies and our exploration and production company, with final examination and approval by the RAD Team.

In addition, we commissioned independent assessment firms to independently reassess our annually assessed proved reserves in accordance with relevant SEC rules. We disclose the reserves as assessed by independent assessment firms in accordance with the SEC requirements.

Third-Party Reserves Report

DeGolyer and MacNaughton, an independent petroleum engineering consulting firm based in the United States, carried out an independent assessment of our reserves in China and certain other countries as of December 31, 2015, 2016 and 2017. Mr. Thomas C. Pence, a senior vice president of DeGolyer and MacNaughton, is primarily responsible for supervising the preparation of our reserves report. Mr. Pence is a Registered Professional Engineer in Texas, a member of the International Society of Petroleum Engineers, and has over 35 years of experience in oil and gas reservoir studies and reserves evaluations.

Ryder Scott Company, L.P. (“Ryder Scott”), an independent petroleum engineering consulting firm based in the United States, carried out an independent assessment of certain of our selected petroleum assets such as in Chad, West Qurna and Peru as of December 31, 2015, 2016 and 2017. Mr. John MacDonald and Mr. Timour Baichev, each a vice president of Ryder Scott, were responsible for overseeing the estimate of the reserves, future production and income as stated in the reserves report. Mr. John MacDonald is a licensed professional engineer and has over 33 years of experience in the petroleum reserves estimation and evaluation industry. Mr. Timour Baichev is a licensed professional engineer and has over 34 years of experience in the petroleum reserves estimation and evaluation industry.

GLJ Petroleum Consultants (“GLJ”), a petroleum consulting firm based in Canada, carried out an independent assessment of our reserves for certain gas and oil properties in Canada as of December 31, 2015, 2016 and 2017. Ms. Trisha MacDonald was the project manager for the evaluation. She is a senior engineer and has over 10 years of relevant experience. Mr. Jodi L. Anhorn, the executive vice president and chief operation officer of GLJ, was the technical supervisor for the evaluation. He is an internationally recognized oil and gas resource evaluation expert and has over 20 years of working experience.

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McDaniel & Associates Consultants Ltd., a petroleum consulting firm with its headquarters in Canada, carried out an independent assessment of our reserves held through PetroKazakhstan Inc. as of December 31, 2015, 2016 and 2017. Mr. Cam Boulton, a vice president of McDaniel & Associates Consultants Ltd., was responsible for supervising the preparation of our reserves report. Mr. Boulton is a member of the Association of Professional Engineers and Geoscientists of Alberta and a member of Society of Petroleum Engineers. He has over 10 years’ experience in oil and gas reservoir evaluation.

None of the above consulting firms or their partners, senior officers or employees has any direct or indirect financial interest in our company and the remunerations to the firms are not in any way contingent upon reported reserves estimates.

For detailed information about our net proved reserves estimates, please refer to the summary reports of reserves filed hereto as exhibits to this annual report on Form 20-F.

The following table sets forth our estimated proved reserves (including proved developed reserves and proved undeveloped reserves), proved developed reserves and proved undeveloped reserves of crude oil and natural gas as of December 31, 2015, 2016 and 2017.

	Crude Oil			Natural Gas(1)			Combined
	(Million barrels)			(Bcf)			(BOE, in millions)
Proved developed and undeveloped reserves
Reserves as of December 31, 2014		10,593.4			71,097.5			22,443.0
Revisions of previous estimates		(1,662.9	)		(206.0	)		(1,697.1	)
Extensions and discoveries		456.9			9,764.2			2,084.3
Improved recovery		105.6			—			105.6
Sold		—			—			—
Production for the year		(971.9	)		(3,131.0	)		(1,493.9	)
Reserves as of December 31, 2015		8,521.1			77,524.7			21,441.9
Revisions of previous estimates		(810.9	)		(863.2	)		(954.7	)
Extensions and discoveries		491.7			4,770.3			1,286.8
Improved recovery		93.0			—			93.0
Bought		63.6			554.5			156.0
Production for the year		(920.7	)		(3,274.5	)		(1,466.6	)
Reserves as of December 31, 2016		7,437.8			78,711.8			20,556.4
Revisions of previous estimates		486.2			(1,750.8	)		194.6
Extensions and discoveries		346.3			3,350.0			904.6
Improved recovery		98.0			—			98.0
Bought		—			—			—
Production for the year		(887.0	)		(3,423.4	)		(1,457.7	)
Reserves as of December 31, 2017		7,481.3			76,887.6			20,295.9
Proved developed reserves
As of December 31, 2015		6,195.8			40,406.1			12,930.2
As of December 31, 2016		5,176.3			40,663.8			11,953.5
As of December 31, 2017		5,592.9			39,242.6			12,133.2
Proved undeveloped reserves
As of December 31, 2015		2,325.3			37,118.6			8,511.7
As of December 31, 2016		2,261.5			38,048.0			8,602.9
As of December 31, 2017		1,888.4			37,645.0			8,162.7

(1) Represents natural gas remaining after field separation for condensate removal and reduction for flared gas.

Our proved undeveloped reserves were 8,162.7 million BOE in 2017. The main changes in our proved undeveloped reserves in 2017 included (i) an increase of 904.6 million BOE through extensions and discoveries; (ii) an increase of 98.0 million BOE through improved recovery; (iii) a decrease of 465.6 million BOE due to our optimization adjustment in the investment plans with respect to certain proved undeveloped reserves; and (iv) the conversion of 977.2 million BOE of proved undeveloped reserves into proved developed reserves. In 2017, we spent RMB107,472 million on developing proved undeveloped reserves. The overwhelming majority of our

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proved undeveloped reserves were situated around the oil fields that are currently producing. The majority of our proved undeveloped reserves are already scheduled for development within five years after initial booking.

Some of our natural gas proved undeveloped reserves are being developed more than five years after their initial disclosure primarily due to the effect of long-term natural gas supply contracts. The sale of natural gas produced from our reserves located in China is subject to our long-term contractual obligations to provide a stable supply of natural gas to customers. We sell all of the natural gas through our pipelines and under long-term supply arrangements with customers.

There are mainly two types of long-term supply arrangements. The first is multi-year supply contracts with terms ranging from 20 to 30 years that can be extended upon mutual agreement. The second type is renewable annual contracts. The majority of the natural gas produced from our gas fields in China is put into our nationwide, long-range pipeline system and sold to customers who have entered into multi-year supply contracts with us in the areas where the long-range pipeline system covers. A small portion of the natural gas produced by our company is put into local or internal pipeline systems and sold to customers in the areas adjacent to our gas fields. These customers typically have formed de-facto long-term relationships with our company over the years and enter into supply contracts with us before the year end to determine the amount of gas to be purchased for the next year, with such contracts being renewed every year. In general, our supply relationships with customers under the annual contracts have existed for more than ten years.

Mainly as a result of our contractual obligations to ensure a long-term, stable supply of natural gas to customers, we must maintain a relatively large amount of proved undeveloped natural gas reserves and develop them over an extended period of time (in some cases, longer than five years).

The following tables set forth our crude oil and natural gas proved reserves and proved developed reserves by region as of December 31, 2015, 2016 and 2017.

	As of December 31,
	2015				2016				2017
	Proved Developed and Undeveloped		Proved Developed		Proved Developed and Undeveloped		Proved Developed		Proved Developed and Undeveloped		Proved Developed
	(Million barrels)
Crude oil reserves
Daqing		1,804.7		1,483.0		1,504.7		1,226.3		1,513.7		1,283.9
Changqing		2,186.0		1,600.6		1,917.8		1,319.1		2,049.2		1,413.9
Xinjiang		1,040.0		875.6		795.1		730.5		927.3		855.9
Other regions(1)		3,490.4		2,236.6		3,220.2		1,900.4		2,991.1		2,039.2
Total		8,521.1		6,195.8		7,437.8		5,176.3		7,481.3		5,592.9

	As of December 31,
	2015				2016				2017
	Proved Developed and Undeveloped		Proved Developed		Proved Developed and Undeveloped		Proved Developed		Proved Developed and Undeveloped		Proved Developed
	(Bcf)
Natural gas reserves(2)
Changqing		25,808.0		10,826.0		25,697.9		9,920.8		25,509.2		9,107.4
Tarim		24,270.6		14,303.3		24,019.2		14,336.1		22,918.7		14,054.7
Chuanyu		13,399.5		5,833.1		13,905.1		6,982.4		13,838.0		6,756.5
Other regions(1)		14,046.6		9,443.7		15,089.6		9,424.5		14,621.7		9,324.0
Total		77,524.7		40,406.1		78,711.8		40,663.8		76,887.6		39,242.6

(1) Represents other oil regions in China and our overseas oil and gas fields.

(2) Represents natural gas remaining after field separation for condensate removal and reduction for flared gas.

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Exploration and Development

We are currently conducting exploration and development efforts in 12 provinces, two municipalities under the direct administration of the central government and three autonomous regions in China as well as in certain regions in other countries. We believe that we have more extensive experience in the exploration and development of crude oil and natural gas than any of our principal competitors in China.

The following table sets forth the number of wells we drilled, or in which we participated, and the results thereof, for the periods indicated.

Year		Daqing		Xinjiang		Changqing		Others(1)		Total
2015
	Net exploratory wells drilled(2)		136		123		790		549		1,598
	Crude oil		118		79		414		303		914
	Natural gas		5		6		103		76		190
	Dry(3)		13		38		273		170		494
	Net development wells drilled(2)		3,674		1,359		4,967		3,385		13,385
	Crude oil		3,645		1,339		4,098		2,957		12,039
	Natural gas		22		20		841		392		1,275
	Dry(3)		7		—		28		36		71
2016
	Net exploratory wells drilled(2)		148		134		955		550		1,787
	Crude oil		127		87		625		353		1,192
	Natural gas		9		1		125		75		210
	Dry(3)		12		46		205		122		385
	Net development wells drilled(2)		3,150		792		5,135		2,194		11,271
	Crude oil		3,129		777		4,526		1,824		10,256
	Natural gas		15		15		551		354		935
	Dry(3)		6		—		58		16		80
2017
	Net exploratory wells drilled(2)		217		132		868		608		1,825
	Crude oil		184		69		539		346		1,138
	Natural gas		13		11		59		108		191
	Dry(3)		20		52		270		154		496
	Net development wells drilled(2)		3,205		1,520		6,020		3,731		14,476
	Crude oil		3,185		1,504		4,217		2,898		11,804
	Natural gas		10		13		1,746		820		2,589
	Dry(3)		10		3		57		13		83

(1) Represents the Liaohe, Jilin, Huabei, Dagang, Sichuan, Tarim, Tuha, Qinghai, Jidong, Yumen, Zhejiang, southern and other oil regions.

(2) “Net” wells refer to the wells after deducting interests of others. No third parties own any interests in any of our wells.

(3) “Dry” wells are wells with insufficient reserves to sustain commercial production.

We had 571 wells in the process of being drilled and 7,706 wells with multiple completions as of December 31, 2017.

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Oil-and-Gas Properties

The following table sets forth our interests in developed and undeveloped acreage by oil region and in productive crude oil and natural gas wells as of December 31, 2017.

					Acreage(1) (Thousand acres)
	Productive Wells(1)				Developed				Undeveloped
Oil Region	Crude Oil		Natural Gas		Crude Oil		Natural Gas		Crude Oil		Natural Gas
Daqing		75,137		328		1,151.91		103.41		796.18		112.28
Changqing		61,356		13,074		1,397.48		5,863.47		730.42		1,932.27
Xinjiang		32,884		284		390.48		63.44		229.39		18.27
Other regions(2)		73,917		6,027		1,635.40		1,305.08		1,064.25		1,754.88
Total		243,294		19,713		4,575.27		7,335.40		2,820.24		3,817.70

(1) Includes all wells and acreage in which we have an interest. No third parties own any interests in any of our wells or acreage.

(2) Represents the Liaohe, Jilin, Huabei, Dagang, Southwestern, Tarim, Tuha, Qinghai, Jidong, Yumen, Zhejiang, Southern and other oil regions.

Production

The following table sets forth our historical average net daily crude oil and natural gas production by region and our average sales price for the years ended December 31, 2015, 2016 and 2017.

	For the Year Ended December 31,						% of 2017 Total
	2015		2016		2017
Crude oil production(1)
(thousand barrels per day, except percentages or otherwise indicated)
Daqing		755.8		717.2		668.8		27.5
Changqing		502.0		482.7		479.9		19.7
Xinjiang		238.9		224.7		229.0		9.4
Other(2)		1,166.1		1,090.9		1,052.4		43.4
Total		2,662.8		2,515.5		2,430.1		100
Annual production (million barrels)		971.9		920.7		887.0
Average sales price (US$ per barrel)		48.35		37.99		50.64
Natural gas production(1)(3)
(million cubic feet per day, except percentages or otherwise indicated)
Changqing		3,181.2		3,103.5		3,121.7		33.3
Tarim		2,083.0		2,093.1		2,277.3		24.3
Chuanyu		1,412.5		1,696.1		1,844.1		19.7
Other(4)		1,901.4		2,054.1		2,136.1		22.7
Total		8,578.1		8,946.8		9,379.2		100
Annual production (Bcf)		3,131.0		3,274.5		3,423.4
Average realized price (US$ per Mcf)(5)		6.23		4.67		5.18

(1) Production volumes for each region include our share of the production from all of our cooperative projects with foreign companies in that region.

(2) Represents production from the Liaohe, Jilin, Huabei, Dagang, Tarim, Tuha, Qinghai, Jidong, Yumen and other oil regions and our share of overseas production as a result of our acquisition of overseas assets.

(3) Represents production of natural gas for sale.

(4) Represents production from the Daqing, Qinghai, Tuha, Xinjiang, Liaohe, Huabei, Dagang, Jilin, Jidong, Yumen and other oil and gas regions and our share of overseas production as a result of our acquisition of overseas assets.

(5) For natural gas citygate price, please refer to “Item 5 — Operating and Financial Review and Prospects — Overview”.

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In 2017, we supplied a substantial majority of our total crude oil sales to our refineries. In addition, we enter into annual crude oil mutual supply framework agreement with Sinopec for supply of crude oil to each other’s refineries. Under the annual agreement for 2018, we agreed in principle to supply 1.09 million tons of crude oil to Sinopec’s refineries and Sinopec agreed in principle to supply 1.57 million tons of crude oil to us in 2018.

The following table sets forth our average sales prices and average lifting costs of crude oil and natural gas of our company on an overall basis and those in China in 2015, 2016 and 2017.

	Crude Oil Average Realized Prices (RMB/ton)		Natural Gas Average Realized Prices (RMB/Kilostere)		Average Lifting Cost (US$/BOE)
2015
Overall		2,225		1,371		12.98
— China		2,237		1,468		14.26
2016
Overall		1,865		1,097		11.67
— China		1,831		1,146		13.00
2017
Overall		2,526		1,236		11.53
— China		2,494		1,225		12.71

Principal Oil and Gas Regions

Daqing Oil Region

The Daqing oil region, our largest oil and gas producing property, is located in the Songliao basin and covers an area of approximately one million acres. In 2015, 2016 and 2017, our crude oil production volume in the Daqing oil region was 755.8 thousand barrels, 717.2 thousand barrels and 668.8 thousand barrels per day, respectively. As of December 31, 2017, we produced crude oil from 40 fields in the Daqing oil region.

As of December 31, 2017, our proved crude oil reserves in the Daqing oil region were 1,513.7 million barrels, representing 20.2% of our total proved crude oil reserves. As of December 31, 2015 and 2016, the proved crude oil reserves in our Daqing oil region were 1,804.7 million barrels and 1,504.7 million barrels, respectively. In 2017, the crude oil reserve-to-production ratio of the Daqing oil region was 6.1 years.

Daqing’s crude oil has low sulfur and high paraffin content. As many refineries in China, particularly those in Northeastern China, are configured to refine Daqing crude oil, we have a stable market for the crude oil we produce in the Daqing oil region.

Changqing Oil and Gas Region

The Changqing oil and gas region covers parts of Shaanxi Province, Gansu Province, Ningxia, Inner Mongolia and Shanxi Province. As of December 31, 2017, our proved crude oil reserves in the Changqing oil region were 2,049.2 million barrels, representing 27.4% of our total proved crude oil reserves. In 2017, our crude oil production in the Changqing oil region averaged 479.9 thousand barrels per day, representing approximately 19.7% of our total daily crude oil production. In 2017, the crude oil reserve-to-production ratio at the Changqing oil region was 11.7 years.

In the early 1990s, we discovered the Changqing oil and gas region, which had total proved natural gas reserves of 25,509.2 Bcf as of December 31, 2017, representing 33.2% of our total proved natural gas reserves. In January 2001, we discovered the Sulige gas field in the Changqing oil and gas region, which had total proved natural gas reserves of 14,822.6 Bcf as of December 31, 2017. Sulige gas field is currently the largest gas field in China. In 2017, the Changqing oil and gas region produced 1,139.4 Bcf of natural gas for sale, representing an increase of 0.3% from 1,135.9 Bcf in 2016.

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Xinjiang Oil Region

The Xinjiang oil region is one of our four largest crude oil producing properties and is located in the Junggar basin in Northwestern China. We commenced our operations in the Xinjiang oil region in 1951. The Xinjiang oil region covers a total area of approximately 900,000 acres.

As of December 31, 2017, our proved crude oil reserves in the Xinjiang oil region were 927.3 million barrels, representing 12.4% of our total proved crude oil reserves. In 2017, our oil fields in the Xinjiang oil region produced an average of 229.0 thousand barrels of crude oil per day, representing approximately 9.4% of our total daily crude oil production. In 2017, the crude oil reserve-to-production ratio at the Xinjiang oil region was 11.1 years.

Tarim Oil and Gas Region

The Tarim oil and gas region is located in the Tarim basin in Northwestern China with a total area of approximately 590,000 acres. In 1998, we discovered the Kela 2 natural gas field in the Tarim oil and gas region. As of December 31, 2017, the proved natural gas reserves in the Tarim oil and gas region reached 22,918.7 Bcf, representing 29.8% of our total proved natural gas reserves.

In 2017, we produced 831.2 Bcf of natural gas for sale in the Tarim oil and gas region. We have completed the construction of the pipelines to deliver natural gas in the Tarim oil and gas region to the central and Eastern regions of China where there is strong demand for natural gas transmitted through our West-East Gas Pipelines. See “— Natural Gas and Pipeline — Natural Gas Transmission Infrastructure” for a discussion of our West-East Gas Pipeline.

Chuanyu Gas Region

We began natural gas exploration and production in the Chuanyu gas region in the 1950s. The Chuanyu gas region covers a total area of approximately 2.3 million acres. The natural gas reserve-to-production ratio in the Chuanyu gas region was approximately 20.6 years in 2017. As of December 31, 2017, we had 116 natural gas fields under development in the Chuanyu gas region.

As of December 31, 2017, our proved natural gas reserves in the Chuanyu gas region were 13,838.0 Bcf, representing 18.0% of our total proved natural gas reserves and a decrease of 0.5% from 13,905.1 Bcf as of December 31, 2016. In 2017, our natural gas production for sale in the Chuanyu gas region reached 673.1 Bcf, representing 19.7% of our total natural gas production for sale.

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Refining and Chemicals

We now operate 29 enterprises located in nine provinces, four autonomous regions and three municipalities to engage in refining of crude oil and petroleum products, as well as the production and marketing of basic petrochemical products, derivative chemical products and other chemical products.

The following table sets forth the financial and operating data of our refining and chemicals segment for each of the years ended December 31, 2015, 2016 and 2017:

	Year Ended December 31,
	2015		2016		2017
Revenue (RMB in millions)		642,428		582,510		707,804
Profit from operations (RMB in millions)		4,883		39,026		39,961
Crude oil processed (million barrels)		998.1		953.3		1,016.9
Crude oil primary distillation capacity (million barrels/year)		1,252.4		1,257.6		1,347.0
Production of refined oil products (thousand tons)		91,933		86,022		92,715

Refining

Refined Products

We produce a wide range of refined products at our refineries. Some of the refined products are for our internal consumption and used as raw materials in our petrochemical operation. The table below sets forth production volumes for our principal refined products for each of the years ended December 31, 2015, 2016 and 2017.

	Year Ended December 31,
Principal Product	2015		2016		2017
	(In thousand tons)
Diesel		54,182		46,689		48,241
Gasoline		32,258		33,275		37,363
Kerosene		5,493		6,058		7,111
Lubricants		1,210		1,164		1,636
Fuel oil		2,700		2,222		1,880
Naphtha		9,748		9,919		10,032

Our Refineries

Most of our refineries are strategically located close to our crude oil production and storage bases along our crude oil and refined product transmission pipelines and railways, which provide our refineries with secure supplies of crude oil and facilitate our distribution of refined products to the domestic markets.

In 2017, we further optimized our production processes, adjusted our products portfolio and concentrated our resources and production capacity on products with high profit margins. We reduced the diesel-gasoline ratio from 1.40 in 2016 to 1.29 in 2017. In each of the years ended December 31, 2015, 2016 and 2017, our exploration and production operations supplied approximately 69.9%, 71.8% and 67.0%, respectively, of the crude oil processed in our refineries.

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The table below sets forth certain operating statistics regarding our refineries as of December 31, 2015, 2016 and 2017.

	As of December 31,
	2015		2016		2017
Primary distillation capacity(1) (thousand barrels per day)
Lanzhou Petrochemical		212.6		212.6		212.6
Dalian Petrochemical		415.0		415.0		415.0
Fushun Petrochemical		222.7		222.7		222.7
Dushanzi Petrochemical		202.4		202.4		202.4
Guangxi Petrochemical		202.4		202.4		202.4
Jilin Petrochemical		198.4		198.4		198.4
Sichuan Petrochemical		202.4		202.4		202.4
Yunnan Petrochemical(2)		—		—		263.2
Other refineries		1,775.4		1,789.6		1,771.4
Total		3,431.3		3,445.5		3,690.5
Refining throughput (thousand barrels per day)
Lanzhou Petrochemical		195.8		166.6		178.3
Dalian Petrochemical		280.7		263.5		217.4
Fushun Petrochemical		164.0		170.5		158.9
Dushanzi Petrochemical		139.8		151.2		149.1
Guangxi Petrochemical		130.3		90.9		143.3
Jilin Petrochemical		162.0		184.3		181.6
Sichuan Petrochemical		152.0		141.0		147.5
Yunnan Petrochemical(2)		—		—		81.4
Other refineries		1,509.9		1,443.9		1,528.6
Total		2,734.5		2,611.8		2,786.1

(1) Represents the primary distillation capacity of crude oil and condensate.

(2) Yunnan Petrochemical commenced operations in August 2017.

In each of the years ended December 31, 2015, 2016 and 2017, the average utilization rate of the primary distillation capacity at our refineries was 84.2%, 80.3% and 80.3%, respectively, and the average yield for our four principal refined products (gasoline, kerosene, diesel and lubricants) at our refineries was 69.0%,67.6% and 68.6%, respectively. “Yield” represents the number of tons of a refined product expressed as a percentage of the number of tons of crude oil from which that product is processed. In each of the years ended December 31, 2015, 2016 and 2017, the overall refining yield at our refineries was 93.8%,93.5% and 93.3%, respectively.

In 2017, Dalian Petrochemical, Yunnan Petrochemical, Fushun Petrochemical, Lanzhou Petrochemical, Dushanzi Petrochemical, Guangxi Petrochemical, Sichuan Petrochemical, and Jilin Petrochemical were our leading refineries in terms of both primary distillation capacity and refining throughput.

To maintain efficient operations of our facilities and lower production costs, we have endeavored to achieve the most cost-efficient proportions of various types of crude oil in our refining process. We purchase a portion of our crude oil requirements from third-party international suppliers located in different countries and regions. In 2017, we purchased crude oil sourced from Rosneft, a Russian company which is subject to U.S. economic sanctions for use in our refining operations. The revenue generated from our refinery from the crude oil sourced from Rosneft accounted for 2.27% of our total revenue in 2017, respectively. See “Item 3 — Key Information — Risk Factors — Risks Related to Outbound Investments and Trading.”

Chemicals

Most of our chemical plants are close to our refineries and are connected to the refineries by pipelines, providing additional production flexibility and opportunities for cost competitiveness. The raw materials required by our chemicals operations have been supplied by our own refineries.

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Our Chemical Products

The table below sets forth the production volumes of our principal chemical products for each of the years ended December 31, 2015, 2016 and 2017.

	Year Ended December 31,
	2015		2016		2017
	(In thousand tons)
Basic petrochemicals
Propylene		4,848		5,120		5,322
Ethylene		5,032		5,589		5,764
Benzene		1,896		1,918		2,209
Derivative petrochemicals
Synthetic resin		8,215		9,078		9,284
Other synthetic fiber raw materials and polymer		1,348		1,410		1,390
Synthetic rubber		713		760		809
Other chemicals
Urea		2,566		1,900		1,439

We are one of the major producers of ethylene in China. We use the bulk of the ethylene we produce as a principal feedstock for the production of many chemical products, such as polyethylene. As of December 31, 2017, our annual ethylene production capacity was 5,910 thousand tons. We produce a number of synthetic resin products, including polyethylene, polypropylene and ABS. As of December 31, 2017, our annual production capacities for polyethylene, polypropylene and ABS were 5,062 thousand tons, 4,120 thousand tons and 705 thousand tons, respectively. 

Marketing of Chemicals

Our chemical products are distributed to a number of industries including the automotive, construction, electronics, medical manufacturing, printing, electrical appliances, household products, insulation, packaging, paper, textile, paint, footwear, agriculture and furniture industries.

The following table sets forth the sales volumes of our chemical products by principal product category for each of the years ended December 31, 2015, 2016 and 2017.

	Year Ended December 31,
Product	2015		2016		2017
	(In thousand tons)
Derivative petrochemicals
Synthetic resin		8,222.3		8,998.4		9,166.0
Synthetic fiber		83.7		83.6		76.9
Synthetic rubber		764.5		793.7		813.6
Intermediates		8,838.3		9,262.4		10,324.6
Other chemicals
Urea		2,106.1		2,181.8		1,171.8

In each of the years ended December 31, 2015, 2016 and 2017, our capital expenditures for our refining and chemicals segment amounted to approximately RMB15,725 million, RMB12,847 million and RMB17,705 million, respectively. These capital expenditures were incurred primarily in connection with the construction and expansion of our refining and chemical facilities and the upgrading of our product quality. We believe that our refined products are capable of meeting the product specification and environmental protection requirements as set by the PRC government.

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Marketing

We engage in the marketing of refined products through 37 regional sales companies including three distribution branch companies, one lubricant branch company, one fuel oil company and one convenience store chain company, PetroChina uSmile Company Limited, operated under the trade name “uSmile”. These operations include the transportation and storage of the refined products, and the wholesale, retail and export of gasoline, diesel, kerosene, lubricant, asphalt and other refined products. In addition, with respect to our international trading sector, we have optimized the import and export resources, focused on synergies, actively expanded into the high-end markets, and maintained growth in trading volume and improved operation results.

The following table sets forth the financial and operating data of our marketing segment for each of the years ended December 31, 2015, 2016 and 2017:

	Year Ended December 31,
	2015			2016		2017
Revenue (RMB in millions)		1,383,426			1,301,616		1,660,456
(Loss)/profit from operations (RMB in millions)		(500	)		11,048		8,279
External sales volume of refined oil products (thousand tons)		160,097			159,107		169,466

We market a wide range of refined products, including gasoline, diesel, kerosene and lubricants, through an extensive network of sales personnel and independent distributors and a broad wholesale and retail distribution system across China. As of December 31, 2017, our marketing network consisted of:

• Numerous nationwide wholesale distribution outlets. All of these outlets are located in high demand areas across China, particularly in the coastal areas, along major railways and along the Yangtze River; and

• 21,399 service stations, consisting of 20,350 service stations owned and operated by us and 1,049 franchised service stations owned and operated by third parties.

In addition, we took active steps to adapt to changes in market condition and customer demand, including enhanced integrated marketing of refined products, fuel cards, non-oil business, lubricants and gas, enhanced internet marketing and carried out various promotion activities. We integrated our WeChat official account and our mobile application, expanded our internet payment services and enhanced our marketing of non-oil businesses.

The PRC government and other institutional customers, including railway, transportation and fishery operators, are long-term purchasers of the gasoline and diesel that we produce. We sell gasoline and diesel to these customers at the supply prices for special customers published by the PRC government. See “— Regulatory Matters — Pricing — Refined Products” for a discussion of refined product pricing.

The following table sets forth our sales volumes of diesel, gasoline, kerosene and lubricants for each of the years ended December 31, 2015, 2016 and 2017.

	Year Ended December 31,
Product	2015		2016		2017
	(In thousand tons)
Diesel		84,763		80,168		87,324
Gasoline		60,651		62,406		65,293
Kerosene		14,683		16,533		16,849
Lubricants		1,150		1,122		1,283

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Wholesale Marketing

We sell refined products both directly and through independent distributors into various wholesale markets, as well as to utility, commercial, petrochemical, aviation, agricultural, fishery and transportation companies in China. Our gasoline and diesel sales also include the amount we transferred to our retail operations.

Retail Marketing

The weighted average sales volume of gasoline and diesel per business day at our service station network was 10.6 tons, 10.5 tons and 10.5 tons per service station in 2015, 2016 and 2017, respectively.

Capital expenditures for the marketing segment for the years ended December 31, 2015, 2016 and 2017 amounted to RMB7,061 million, RMB7,983 million and RMB10,982 million, respectively, which were used mainly for the construction of sales network facilities including service stations and oil storage tanks.

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Natural Gas and Pipeline

We are China’s largest natural gas transporter and seller in terms of sales volume. We sell natural gas primarily to industrial companies, power plants, fertilizer and chemical companies, commercial users and municipal utilities owned by local governments. In addition, we also transmit crude oil and refined products in the natural gas and pipeline segment.

The following table sets forth the financial and operating data of our natural gas and pipeline segment for each of the years ended December 31, 2015, 2016 and 2017:

	As of December 31 or Year Ended December 31,
	2015		2016		2017
Revenue (RMB in millions)		281,778		247,477		295,786
Profit from operations (RMB in millions)		51,231		17,885		15,688
Total length of natural gas pipelines (km)		48,629		49,420		51,315
Total length of crude oil pipeline (km)		18,892		18,872		19,670
Total length of refined oil products pipeline (km)		10,091		10,560		11,389
Total volume of natural gas sold(1) (Bcf)		5,583.6		6,469.8		6,588.5

(1) Represents the natural gas sold to third parties.

Our Principal Markets for Natural Gas

We sell our natural gas across China. Our natural gas supply covers all provinces, municipalities under direct administration of the central government and autonomous regions of China, other than Macau and Taiwan. We supply natural gas to Tibet by means of LNG tanker trucks.

The Bohai Rim is one of our principal markets for natural gas. The natural gas supplied to Bohai Rim is primarily sourced from the Changqing oil and gas region and transmitted through the Shaanxi to Beijing natural gas pipeline system.

The Yangtze River Delta and Southwestern region in China are also our principal markets. We supply natural gas to these regions primarily from our domestic production sites and through long-distance pipelines and by LNG tanker trucks.

In addition to the above, provinces such as Henan, Hubei, Anhui and Hunan, consume more and more natural gas and have become another significant natural gas market of us.

We are committed to providing approximately 5,547 Bcf of natural gas in 2018. However, the committed quantity of supply may be adjusted by the buyers in light of the actual situation.

Driven by environmental and efficiency concerns, the PRC government is increasingly encouraging industrial and residential use of natural gas. The PRC government has adopted a number of laws and regulations to require local governments to increase the use of clean energy, such as natural gas and liquefied petroleum gas, to replace the use of raw coal. Several local governments have adopted policies to facilitate an increase in natural gas consumption in order to reduce the air pollution level. The PRC government has also adopted preferential value-added tax rate for natural gas production. Effective from May 1, 2018, the value-added tax rate for natural gas will be 10%, as compared to 16% for crude oil. In 2017, the PRC government issued a new policy to accelerate the large-scale and high-efficient utilization of natural gas in urban gas, industrial fuel, gas-fired power generation and transportation, and to significantly increase the proportion of use of natural gas in primary energy consumption. The overall goal of the policy is that the proportion of natural gas in the primary energy consumption to reach around 10% by 2020 and 15% by 2030, and the underground gas storage to form an effective working gas volume of over 14.8 billion cubic meters by 2020 and over 35 billion cubic meters by 2030.

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We believe that these policies have had a positive effect on the development and consumption of natural gas in many municipalities that are our existing or potential markets for natural gas. We believe that these favorable policies will continue to benefit our natural gas business.

Natural Gas Transmission Infrastructure

As of December 31, 2017, we owned and operated approximately 51,315 kilometers of natural gas pipelines in China. Our natural gas pipelines represent the vast majority of China’s onshore natural gas pipelines. Our existing natural gas pipelines form a national trunk network for natural gas supply and the regional natural gas supply networks in Northwestern, Southwestern, Northern and central China as well as the Yangtze River Delta.

The First West-East Gas Pipeline

The construction of the First West-East Gas Pipeline commenced officially in July 2002 and was completed and put into operation on October 1, 2004. The main line of our West-East Gas Pipeline links our natural gas fields in Xinjiang and Changqing with Henan Province, Anhui Province, Jiangsu Province, Shanghai Municipality and other areas in the Yangtze River Delta. It is designed to mainly transmit the natural gas produced at Tarim oil region to Henan, Anhui, Jiangsu, Zhejiang and Shanghai. The First West-East Gas Pipeline includes one main line, three main branch lines and numerous accessory branch lines, and two underground storage facilities, with a total length of 5,778 kilometers, of which the main line has a total length of 3,833 kilometers. The First West-East Gas Pipeline has a designed annual throughput capacity of 600.4 Bcf.

The Second West-East Gas Pipeline

In February 2008, we commenced the construction of the Second West-East Gas Pipeline. The west section of the Second West-East Gas Pipeline was put into operation in December 2009. In June 2011, the east section was put into operation. By the end of 2012, the main line and branch lines as well as the Hong Kong branch line of the Second West-East Gas Pipeline were all completed and put into operation. The Second West-East Gas Pipeline includes one main line, eight main branch lines and numerous accessory branch lines and three underground storage facilities, with a total length of 8,601 kilometers. The main line of the Second West-East Gas Pipeline has a length of 4,845 kilometers. The western section of the main line extends from Horgos to Zhongwei with a length of 2,325 kilometers and a designed annual throughput capacity of 1,059.5 Bcf. The eastern section of the main line extends from Zhongwei to Guangzhou with a length of 2,520 kilometers and a designed annual throughput capacity of 988.8 Bcf.

The Third West-East Gas Pipeline

The Third West-East Gas Pipeline extends from Horgos to Fuzhou via Zhongwei. It consists of the western section, middle section and the eastern section. The western section extending from Horgos to Zhongwei, with a length of 2,445 kilometers and an annual throughput capacity of 1,059.4 Bcf, was completed in the end of 2014. The eastern section extending from Ji’an to Fuzhou, with a length of 817 kilometers and an annual throughput capacity of 529.7 Bcf, was completed in the end of 2016. The middle section extends from Zhongwei to Ji’an, of which, the Zhongwei-Zaoyang section is 1,218 kilometers long with a designed throughput capacity of 1,059.4 Bcf, which is expected to be completed by 2023, and the Zaoyang-Ji’an section is 798 kilometers long with a designed capacity of 882.8 Bcf, which is expected to be completed by 2021. In 2017, the Zhongwei-Jingbian line, as a linking-up line of the middle section, was completed and commenced operations.

In addition, we also operate other natural gas pipelines, such as the Zhong County-Wuhan natural gas pipeline, the four Shaanxi-Beijing natural gas pipelines and Sebei-Lanzhou natural gas pipelines. The construction of the fourth Shaanxi-Beijing Natural Gas Pipeline was completed and commenced operations in 2017.

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Crude Oil Transportation Infrastructure

We have an extensive network for transportation, storage and distribution of crude oil, which covers many regions of China. As of December 31, 2017, we had crude oil pipelines of 19,670 kilometers.

Russia-China Crude Oil Pipeline

In May 2009, we commenced the construction of the Russia-China crude oil transmission pipeline (the Mohe-Daqing section) upon the approval of the National Development and Reform Commission, or NDRC. In September 2010, we completed construction of the entire line and put it into commercial production in January 2011. We were the builder and operator of the section crossing the Heilongjiang River and the section which lies in China. This pipeline extends from the Skovorodino off-take station of Russia’s Far East Pipeline through Galinda at the Russian border, Heilongjiang Province, Inner Mongolia, to Daqing terminal station. This pipeline is 935 kilometers long and has a designed annual transmission capacity of 15 million tons. In February 2016, the second Russia-China oil pipeline from Mohe to Daqing was approved by the NDRC. We commenced the construction of the line in July 2016 and put it into operations in January 2018. The pipeline is 941 kilometers long and has a designed annual transmission capacity of 15 million tons.

In addition, we also operate other crude oil pipelines, including the western crude oil pipeline, the northeastern crude oil pipeline network and the Lanzhou-Chengdu crude oil pipeline.

Refined Product Transportation Infrastructure

As of December 31, 2017, we had refined product pipelines of 11,389 kilometers.

The Lanzhou-Zhengzhou-Changsha Pipeline

We received approval from the NDRC for and commenced construction of the Lanzhou-Zhengzhou-Changsha refined oil pipeline in December 2007. The pipeline starts from Lanzhou of Gansu Province and terminates at Changsha of Hunan Province, with a total length of 3,027 kilometers, including the length of all the main lines and branch lines. We finished construction and commenced the operation of the section from Lanzhou to Zhengzhou in April 2009 and the section from Zhengzhou to Wuhan in August 2009. The construction of all the main lines and branch lines was completed by October 2013.

In addition, we also operate other refined product pipelines, such as the refined product pipelines for western regions and Lanzhou-Chengdu-Chongqing refined product pipeline.

During the past three years, we have not experienced any delays in delivering natural gas, crude oil and refined products due to pipeline capacity constraints.

Competition

As an oil and gas company operating in a competitive industry, we compete in each of our business segments in both China and international markets for desirable business prospects and for customers. Our principal competitors in China are China Petroleum and Chemical Corporation, or Sinopec, and China National Offshore Oil Corporation, or CNOOC.

Exploration and Production Operations

We are the largest onshore oil and gas company in China in terms of proved crude oil and natural gas reserves as well as crude oil and natural gas production and sales. However, we compete with other domestic oil and gas companies for the acquisition of desirable crude oil and natural gas prospects. Similarly, we face some

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competition in the development of offshore oil and gas resources. In addition, the gradual development of the low-cost shale gas and shale oil in the United States has had a material effect on our business. We believe that our experience in crude oil and natural gas exploration and production and our advanced exploration and development technologies that are suitable for diverse geological conditions in China will enable us to maintain our dominant position in discovering and developing crude oil and natural gas reserves in China.

Refining and Chemicals Operations and Marketing Operations

We compete with Sinopec in our refining and chemicals operations and marketing operations on the basis of price, quality and customer service. Most of our refineries and chemical plants are located in the Northeastern and Northwestern regions of China where we have the dominant market share for refined products and chemical products. We sell the remainder of our refined products and chemical products to the Eastern, Southern, Southwestern and Central-southern regions of China, where our products have a considerable market share. The Eastern and Southern regions of China, where refined products and chemical products are in higher demand, are important markets for our refined products and chemical products. Sinopec has a strong presence in the Eastern and Southern regions of China in competition with us, and most of Sinopec’s refineries, chemical plants and distribution networks are located in these regions in close proximity to these markets. Moreover, as the newly constructed facilities of CNOOC commenced operation in the same region, large quantity of chemical products have been marketed into that area, which made the competition even intense. We expect that we will continue to face competition in our refined products and chemical products sales in these regions.

As a result of China’s recent policies towards diversification of market participants, we also face competition from new market participants. Over the recent years, large state-owned enterprises, such as Sinochem Group and China North Industries Group Corporation, have entered the refinery sector and local independent refineries have been growing rapidly. The refinery sector in China, which had long been dominated by us and Sinopec, has been more competitive.

We also face competition from imported refined products and chemical products in terms of price and quality. In recent years, competition from foreign producers of refined products and chemical products has increased and the retail and wholesale markets in China for refined products and chemical products have been gradually opened to foreign competition as a result of the changes in China’s tariff policies toward imported refined products and chemical products. For example, sales of chemical products imported from the Middle East increased rapidly in China in recent years. In response, we have to reduce our production costs, improve the quality of our products and optimize our product mix.

In addition, we also face competition from alternative energies. For example, electric car, as a clean means of transport with “zero pollution and zero emission” has won the favor of the government. The central and local governments have imposed restrictions on oil-powered cars, while encouraged electricity-powered cars. The alternative energy-powered cars, especially electric cars, will continue to grow. Despite the issues such as immature technologies, short range and limited infrastructure with respect to electric cars, with the importance attached by the central governments to the development of electric car batteries and electric car technologies and the focus given by the local government to the construction of electric car charging infrastructure, the advantages of electric cars will be fully demonstrated in the future. As a result, the impact of the innovation of electric cars on us will become increasingly obvious and the effect of the refined oil being substituted will be even more prominent.

Natural Gas and Pipeline Operations

We are the largest natural gas supplier in the PRC in terms of sales volume. Currently, we face competition from Sinopec, CNOOC, coal-based natural gas producers and other companies engaged in import of natural gas in the supply of natural gas to Beijing, Tianjin, Hebei Province, Shanghai, Jiangsu Province, Anhui Province, Henan Province, Hubei Province, Hunan Province and the Northwestern regions of China, our existing principal

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markets for natural gas. Currently, Sinopec has natural gas fields in Sichuan Province and Chongqing Municipality and sells natural gas to users in places such as Sichuan, Chongqing, Hunan, Jiangsu, Zhejiang and Shanghai. We have also expanded into the coastal regions in Eastern and Southern China where we may face competition from CNOOC and Sinopec. We believe that our dominant natural gas resources base, our relatively advanced automatic technologies in pipeline transmission and our skills in managing long distance pipelines will enable us to continue to be a dominant player in the natural gas markets in China.

See “Item 3 — Key Information — Risk Factors — Risks Related to Competition”.

Environmental Matters

Like other companies in the industries in which we operate, we are subject to numerous national, regional and local environmental laws and regulations promulgated by the governments in those jurisdictions. These laws and regulations concern our oil and gas exploration and production operations, petroleum and petrochemical products and other activities. In particular, some of these laws and regulations:

• require an environmental evaluation report to be submitted and approved prior to the commencement of exploration, production, refining and chemical projects;

• restrict the type, quantities, and concentration of various substances that can be released into the environment in connection with drilling and production activities;

• limit or prohibit drilling activities within protected areas and certain other areas; and

• impose penalties for pollution resulting from oil, natural gas and petrochemical operations, including criminal and civil liabilities for serious pollution.

These laws and regulations may also restrict air emissions and discharges to surface and subsurface water resulting from the operation of natural gas processing plants, chemical plants, refineries, pipeline systems and other facilities that we own. In addition, our operations are subject to laws and regulations relating to the generation, handling, storage, transportation, disposal and treatment of solid waste materials.

We anticipate that the environmental laws and regulations to which we are subject will become increasingly strict and are therefore likely to have an increasing impact on our operations. It is difficult, however, to predict accurately the effect of future developments in such laws and regulations on our future earnings and operations. Some risk of environmental costs and liabilities is inherent in our operations and products, as it is with other companies engaged in similar businesses. We cannot assure you that material costs and liabilities will not be incurred. However, we do not currently expect any material adverse effect on our financial condition or results of operations as a result of compliance with such laws and regulations. We paid pollutant discharge fees of approximately RMB347 million, RMB388 million and RMB333 million in 2015, 2016 and 2017, respectively.

To meet future environmental obligations, we are engaged in a continuous program to develop effective environmental protection measures. This program includes:

• building environment-friendly projects;

• reducing sulfur levels in gasoline and diesel fuel;

• reducing olefins and benzene content in gasoline, and continuously reducing the quantity of emissions and effluents from our refineries and petrochemical plants; and

• developing and installing monitoring systems at our pollutant discharge openings and developing environmental impact assessments for construction projects.

Our capital expenditures on environmental programs in 2015, 2016 and 2017 were approximately RMB4.14 billion, RMB3.10 billion and RMB4.17 billion, respectively.

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Because a number of our production facilities are located in populated areas, we have established a series of preventative measures to improve the safety of our employees and surrounding residents and minimize disruptions or other adverse effects on our business. These measures include:

• providing each household in areas surrounding our production facilities with printed materials to explain and illustrate safety and protection knowledge and skills; and

• enhancing the implementation of various effective safety production measures we have adopted previously.

We believe that these preventative measures have helped reduce the possibility of incidents that may result in serious casualties and environmental consequences. In addition, the adoption of these preventative measures has not required significant capital expenditures to date, and therefore, will not have a material adverse effect on our results of operations and financial condition.

See “Item 3 — Key Information — Risk Factors — Risks Related to Environmental Protection and Safety” and “Item 3 — Key Information — Risk Factors — Risks Related to Climate Change”.

Legal Proceedings

We are involved in several legal proceedings concerning matters arising in the ordinary course of our business. We believe, based on currently available information, that these proceedings, individually or in the aggregate, will not have a material adverse effect on our results of operations or financial condition.

Properties

We own substantially all of our properties, plants and equipment relating to our business activities. We hold exploration and production licenses covering all of our interests in developed and undeveloped acreage, oil and natural gas wells and relevant facilities.

Intellectual Property

Our company logo “ ” is jointly owned by us and CNPC and has been used since December 26, 2004. Together with CNPC, we have applied for trademark registrations of the logo with the State Trademark Bureau of the PRC. To date, most of our applications for registration of and our other trademarks have been approved and certain others are either in the process of review or public announcement phase. In addition, together with CNPC, we have applied for international trademark registration for our logo in other jurisdictions. We have received 583 International Trademark Registration Certificates for our logo covering more than 50 jurisdictions.

As of December 31, 2017, we owned approximately 13,500 patents in China and other jurisdictions. We were granted 2,292 patents in China in 2017.

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Regulatory Matters

Overview

China’s oil and gas industry is subject to extensive regulation by the PRC government with respect to exploration, production, transmission and marketing of crude oil and natural gas as well as production, transportation and marketing of refined products and chemical products. The following central government authorities exercise control over China’s oil and gas industry:

• The Ministry of Natural Resources (formerly known as the Ministry of Land and Resources), or the MNR, has the authority to grant, examine and approve oil and gas exploration and production licenses, and to oversee the registration and transfer of exploration and production licenses;

• The Ministry of Commerce, or the MOFCOM,

• sets and grants import and export volume quotas for crude oil and refined products in accordance with the market supply and demand in China as well as WTO requirements for China; and

• issues import and export licenses for crude oil and refined products to oil and gas companies that have obtained import and export quotas.

• The National Development and Reform Commission, or the NDRC:

• is responsible for industry administration, industry policy and policy coordination over China’s oil and gas industry;

• publishes guidance prices for natural gas and maximum retail prices for certain refined products, including gasoline and diesel;

• formulates the plan for aggregate import and export volume of crude oil and refined products in accordance with the market supply and demand in China;

• approves significant petroleum, natural gas, oil refinery and chemical projects set forth under the Catalogs of Investment Projects Approved by the Central Government; and

• approves Sino-foreign equity and cooperative projects of certain types.

Exploration Licenses and Production Licenses

The Mineral Resources Law authorizes the MNR to exercise administrative authority over the exploration and production of mineral resources within the PRC. The Mineral Resources Law and its supplementary regulations provide the basic legal framework under which exploration licenses and production licenses are granted. The MNR has the authority to issue exploration licenses and production licenses. Applicants must be companies approved by the State Council to engage in oil and gas exploration and production activities.

Applicants for exploration licenses must first register with the MNR blocks in which they intend to engage in exploration activities. The holder of an exploration license is obligated to make a progressively increasing annual minimum exploration investment in each corresponding block. Investments range from RMB2,000 per square kilometer for the initial year to RMB5,000 per square kilometer for the second year, and to RMB10,000 per square kilometer for the third and subsequent years. Additionally, the holder has to pay an annual exploration license fee that starts at RMB100 per square kilometer for each of the first three years and increases by an additional RMB100 per square kilometer per year for subsequent years up to a maximum of RMB500 per square kilometer. The maximum term of an oil and natural gas exploration license is seven years, subject to renewal upon expiration of the original term, with each renewal being up to two years. At the exploration stage, an applicant can also apply for a progressive exploration and production license that allows the holder to test and develop reserves not yet fully proven. Upon the detection and confirmation of the quantity of reserves in a certain block, the holder must apply for a production license based on economic evaluation, market conditions and

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development planning in order to shift into the production phase in a timely fashion. In addition, the holder needs to obtain the right to use that block of land. Generally, the holder of a full production license must obtain a land use rights certificate for industrial land use covering that block of land.

The MNR issues production licenses to applicants on the basis of the reserves reports approved by the relevant authorities. Production license holders are required to pay an annual production right usage fee of RMB1,000 per square kilometer. Administrative rules issued by the State Council provide that the maximum term of a production license is 30 years, 20 years, or 10 years as applicable to large, medium and small mineral blocks, respectively. In accordance with a special approval from the State Council, the MNR has issued production licenses with terms coextensive with the projected productive life of the assessed proven reserves as discussed above. Each of our production licenses is renewable upon our application 30 days prior to expiration. If oil and gas prices increase, the productive life of our crude oil and natural gas reservoirs may be extended beyond the current terms of the relevant production licenses.

Among the major PRC oil and gas companies, the exploration licenses and production licenses held by us, Sinopec and CNOOC account for the majority of mining rights in China. Among those companies, we and Sinopec primarily engage in onshore exploration and production, while CNOOC primarily engages in offshore exploration and production.

Pricing

Crude Oil

We and Sinopec set the crude oil median prices each month based on the average international market FOB prices for crude oil of different grades in the previous month. In addition, PetroChina and Sinopec negotiate a premium or discount to reflect transportation costs, the differences in oil quality and the supply and demand.

Refined Products

The prices of our gasoline and diesel products are set by the government.

On December 18, 2008, the NDRC issued the Notice on Implementing Price and Tax Reform of Refined Oil, which improved the pricing mechanism for refined oil products. Under the improved mechanism, the domestic ex-factory prices of refined oil products are determined on the basis of the relevant international crude oil prices, by taking into consideration the average domestic processing cost, tax and a pre-determined profit margin. The prices of diesel and gasoline continue to follow the government guiding prices. The highest retail price set for gasoline and diesel is calculated by using the relevant ex-factory price and a determined profit margin for retailing activities.

On March 26, 2013, the NDRC issued the Notice on Further Improvement of Refined Oil Pricing Mechanism and the amended and restated Measures for Oil Prices Management (on trial). Under this new system, (i) the price adjustment period was shortened from 22 working days to 10 and the 4% limit on the price adjustment range was eliminated; (ii) the composition of the basket of crudes to which refined oil products prices are linked was adjusted in light of the composition of the imported crudes and changes in crudes trading on the international market; and (iii) the refined oil products pricing mechanism was further enhanced.

In order to promote the oil product quality upgrading, on September 16, 2013, the NDRC issued the Circular regarding Relevant Opinions on the Pricing Policy for Oil Product Quality Upgrading, pursuant to which the price increase standard for the auto-use gasoline and diesel upgraded to China IV Standard shall be set as RMB290 per ton and RMB370 per ton, respectively, and the price increase standard for the auto-use gasoline and diesel upgraded from China IV to China V Standard shall be set at RMB170 per ton and RMB160 per ton, respectively.

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On January 13, 2016, the NDRC issued the Notice on Issues Concerning Further Improving the Pricing Mechanism for Refined Oil, pursuant to which, starting from January 13, 2016, downward adjustment of the refined oil price is subject to a floor of US$40 per barrel. Accordingly, when the international crude oil price drops to US$40 per barrel or below, the refined oil price in China shall not be adjusted downwards and the unadjusted amount shall be allocated to the reserve fund to be used for energy saving, reduction of emission, improving the oil quality and securing a safe supply of refined oil. When the international crude oil price surges to US$130 per barrel or above, appropriate financial and taxation policies shall be adopted to ensure the production and supply of refined oil but the refined oil price shall in principle remain unadjusted or shall only be slightly adjusted upwards. This regulation also liberalized the ex-factory price of liquefied petroleum gas.

On December 15, 2016, the Ministry of Finance (“MOF”) and NDRC issued Circulation on Collection of Risk Reserves for Oil Price Control (the “Rules”), pursuant to which, effective from January 13, 2016, when the price of crude oil in international market drops below the lower limit set by the Chinese government, domestic enterprises which are engaged in production, commissioned processing and import and export of such refined oil products as gasoline and diesel shall make full payment of risk reserves according to sales volumes and the corresponding collection rates. “Sales volumes” refer to the actual sales volumes of such enterprises between the two adjacent window periods of price adjustment. Collection rates for risk reserves are determined with reference to the unadjusted prices of refined oil products. The NDRC and the MOF jointly determine the collection rates on a quarterly basis and notify the collection agencies in writing..

On December 22, 2016, MOF issued Notice on Proper Collection of Risk Reserves for Oil Price Adjustment in 2016, pursuant to which, if the subsidiaries (limited to listed companies) of CNPC, Sinopec and CNOOC have already recognized the risk reserves accrued as operation revenue, such subsidiaries may opt to have such risk reserves to be paid by their parent companies out of the net profit.

Chemical Products

We determine the prices of all of our chemical products based on market conditions.

Natural Gas

On June 28, 2013, the NDRC announced the initiation of a program for adjustment of natural gas prices from July 10, 2013. The program consists of (i) changing pricing mechanism of natural gas from ex-factory price to citygate price, and no longer differentiating the prices payable by the users in different provinces; (ii) establishment of the mechanism linking the citygate price of natural gas to the price of alternative energy with a view to gradually shift to a market-driven pricing mechanism for natural gas; (iii) adopting differential pricing approaches towards the existing usage and the incremental usage so as to establish as soon as practicable a new pricing mechanism for natural gas while reducing the impact that the pricing reform will have on existing gas users.

On August 10, 2014, based on the natural gas price reform roadmap, the NDRC issued price adjustment programs for non-residential use stock natural gas, pursuant to which, effective from September 1, 2014, (i) the natural gas citygate price for non-residential uses was increased by RMB400 per thousand cubic meters; (ii) no adjustment will be made to the citygate price for natural gas consumed by residential users; and (iii) further actions will be taken to implement the policy in connection with the liberalization of the sales price of imported liquefied natural gas and the ex-factory prices for shale gas, coal-seam gas and coal gas.

On February 26, 2015, the NDRC announced the unification of the prices of domestic natural gas of existing and incremental gas volume starting from April 1, 2015.

On November 18, 2015, the NDRC announced the reduction of the price of natural gas for non-residential use from November 20, 2015, whereby the citygate price ceiling for non-resident users was decreased by

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RMB700/kilostere while the preferential policy and price for natural gas used by fertilizer makers remain unchanged. With a view to improve the market-driven pricing mechanism for natural gas, since November 20, 2016, suppliers and non-residential users can negotiate prices of natural gas up to 20% above the benchmark price for non-residential uses.

On October 15, 2016, the NDRC issued Clarifying the Price Policy for Gas Storage Facilities, which announced that the prices for natural gas purchase and sale to be conducted by and the prices of gas storage services to be provided by the gas storage facilities shall be formed through the operation of market.

On November 5, 2016, NDRC issued Notice on Enhancing Price Liberalization for Gas Used as Fertilizer Feedstock, pursuant to which, effective from November 10, 2016, prices for gas used as fertilizer feedstock were fully liberalized and subject to negotiations between the vendors and the purchasers. It encourages the trading of the natural gas used by fertilizer makers in the oil and gas exchange centers in order to achieve open and transparent pricing of gas as fertilizer feedstock.

On November 11, 2016, the NDRC issued Notice on Relevant Issues concerning the Price Policy for Natural Gas Citygate Price in Fujian Province, which expressly liberated the citygate natural gas price in Fujian Province and made Fujian the first province that would implement fully liberated citygate natural gas price.

On August 29, 2017, the NDRC issued Notice on Reduction of the Benchmark City Gate Price of Non-residential Natural Gas, which reduced the benchmark city gate price of non-residential natural gas by RMB100 per thousand cubic meters effective from September 1, 2017.

Pipeline Transmission Tariff

Pipeline transmission tariffs for crude oil, refined oil and natural gas are set by the government. Cross province transmission tariffs are set by the NDRC and provincial transmission tariffs are set by the provincial level branches of the NDRC.

For those pipelines constructed prior to 1984, which were funded by the government, the transmission tariff is a uniform flat tariff determined based on the principle of minimum profit margin. For those pipelines constructed with the funds of the enterprises after 1984, the tariffs must be submitted to the NDRC for examination and approval on a case by case basis and based on the capital investment made in the pipeline, the operation period for the pipeline and a reasonable profit margin.

On October 9, 2016, the NDRC issued Rules on Administration of the Pipeline Transmission Tariff for Natural Gas (on trial) and Rules on Supervision and Review of the Costs Used in Setting the Pipeline Transmission Tariff (on trial), which expressly stipulated that the pipeline transmission tariff for natural gas shall be reviewed and set on the principle of “permissible costs plus reasonable margins”, and the rules intended to regulate the tariff charged by companies engaged in cross-province pipeline transmission operation.

Production and Marketing

Crude Oil

Each year, the NDRC publishes the projected target for the production and process of crude oil in China based on the domestic consumption estimates submitted by domestic producers, including but not limited to us, Sinopec and CNOOC, the production of these companies as well as the forecast of international crude oil prices. The actual production levels are determined by the producers themselves and may vary from the submitted estimates. Since January 1, 2007, when the Measures on the Administration of the Refined Products Market promulgated by the MOFCOM became effective, qualified domestic producers are permitted to engage in the sale and storage of crude oil. Foreign companies with the required qualifications are also allowed to establish and invest in enterprises to conduct crude oil business.

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Refined Products

Previously, only we, Sinopec and joint ventures established by the two companies had the right to conduct gasoline and diesel wholesale business. Other companies, including foreign invested companies, were not allowed to engage in wholesale of gasoline and diesel in China’s domestic market. In general, only domestic companies, including Sino-foreign joint venture companies, were permitted to engage in retail of gasoline and diesel. Since December 11, 2004, wholly foreign-owned enterprises are permitted to conduct refined oil retail business. Since January 1, 2007, when the Measures on the Administration of the Refined Products Market became effective, all entities meeting certain requirements are allowed to submit applications to the MOFCOM to conduct refined oil products wholesale, retail and storage businesses.

Natural Gas

The NDRC determines each year the annual national natural gas production target based on the natural gas production targets submitted by domestic natural gas producers. Domestic natural gas producers determine their annual natural gas production targets on the basis of consumption estimates. The actual production volume of each producer is determined by the producer itself, which may deviate from the production target submitted by it. The NDRC also formulates the annual natural gas guidance supply plan, which requires natural gas producers to distribute a specified amount of natural gas to designated key municipalities and key enterprises.

Foreign Investments

Cooperation in Exploration and Production with Foreign Companies

Currently, CNPC is one of the few Chinese companies that have the right to cooperate with foreign companies in onshore crude oil and natural gas exploration and production in China. CNOOC has the right to cooperate with foreign companies in offshore crude oil and natural gas exploration and production in China.

Sino-foreign cooperation projects and foreign parties in onshore oil and gas exploration and production in China are generally selected through open bids and bilateral negotiations. Those projects are generally conducted through production sharing contracts. The MOFCOM must approve those contracts.

As authorized by the Regulations of the PRC on Exploration of Onshore Petroleum Resources in Cooperation with Foreign Enterprises, CNPC has the right to enter into joint cooperation arrangements with foreign oil and gas companies for onshore crude oil and natural gas exploration and production. We do not have the capacity to enter into production sharing contracts directly with foreign oil and gas companies under existing PRC law. Accordingly, CNPC will continue to enter into production sharing contracts. After signing a production sharing contract, CNPC will, subject to approval of the MOFCOM, assign to us most of its commercial and operational rights and obligations under the production sharing contract as required by the Non-competition Agreement between CNPC and us.

Transportation and Refining

Since December 1, 2007, PRC regulations have encouraged foreign investment in the construction and operation of oil and gas pipelines and storage facilities. On March 10, 2015, PRC lifted the restrictions on foreign investment in refineries with a production capacity of below 10 million tons per annum. Furthermore, when appropriate, projects must receive necessary approvals from relevant PRC government agencies. See “Item 3 — Key Information — Risk Factors — Risks Related to Government Regulation.”

Import and Export

Since January 1, 2002, state-owned trading companies have been allowed to import crude oil under an automatic licensing system. Non-state-owned trading companies have been allowed to import crude oil and

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refined products subject to quotas. The export of crude oil and refined oil products by both state-owned trading companies and non-state-owned trading companies is subject to quota control. The MOFCOM has granted us the right to conduct crude oil and refined product import and export business.

Capital Investment and Financing

Capital investments in exploration and production of crude oil and natural gas made by Chinese oil and gas companies are subject to approval by or filing with relevant government authorities. The following projects are subject to approval by the NDRC or the competent local authorities:

• facilities for taking delivery of and storing liquefied petroleum gas (excluding accessory projects of oil or gas fields or refineries);

• new facilities for taking delivery of or storing imported liquefied natural gas (including expansion on a different site other than the original facilities);

• oil or gas transmission pipeline networks (excluding gathering and transmission pipeline networks of oil or gas fields);

• new refineries, expansion of existing primary processing refineries;

• new ethylene, paraxylene (PX), diphenylmethane diisocyanate (MDI) projects; and

• new coal-to-olefins projects, new coal to paraxylene (PX) projects, and new coal-to-methanol projects with a capacity of 1 million tons per annum or more.

Taxes, Fees and Royalties

We are subject to a variety of taxes, fees and royalties. The table below sets forth the major taxes, fees and royalty fees payable by us or by Sino-foreign oil and gas exploration and development cooperative projects. Our subsidiaries which have legal person status should report and pay enterprise income tax to the relevant tax authorities based on the applicable laws and regulations.

Tax Item	Tax Base	Tax Rate
Enterprise income tax	Taxable income	25%, or 15% for qualified taxpayers in certain western regions of China
Value-added tax	Revenue	Prior to July 1, 2017, value added tax rates were 17%, 13%, 11% and 6%, as applicable. In particular, 13% was for liquefied natural gas, natural gas, liquefied petroleum gas, agricultural film and fertilizers and 17% for oil products and other products. Effective from July 1, 2017, the rate of 13% was cancelled and the applicable rate for natural gas has been changed from 13% to 11%. Effective from May 1, 2018, the rate of 17% will be changed to 16% and the rate of 11% will be changed to 10%. Since May 1, 2016, as a result of the reform of value-added tax in lieu of business tax, certain sectors such as real estate, engineering construction, financial and other sectors, which previously were subject to business tax, have been subject to value-added tax instead.

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Tax Item	Tax Base	Tax Rate
Consumption tax	Aggregate volume sold or self-consumed	RMB1.52 per liter for gasoline, naphtha, solvent naphtha and lubricant and RMB1.2 per liter for diesel, aviation kerosene and fuel oil. Collection of taxes on aviation kerosene continues to be suspended.
Resource tax	Sales	6%, exemption or deduction may apply if qualified.
Crude oil special gain levy	Sales amount above specific threshold	Five-level progressive tax rates from 20% to 40%, taxable if the crude oil price reach the threshold of US$65 per barrel.
Exploration license fee(1)	Area	RMB100 to RMB500 per square kilometer per year
Production license fee(1)	Area	RMB1,000 per square kilometer per year
Royalty fee(2)	Production volume	Progressive rate of 0-12.5% for crude oil and 0-3% for natural gas

(1) Effective from April 13, 2017, the exploration license fee and production license fee were renamed to mining right occupancy fees.

(2) It shall be paid in cash and is only applicable to Sino-foreign oil and gas exploration and development cooperative projects in China. However, effective from December 1, 2010, the royalty fee payable by new Sino-foreign oil and gas exploration and development cooperative projects in Western regions was replaced by the resource tax, while those cooperative projects under contracts signed before December 1, 2010 continue to be subject to the royalty fee until the contracts expire. Effective from November 1, 2011, the royalty fee payable by new Sino-foreign oil and gas exploration and development cooperative projects in the whole country was replaced by the resource tax, while those cooperative projects under contracts signed before November 1, 2011 continue to be subject to the royalty fee until the contracts expire.

Environmental Regulations

We are subject to various PRC national environmental laws and regulations and also environmental regulations promulgated by the local governments in whose jurisdictions we have operations. China has adopted extensive environmental laws and regulations that affect the operation of the oil and gas industry. There are national and local standards applicable to emissions control, discharges to surface and subsurface water and disposal, and the generation, handling, storage, transportation, treatment and disposal of solid waste materials.

The environmental regulations require a company, such as us, to register or file an environmental impact report with the relevant environmental authority for approval before it undertakes any construction of a new production facility or any major expansion or renovation of an existing production facility. The new facility or the expanded or renovated facility will not be permitted to operate unless the relevant environmental authority has inspected the environmental equipment installed at the facility and decides it satisfies the environmental protection requirements. A company that wishes to discharge pollutants, whether it is in the form of emission, water or materials, must submit a pollutant discharge declaration statement detailing the amount, type, location and method of treatment. After reviewing the pollutant discharge declaration, the relevant environmental authority will determine the amount of discharge allowable under the law and will issue a pollutant discharge license for that amount of discharge subject to the payment of discharge fees. If a company discharges more than is permitted in the pollutant discharge license, the relevant environmental authority can fine the company up to several times the discharge fees payable by the offending company for its allowable discharge, or require the offending company to close its operation to remedy the problem.

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Item 4A — UNRESOLVED STAFF COMMENTS

We do not have any unresolved staff comment.

Item 5 — OPERATING AND FINANCIAL REVIEW AND PROSPECTS

General

You should read the following discussion together with our consolidated financial statements and their notes included elsewhere in this annual report. Our consolidated financial statements have been prepared in accordance with IFRS.

Overview

We are engaged in a broad range of petroleum and natural gas related activities, including:

• the exploration, development, production and sale of crude oil and natural gas;

• the refining of crude oil and petroleum products, and the production and marketing of basic petrochemical products, derivative chemical products and other chemical products;

• marketing of refined oil products and trading; and

• the transmission of natural gas, crude oil and refined oil products as well as the sale of natural gas.

We are China’s largest producer of crude oil and natural gas and are one of the largest companies in China in terms of revenue. In 2017, we produced approximately 887.0 million barrels of crude oil and approximately 3,423.4 Bcf of natural gas for sale. Our refineries processed approximately 1,016.9 million barrels of crude oil in 2017. In 2017, we had revenue of RMB2,015,890 million and profit attributable to owners of the Company of RMB22,798 million.

Factors Affecting Results of Operations

Our results of operations and the period-to-period comparability of our financial results are affected by a number of external factors, including changes in the prices, production and sales volume of our principal products and the regulatory environment.

Prices of Principal Products

The fluctuations in the prices of crude oil, refined products, chemical products and natural gas have a significant impact on our revenue. See “Item 4 — Information on the Company — Regulatory Matters — Pricing” for a more detailed discussion of current PRC pricing regulations and “Item 3 — Risk Factors — Risks Related to Pricing and Exchange Rate”.

The table below sets forth the average realized prices of our principal products in 2015, 2016 and 2017.

	2015		2016		2017
Crude oil (US$/barrel)		48.35		37.99		50.64
Natural gas (US$/thousand cubic feet)(1)		7.42		5.68		6.27
Gasoline (US$/barrel)		112.80		101.41		111.26
Kerosene (US$/barrel)		67.77		54.67		66.60
Diesel (US$/barrel)		96.39		82.84		90.84

(1) Natural gas citygate price

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Production and Sales Volume for Oil and Gas Products

Our results of operations are also affected by production and sales volumes. Our crude oil and natural gas production volumes depend primarily on the level of the proved developed reserves in the fields in which we have an interest, as well as other factors such as general economic environment and market supply and demand conditions.

Regulatory Environment

Our operating activities are subject to extensive regulations and control by the PRC government, including the issuance of exploration and production licenses, the imposition of industry-specific taxes or product-specific taxes and levies and the implementation of environmental policies and safety standards. Our results of operations will be affected by any future changes of such regulatory environment.

Critical Accounting Policies

The preparation of our consolidated financial statements requires our management to select and apply significant accounting policies, the application of which may require management to make judgments and estimates that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of our financial statements, and the reported amounts of revenue and expenses during the reporting period. Notwithstanding the presentation of our principal accounting policies in Note 3 to our consolidated financial statements included elsewhere in this annual report, we have identified the accounting policies below as most critical to our business operations and the understanding of our financial condition and results of operations presented in accordance with IFRS. Although these estimates are based on our management’s best knowledge of current events and actions, actual results ultimately may differ from those estimates.

Accounting for Oil and Gas Exploration and Production Activities

We use the successful efforts method of accounting, with specialized accounting rules that are unique to the oil and gas industry, for oil and gas exploration and production activities. Under this method, geological and geophysical costs incurred are expensed when incurred. However, all costs for developmental wells, support equipment and facilities, and proved mineral interests in oil and gas properties are capitalized. Costs of exploratory wells are capitalized as construction in progress pending determination of whether the wells find proved reserves. For exploratory wells located in regions that do not require substantial capital expenditures before the commencement of production, the evaluation of the economic benefits of the reserves in such wells will be completed within one year following the completion of the exploration drilling. Where such evaluation indicates that no economic benefits can be obtained, the relevant costs of exploratory wells will be converted to dry hole exploration expenses. The relevant costs will be classified as oil and gas assets and go through impairment review if the evaluation indicates that economic benefits can be obtained. For wells with economically viable reserves in areas where a major capital expenditure would be required before production can begin, the related well costs remain capitalized only if additional drilling is under way or firmly planned. Otherwise the well costs are expensed as dry holes. We have no material costs of unproved properties capitalized in oil and gas properties.

Oil and Gas Reserves

The estimation of the quantities of recoverable oil and gas reserves in oil and gas fields is integral to effective management of our exploration and production operations. Because of the subjective judgments involved in developing and assessing such information, engineering estimates of the quantities of recoverable oil and gas reserves in oil and gas fields are inherently imprecise and represent only approximate amounts.

Before estimated oil and gas reserves are designated as “proved”, certain engineering criteria must be met in accordance with industry standards and the regulations of the SEC. Proved oil and gas reserves are the estimated

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quantities of crude oil and natural gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulation before the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether the estimate is a deterministic estimate or probabilistic estimate. Therefore, these estimates do not include probable or possible reserves. Our proved reserves estimates are updated annually by independent, qualified and experienced oil and gas reserves engineering firms in the United States, Singapore and Canada. Our oil and gas reserves engineering department has policies and procedures in place to ensure that these estimates are consistent with these authoritative guidelines. Among other factors required by authoritative guidelines, this estimation takes into account recent information about each field, including production and seismic information, estimated recoverable reserves of each well, and oil and gas prices and operating costs as of the date the estimate is made. The price shall be the average price during the 12-month period before the ending date of the period covered by this report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions. The costs shall be that prevailing at the end of the period.

Despite the inherent imprecision in these engineering estimates, estimated proved oil and gas reserves quantity has a direct impact on certain amounts reported in the financial statements. In addition to the capitalization of costs related to oil and gas properties on the balance sheet discussed earlier, estimated proved reserves also impact the calculation of depreciation, depletion and amortization expenses of oil and gas properties. The cost of oil and gas properties is amortized at the field level on the unit of production method. Unit of production rates are based on the total oil and gas reserves estimated to be recoverable from existing facilities based on the current terms of our production licenses. Our reserves estimates include only crude oil and natural gas which management believes can be reasonably produced within the current terms of the production licenses that are granted by the Ministry of Natural Resources, ranging from 30 years to 55 years from the effective date of issuance in March 2000, renewable upon application 30 days prior to expiration. Consequently, the impact of changes in estimated proved reserves is reflected prospectively by amortizing the remaining book value of the oil and gas property assets over the expected future production. If proved reserves estimates are revised downward, earnings could be affected by higher depreciation expense or an immediate write-down of the property’s book value had the downward revisions been significant See “— Property, Plant and Equipment” below. Given our large number of producing properties in our portfolio, and the estimated proved reserves, it is unlikely that any changes in reserves estimates will have a significant effect on prospective charges for depreciation, depletion and amortization expenses.

In addition, due to the importance of these estimates in understanding the perceived value and future cash flows of a company’s oil and gas operations, we have also provided supplemental disclosures of “proved” oil and gas reserves estimates prepared in accordance with authoritative guidelines elsewhere in this annual report.

Property, Plant and Equipment

Where it is probable that property, plant and equipment, including oil and gas properties, will generate future economic benefits, their costs are initially recorded in the consolidated statement of financial position as assets. Cost represents the purchase price of the asset and other costs incurred to bring the asset into existing use. Subsequent to their initial recognition, property, plant and equipment are carried at cost less accumulated depreciation, depletion and amortization (including any impairment).

Depreciation, to write off the cost of each asset, other than oil and gas properties, to their residual values over their estimated useful lives is calculated using the straight-line method.

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The Company uses the following useful lives for depreciation purposes:

Buildings and plant	8-40 years
Equipment and machinery	4-30 years
Motor vehicles	4-14 years
Other	5-12 years

No depreciation is provided on construction in progress until the assets are completed and ready for use.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

Property, plant and equipment, including oil and gas properties, are reviewed for possible impairments when events or changes in circumstances indicate that the carrying amount may not be recoverable. Determination as to whether and how much an asset is impaired involves management estimates and judgments such as future crude oil prices, prices of refined products and chemical products, the operation costs, the product mix, production volumes and the oil and gas reserves. Certain estimates and assumptions adopted by the management in the impairment reviews and calculations are formed by the internal professional team (including operations and finance teams) by reference to external institutions’ analysis reports and taking into account current economic conditions. The other estimates and assumptions are consistent with the assumptions used in our business plans.

In forming the relevant estimates and assumptions for impairment tests by our management, our internal professional team (including operations and finance teams) forms a preliminary conclusion by reference to the external institutions’ analysis reports and our historical financial data, and taking into account current economic conditions and our business plans. Then, the preliminary conclusion is reviewed and approved by the management. The approved estimates and assumptions are then utilized by our subsidiaries and branches to perform the impairment tests.

When determining whether there are indications of impairment for oil and gas properties, we consider internal factors, mainly including the decline of production and reserves volumes at the late development stage of certain oil blocks and a significant drop in economic benefits of certain oil blocks resulting from the lower price of crude oil, and external factors, mainly including a significant drop in international prices of crude oil, resulting from the imbalance of supply and demand of global crude oil. When an indication of impairment of certain oil blocks is identified, we will perform the impairment tests on the oil blocks. An impairment loss is recognized for the amount by which the carrying amount of the cash generate unit exceeds the higher of its fair value less costs to sell and its value in use. Value in use is determined by reference to the discounted expected future cash flows to be derived from the cash generate unit.

The expected medium-to-long-term future international prices of crude oil utilized by us when estimating the expected future cash flows are determined mainly based upon the forecast of the international prices of crude oil made by principal international investment institutions combined with the judgment and analysis of the future trends of international prices of crude oil made by us. We calculated the expected future cash flows of each oil block according to the estimates of future production volume levels per year stated in the oil and gas reserves reports, the estimates of operation costs of oil and gas made by us, and taking into account its future capital expenditure plan. We refer to the weighted average cost of capital of the oil and gas industry when determining the discount rate and makes relevant adjustments according to specific risks in different countries or regions. In the year ended December 31, 2016 and 2017, the after-tax discount rates adopted by most of our oil and gas regions were between 7.1% and 10.3%, and between 7.6% and 11.0%, respectively.

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Given the broad scope of our property, plant and equipment, the impairment test involves numerous assumptions, which are interrelated to each other to a certain extent. For example, the estimates and judgments with respect to the product mix, production costs and oil and gas reserves may vary along with the changes in crude oil prices. The sensitivity analysis performed after taking into account the interrelationship among all of the estimates and judgments would be neither cost efficient nor time efficient. As a result, the management believes that a sensitivity analysis of relevant assumptions on impairment is not practicable. Favorable changes to some assumptions might have avoided the need to impair any assets or make it necessary to reverse an impairment loss recognized in prior periods, whereas unfavorable changes might have caused an additional unknown number of other assets to become impaired, or resulted in larger impacts on impaired assets.

Our operating results in the following fiscal year may deviate from management’s estimates or judgments. This would require an adjustment to the provision for impairment of the property, plant and equipment disclosed in Note 15 to the consolidated financial statements.

Gains and losses on disposals of property, plant and equipment are determined by reference to their carrying amounts and are recorded in the consolidated profit or loss.

Interest and other costs on borrowings to finance the construction of property, plant and equipment are capitalized during the period of time that is required to complete and prepare the asset for its intended use. Costs for repairs and maintenance activities are expensed as incurred except for costs of components that result in improvements or betterments which are capitalized as part of property, plant and equipment and depreciated over their useful lives.

Provision for Asset Decommissioning

Provision is recognized for the future decommissioning and restoration of oil and gas properties. The amounts of the provision recognized are the present values of the estimated future expenditures. The estimation of the future expenditures is based on current local conditions and requirements, including legal requirements, technology, price level, etc. In addition to these factors, the present values of these estimated future expenditures are also impacted by the estimation of the economic lives of oil and gas properties. Changes in any of these estimates will impact the operating results and the financial position of the Company over the remaining economic lives of the oil and gas properties.

Operating Results

The following discussion is based on our historical results of operations. As a result of the factors discussed above, such results of operations may not be indicative of our future operating performance.

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Our statement of comprehensive income for each of the years ended December 31, 2015, 2016 and 2017 is summarized in the table below.

	Year Ended December 31,
	2015			2016			2017
	(RMB in millions)
Revenue		1,725,428			1,616,903			2,015,890
Operating expenses		(1,646,176	)		(1,556,268	)		(1,948,168	)
Profit from operations		79,252			60,635			67,722
Exchange (loss)/gain, net		(632	)		1,257			(1,094	)
Interest expense, net		(22,309	)		(20,857	)		(19,507	)
Share of profit of affiliates and joint ventures		1,504			4,105			5,968
Profit before income tax expense		57,815			45,140			53,089
Income tax expense		(15,726	)		(15,768	)		(16,296	)
Profit for the year attributable to non-controlling interests		6,572			21,515			13,995
Profit for the year attributable to owners of the Company		35,517			7,857			22,798

The table below sets forth our revenue by business segment for each of the years ended December 31, 2015, 2016 and 2017 as well as the percentage changes in revenue for the periods shown.

	2015			2016			2016 vs. 2015			2017			2017 vs. 2016
	(RMB in millions, except percentages)
Revenue
Exploration and production		475,412			412,484			(13.2	)%		505,430			22.5	%
Refining and chemicals		642,428			582,510			(9.3	)%		707,804			21.5	%
Marketing		1,383,426			1,301,616			(5.9	)%		1,660,456			27.6	%
Natural gas and pipeline		281,778			247,477			(12.2	)%		295,786			19.5	%
Headquarters and others		2,507			2,197			(12.4	)%		2,057			(6.4	)%
Total		2,785,551			2,546,284			(8.6	)%		3,171,533			24.6	%
Less intersegment sales		(1,060,123	)		(929,381	)		(12.3	)%		(1,155,643	)		24.3	%
Consolidated net sales from operations		1,725,428			1,616,903			(6.3	)%		2,015,890			24.7	%

The table below sets forth our operating income by business segment for each of the years ended December 31, 2015, 2016 and 2017, as well as the percentage changes in operating income for the periods shown. Other profit from operations shown below consists of research and development, business services and infrastructure support to our operating business segments.

	2015			2016			2016 vs. 2015			2017			2017 vs. 2016
	(RMB in millions, except percentages)
Profit/(loss) from operations
Exploration and production		33,961			3,148			(90.7	)%		15,475			391.6	%
Refining and chemicals		4,883			39,026			699.2	%		39,961			2.4	%
Marketing		(500	)		11,048			—			8,279			(25.1	)%
Natural gas and pipeline		51,231			17,885			(65.1	)%		15,688			(12.3	)%
Headquarters and others		(10,323	)		(10,472	)		—			(11,681	)		11.5	%
Total		79,252			60,635			(23.5	)%		67,722			11.7	%

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Year Ended December 31, 2017 Compared to Year Ended December 31, 2016

Consolidated Results of Operations

Overview

In 2017, our revenue was RMB2,015,890 million, representing an increase of 24.7% as compared with 2016. Net profit attributable to our owners was RMB22,798 million, representing an increase of 190.2% as compared with 2016. Basic earnings per share were RMB0.12, representing an increase of RMB0.08 as compared with 2016.

Revenue Our revenue increased by 24.7% from RMB1,616,903 million in 2016 to RMB2,015,890 million in 2017. This increase was primarily due to (i) the increasing selling prices of the majority of oil and gas products and (ii) the increase in the sales volume.

The table below sets out the external sales volume and average realized prices for our major products in 2016 and 2017, respectively:

	Sales Volume (‘000 ton)							Average Realized Price (RMB/ton)
	2016		2017		Percentage of Change (%)			2016		2017		Percentage of Change (%)
Crude oil		100,108		114,930		14.8			1,881		2,392		27.2
Natural gas (hundred million cubic meters, RMB/’000 cubic meter)		1,832.05		1,865.65		1.8			1,097		1,236		12.7
Gasoline		62,406		65,293		4.6			5,725		6,386		11.5
Diesel		80,168		87,324		8.9			4,127		4,600		11.5
Kerosene		16,533		16,849		1.9			2,869		3,552		23.8
Heavy oil		22,952		23,395		1.9			1,892		2,380		25.8
Polyethylene		4,764		4,739		(0.5	)		7,981		8,559		7.2
Lubricant		1,122		1,283		14.3			7,424		7,693		3.6

Note: The sales volumes listed in the table above represent all of our external sales volumes.

Operating Expenses Operating expenses increased by 25.2% from RMB1,556,268 million in 2016 to RMB1,948,168 million in 2017.

Purchases, Services and Other Expenses Purchases, services and other expenses increased by 34.0% from RMB959,640 million in 2016 to RMB1,285,716 million in 2017. This increase was primarily due to the increase in purchase of oil and gas products.

Employee Compensation Costs Employee compensation costs (including salaries and additional costs such as insurance, housing funds and training fees) were RMB125,384 million in 2017, representing an increase of 6.6% from RMB117,662 million in 2016. This increase was primarily due to the improvement of our performance-based remuneration system and the increase in our employee salaries and costs in line with the general increase of employee average salaries in the industry.

Exploration Expenses Exploration expenses increased by 28.6% from RMB18,576 million in 2016 to RMB23,884 million in 2017. This increase was primarily due to the fact that, in order to consolidate the oil and gas resource foundations, we optimized our exploration deployment and increased our investment in oil and gas exploration.

Depreciation, Depletion and Amortization Depreciation, depletion and amortization increased by 8.8% from RMB218,147 million in 2016 to RMB237,375 million in 2017. This increase was primarily due to (i) our

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provision made for assets impairment, and (ii) an increase in depreciation and depletion as a result of an increase in the cost of property, plant and equipment.

Selling, General and Administrative Expenses Selling, general and administrative expenses increased by 3.8% from RMB74,255 million in 2016 to RMB77,042 million in 2017. This increase was primarily due to the increases in repair expenses and lease expenses as a result of the expansion of our business.

Taxes other than Income Taxes Taxes other than income taxes increased by 4.4% from RMB189,608 million in 2016 to RMB198,022 million in 2017. In particular, the consumption tax increased by RMB2,440 million from RMB140,268 million in 2016 to RMB142,708 million in 2017; and the resource tax increased by RMB3,528 million from RMB14,472 million in 2016 to RMB18,000 million in 2017.

Other Expenses/Income, net Net other expenses in 2017 were RMB745 million, as compared to net other income of RMB21,620 million in 2016. This was primarily due to the combined effects of the following factors: (i) our disposal of certain equity interests in Trans-Asia Gas Pipeline Co., Ltd. (the “Trans-Asia Pipeline”) in 2016 for which we recognized a net gain of RMB24,534 million, and (ii) the increase in the VAT refund relating to the importation of natural gas as recognized in 2017.

Profit from Operations The profit from operations in 2017 was RMB67,722 million, representing an increase of 11.7% from RMB60,635 million in 2016.

Net Exchange (Loss)/Gain Net exchange loss in 2017 was RMB1,094 million, as compared to the net exchange gain of RMB1,257 million in 2016. This was primarily due to the depreciation of US Dollar against Renminbi in 2017.

Net Interest Expense Net interest expense decreased by 6.5% from RMB20,857 million in 2016 to RMB19,507 million in 2017, primarily due to a decrease in the average balance of interest-bearing borrowings as compared with 2016 as a result of our active measures to control debts and reduce interest.

Profit Before Income Tax Expense Profit before income tax expense increased by 17.6% from RMB45,140 million in 2016 to RMB53,089 million in 2017.

Income Tax Expense The income tax expense increased by 3.3% from RMB15,768 million in 2016 to RMB16,296 million in 2017, which was primarily due to the increase in taxable income.

Profit for the Year As a result of the foregoing, our profit in 2017 increased by 25.3% from RMB29,372 million in 2016 to RMB36,793 million in 2017.

Profit Attributable to Non-controlling Interests Net profit attributable to non-controlling interests decreased by 35.0% from RMB21,515 million in 2016 to RMB13,995 million in 2017, which was primarily due to the fact that the disposal of certain equity interests in Trans-Asia Pipeline in 2016 was attributable to non-controlling interests.

Profit Attributable to Owners of the Company The net profit attributable to owners of the company increased by 190.2% from RMB7,857 million in 2016 to RMB22,798 million in 2017.

Segment Results

Exploration and Production Segment

Revenue Revenue of the exploration and production segment was RMB505,430 million in 2017, representing an increase of 22.5% from RMB412,484 million in 2016. This increase was primarily due to the

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combined effects of (i) the increase in the price of crude oil as partially offset by the decrease in the sales volume of crude oil, and (ii) the increase in the sales volume of natural gas and shale gas. Our average realized crude oil price in 2017 was US$50.64 per barrel, representing an increase of 33.3% from US$37.99 per barrel in 2016.

Operating Expenses Operating expenses of the exploration and production segment increased by 19.7% from RMB409,336 million in 2016 to RMB489,955 million in 2017. This increase was primarily due to the combined effects of (i) realized gains derived from the disposal of certain equity interests in the Trans-Asia Pipeline in 2016, and (ii) the increase in depreciation, depletion and amortization in 2017.

We enhanced our control over costs and expenses continuously. Our unit oil and gas lifting cost was US$11.53 per barrel in 2017, representing a decrease of 1.2% from US$11.67 per barrel in 2016.

Profit from Operations In 2017, in response to the increasingly complex development situation, in domestic operations, we adhered to the low-cost strategy and the meticulous management, optimized development plans, and took multi-measures to save energy and tap the potential synergies so as to raise the profit per single well. In overseas operations, we devoted major efforts to broadening sources of income and reducing expenditure as well as cutting costs and enhancing efficiency by various means such as optimizing assets and decreasing inventory. In 2017, the exploration and production segment realized an operating profit of RMB15,475 million, representing an increase of RMB12,327 million from RMB3,148 million in 2016, contributing a substantial increase in the profit level.

Refining and Chemicals Segment

Revenue The revenue of the refining and chemicals segment increased by 21.5% from RMB582,510 million in 2016 to RMB707,804 million in 2017. This increase was primarily due to the increase in oil prices and the production of high-profitability products as a result of our optimized product structure. Both the sales volume and price of most of the refined and chemical products were increased.

Operating Expenses Operating expenses of the refining and chemicals segment increased by 22.9% from RMB543,484 million in 2016 to RMB667,843 million in 2017. This increase was primarily due to the combined effects of (i) the increase in the expenses associated with the purchase of crude oil and feedstock oil from external suppliers; and (ii) impairment provision for some petrochemical assets with higher costs of production and operation in accordance with the accounting standards.

In 2017, we continued to optimize our productions and operations in the refining and chemicals segment. Due to the effects of the increase in the processing volume of crude oil and strengthened control over costs and expenses, the cash processing cost of our refineries was RMB169.04 per ton, representing a decrease of RMB10.89 per ton from RMB179.93 per ton in 2016.

Profit from Operations In 2017, in our refining and chemicals segment, we focused on the principle of market orientation and benefit, energetically pushed forward the structure optimization, reform and innovation, increased the production of high value-added and market-favorable products, and improved internal profit generating capabilities; intensified control over costs and expenses. These efforts resulted in several economic indicators being better than 2016 and maintaining a dominant position in profit contribution. In 2017, we realized operating profits of RMB39,961 million in the refining and chemicals segment, representing an increase of 2.4% as compared with RMB39,026 million in 2016. The refining operations recorded an operating profit of RMB32,573 million, representing an increase of 18.2% as compared with RMB27,565 million in 2016 due to the optimized product structure and the increase in gross profit. Taking advantage of the prosperous cycle of the chemical product market, we increased the sales of high-profitability products. However, as affected by the impairment provision for some petrochemical assets with higher production and operation costs, our chemical operations realized an operating profit of RMB7,388 million, representing a decrease of 35.5%, as compared with RMB11,461 million in 2016.

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Marketing Segment

Revenue Revenue of the marketing segment increased by 27.6% from RMB1,301,616 million in 2016 to RMB1,660,456 million in 2017. This increase was primarily due to the combined effects of (i) the increase in both sales volume and prices of such products as gasoline and kerosene, and the rise in the price and the decrease in the sales volume of diesel; and (ii) the increase in revenue derived from trading of oil products.

Operating Expenses Operating expenses of the marketing segment increased by 28.0% from RMB1,290,568 million in 2016 to RMB1,652,177 million in 2017, primarily due to an increase in the expenses for purchase of refined oil from external suppliers.

Profit from Operations In 2017, in active response to the unfavourable condition of fiercer competition in the market, the marketing segment aimed for maximizing the overall results of the company. In domestic operations, we kept strengthening connection between production, sales and inventory management, optimized allocation of resources, enhanced cost and expense control, improved the integration of marketing and increased the profit from our non-oil business. In international trading, the marketing segment intensified the coordination and cooperation with domestic industrial chain, and optimized the import and export of oil and gas resources. In 2017, the marketing segment realized an operating profit of RMB8,279 million, representing a decrease of 25.1% as compared with RMB11,048 million in 2016.

Natural Gas and Pipeline Segment

Revenue Revenue of the natural gas and pipeline segment amounted to RMB295,786 million in 2017, representing an increase of 19.5% as compared with RMB247,477 million in 2016, primarily due to the increase in the sales volume of natural gas.

Operating Expenses Operating expenses of the natural gas and pipeline segment amounted to RMB280,098 million in 2017, representing an increase of 22.0% as compared with RMB229,592 million in 2016, primarily due to the increase in the expenses for purchasing natural gas.

Profit from Operations In 2017, in the natural gas and pipeline segment, we overcame the negative effects of decline in citygate price, optimized the allocation of resources, reduced comprehensive purchase costs, continued to enhance cost control, and realized an operating profit of RMB15,688 million, representing a decrease of 12.3% as compared with RMB17,885 million in 2016. This decrease was primarily due to the effects that (i) the impairment on goodwill related to the acquisition of PetroChina United Pipelines Co., Ltd. amounted to RMB3,709 million; and (ii) the sales of imported gas recorded a net loss of RMB23,947 million, representing an increase of loss of RMB9,063 million as compared with 2016.

In 2017, our international operations realized a revenue of RMB721,374 million, accounting for 35.8% of the our total revenue. Profit before income tax expense amounted to RMB4,543 million, accounting for 8.6% of our pre-tax profit. Our international operations maintained a healthy development with further improved international operating ability.

Our four operating segments are exploration and production, refining and chemicals, marketing as well as natural gas and pipeline. Overseas operations do not constitute a separate operating segment. The financial data of overseas operations are included in the financial data of the respective operating segment mentioned above.

Year Ended December 31, 2016 Compared to Year Ended December 31, 2015

Consolidated Results of Operations

Overview

In 2016, our revenue was RMB1,616,903 million, representing a decrease of 6.3% compared with the preceding year. Profit attributable to our owners was RMB7,857 million, representing a decrease of 77.9%

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compared with the preceding year. Basic and diluted earnings per share were RMB0.04, representing a decrease of RMB0.15 compared with the preceding year.

Revenue Revenue decreased by 6.3% from RMB1,725,428 million in 2015 to RMB1,616,903 million in 2016. This decrease was primarily due to the combined effects of (i) the decreasing selling prices of oil and gas products, and (ii) the changes in the sales volume of crude oil, natural gas, refined oil and other major products. The table below sets out the external sales volume and average realized prices for our major products in 2015 and 2016, respectively:

	Sales Volume (‘000 ton)							Average Realized Price (RMB/ton)
	2015		2016		Percentage of Change (%)			2015		2016		Percentage of Change (%)
Crude oil		101,620		100,108		(1.5	)		2,134		1,881		(11.9	)
Natural gas (hundred million cubic meter, RMB/‘000 cubic meter)		1,581.10		1,832.05		15.9			1,371		1,097		(20.0	)
Gasoline		60,651		62,406		2.9			5,972		5,725		(4.1	)
Diesel		84,763		80,168		(5.4	)		4,503		4,127		(8.3	)
Kerosene		14,683		16,533		12.6			3,334		2,869		(13.9	)
Heavy oil		15,635		22,952		46.8			2,439		1,892		(22.4	)
Polyethylene		4,270		4,764		11.6			8,202		7,981		(2.7	)
Lubricant		1,150		1,122		(2.4	)		8,234		7,424		(9.8	)

Note: The sales volumes listed in the table above represent all of our external sales volumes.

Operating Expenses Operating expenses decreased by 5.5% from RMB1,646,176 million in 2015 to RMB1,556,268 million in 2016.

Purchases, Services and Other Expenses Purchases, services and other expenses decreased by 9.2% from RMB1,056,795 million in 2015 to RMB959,640 million in 2016. This decrease was primarily due to the facts that (i) our expenses for purchasing oil and gas products declined as a result of the decrease in oil and gas prices, and (ii) certain purchase costs decreased as a result of optimization of production and operations.

Employee Compensation Costs Employee compensation costs (including salaries and additional costs such as insurances, housing funds and training fees) were RMB117,662 million in 2016, representing a decrease of 0.4% from RMB118,082 million in 2015. This decrease was primarily due to the fact that we improved our efficiency-based remuneration system and implemented strict control over the total number of employees and labor costs.

Exploration Expenses Exploration expenses amounted to RMB18,576 million and RMB18,380 million in 2016 and 2015, respectively. We continued to optimize our exploration deployment and endeavored to discover quality reserves of large scales.

Depreciation, Depletion and Amortization Expenses Depreciation, depletion and amortization expenses increased by 7.5% from RMB202,875 million in 2015 to RMB218,147 million in 2016. This increase was mainly due to (i) the decrease in proved reserves as a result of low oil and gas prices, and (ii) an increase in the rate of depletion and amortization, which resulted in the increase in depletion and amortization of our oil and gas properties.

Selling, General and Administrative Expenses Selling, general and administrative expenses increased by 4.2% from RMB71,270 million in 2015 to RMB74,255 million in 2016. This increase was primarily due to

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increased lease expenses as a result of the increase in land-use taxes and the increase in trade volume. We proactively implemented measures for broadening sources of income, reducing expenditure and enhancing efficiency. As a result, our non-production costs and expenses continued to decrease.

Taxes other than Income Taxes Taxes other than income taxes decreased by 7.9% from RMB205,884 million in 2015 to RMB189,608 million in 2016. This decrease was primarily due to (i) a decrease in the consumption tax by RMB9,055 million, from RMB149,323 million in 2015 to RMB140,268 million in 2016, and (ii) a decrease in the resource tax by RMB4,112 million, from RMB18,584 million in 2015 to RMB14,472 million in 2016.

Other Income, net Other net income in 2016 was RMB21,620 million, representing a decrease of RMB5,490 million, from RMB27,110 million in 2015. This decrease was primarily due to the combined effects of the following factors: (i) an investment gain of RMB22,807 million in 2015 derived from the integration of certain pipeline assets and the gain from the equity disposals of some subsidiaries; (iii) the disposal of certain equity interests in Trans-Asia Gas Pipeline Co., Ltd., with gain of RMB24,534 million in 2016; and (iii) the VAT refund relating to the importation of natural gas recognized decreased in 2016 as compared to the preceding year.

Profit from Operations Profit from operations in 2016 was RMB60,635 million, representing a decrease of 23.5% from RMB79,252 million in 2015.

Net Exchange Gain/(Loss) We had a net exchange gain of RMB1,257 million in 2016, while we incurred a net exchange loss of RMB632 million in 2015. This change was primarily due to the appreciation of the US dollar against Renminbi as compared to the preceding year.

Net Interest Expenses Net interest expenses decreased by 6.5% from RMB22,309 million in 2015 to RMB20,857 million in 2016, primarily due to a decrease in the average balance of interest-bearing borrowings as a result of our active measures to control debts and reduce interest.

Profit Before Income Tax Expense Profit before income tax expense decreased by 21.9% from RMB57,815 million in 2015 to RMB45,140 million in 2016.

Income Tax Expense The income tax expense in 2016 was RMB15,768 million, compared to RMB15,726 million in 2015, which was primarily due to the combined effects of (i) the decrease in taxable income as a result of the decrease in oil prices, and (ii) the increase in income tax expense as a result of the increase in profits of certain subsidiaries.

Profit for the Year As a result of the foregoing, our profit for the year decreased by 30.2% from RMB42,089 million in 2015 to RMB29,372 in 2016.

Profit Attributable to Non-controlling Interests Net profit attributable to non-controlling interests increased by RMB14,943 million from RMB6,572 million in 2015 to RMB21,515 million in 2016, primarily due to the increase in the profits of certain subsidiaries.

Profit Attributable to Owners of the Company The net profit attributable to owners of the Company decreased by 77.9% from RMB35,517 million in 2015 to RMB7,857 million in 2016.

Segment Results

Exploration and Production Segment

Revenue The realized revenue of the exploration and production segment was RMB412,484 million in 2016, representing a decrease of 13.2% from RMB475,412 million in 2015, primarily due to the combined

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effects of (i) the decrease in the prices of crude oil and gas, and (ii) the decrease in the sales volume of crude oil. The average realized crude oil price was US$37.99 per barrel in 2016, representing a decrease of 21.4% from US$48.35 per barrel in 2015.

Operating Expenses Operating expenses of the exploration and production segment decreased by 7.3% from RMB441,451 million in 2015 to RMB409,336 million in 2016, primarily due to the combined effects of the following factors: (i) realized gain derived from the disposal of certain equity interests in the Trans-Asia Pipeline; (ii) a provision made in 2015 for impairment of oil and gas properties; and (iii) an increase in depletion of oil and gas assets as a result of a decrease in proved reserves and an increase in depletion rate due to the oil price drop; and (iv) a decrease in purchase expenses for imported crude oil.

We enhanced our control over costs and expenses continuously. The oil and gas lifting cost was US$11.67 per barrel in 2016, representing a decrease of 10.1% from US$12.98 per barrel in 2015.

Profit from Operations In 2016, in our exploration and production segment, we adhered to the low-cost strategy in our domestic operations, optimized our development plans, strengthened the dynamic adjustment of output, focused on the management and control of key elements of production, continued to save energy and tap the potential synergies. In our overseas operations, we devoted our efforts to broadening sources of income, reducing expenditure, as well as enhancing efficiency by various means such as expanding sales, increasing prices and optimizing investments. In an adverse situation where the prices of crude oil and gas dropped, the exploration and production segment realized an operating profit of RMB3,148 million, representing a decrease of 90.7% from RMB33,961 million in 2015.

Refining and Chemicals Segment

Revenue Revenue of the refining and chemicals segment decreased by 9.3% from RMB642,428 million in 2015 to RMB582,510 million in 2016, primarily due to the combined effects of (i) the drop in refined and chemicals products prices such as diesel, and (ii) the changes in the sales volume as affected by the market.

Operating Expenses Operating expenses of the refining and chemicals segment decreased by 14.8% from RMB637,545 million in 2015 to RMB543,484 million in 2016, primarily due to (i) a decrease in the expenses associated with the purchase of crude oil and feedstock oil from external suppliers, and (ii) the decrease in consumption tax.

In 2016, we optimized our production and operations under the cost pressure of the upgrading of oil quality in the refining and chemicals segment and prudently reduced the processing volume of crude oil based on market condition. The cash processing cost of refineries was RMB179.93 per ton in 2016, representing an increase of RMB2.13 per ton from RMB177.80 per ton in 2015.

Profit from Operations In 2016, in our refining and chemicals segment, we emphasized the principle of market orientation and benefit, optimized the allocation of resources and the structure of products, enhanced new technology development to improve the efficiency of facilities, increased the production of highly valued-added market-favorable products, and took the initiative to increase profit. We also intensified control over costs and expenses, which led to the improvement in major economic indicators and contributed to our profit under low oil prices. In 2016, in the refining and chemicals segment, we realized operating profits of RMB39,026 million, representing an increase of RMB34,143 million, as compared with RMB4,883 million in 2015. Among this, the refining operations recorded an operating profit of RMB27,565 million, representing an increase of RMB22,875 million in profit as compared with RMB4,690 million in 2015, due to the optimization of operation and increase in gross profit. Taking the opportunity of favorable changes in the chemical market, we optimized our chemical operations by enhancing the structure of products and increasing the sales of high-profitability products. We recorded an operating profit of RMB11,461 million, representing an increase of RMB11,268 million, as compared with RMB193 million in 2015.

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Marketing Segment

Revenue Revenue of the marketing segment decreased by 5.9% from RMB1,383,426 million in 2015 to RMB1,301,616 million in 2016. This decrease was primarily due to the combined effects of (i) the decrease in the sales volume and price of diesel, partially offset by the decrease in the prices and the increase in the sales volume of gasoline and kerosene; and (ii) the decrease in revenue derived from trade of oil products.

Operating Expenses Operating expenses of the marketing segment decreased by 6.7% from RMB1,383,926 million in 2015 to RMB1,290,568 million in 2016, primarily due to the decrease in the expenses in purchase of refined oil from external suppliers.

Profit from Operations In 2016, facing such adverse factors as the slow-down in domestic demand for refined products and the fierce competition in the market, we aimed to maximize the whole value of the Company and continuously improved the quality of marketing and trade and profitability. In domestic operations, we strengthened connection between production and sales and inventory management, optimized logistics and allocation of resources, intensified cost and expense control and increased the profit from non-oil businesses. In international trade, we intensified the coordination and cooperation with domestic upstream, middle-stream and downstream businesses, optimized the importation of oil and gas resources and expanded exports of products processed with importing materials. In 2016, we realized an operating profit of RMB11,048 million in our marketing segment, representing an increase of RMB11,548 million, as compared with an operating loss of RMB500 million in 2015.

Natural Gas and Pipeline Segment

Revenue Revenue of the natural gas and pipeline segment amounted to RMB247,477 million in 2016, representing a decrease of 12.2% as compared to RMB281,778 million in 2015. This decrease was primarily due to a decrease in the price of nature gas, partially offset by the increase in the revenue derived from pipeline transportation.

Operating Expenses Operating expenses of the natural gas and pipeline segment amounted to RMB229,592 million in 2016, compared with RMB230,547 million in 2015. This slight decrease was primarily due to the decrease in the expenses of purchasing natural gas.

Profit from Operations In 2016, in the natural gas and pipeline segment, we achieved an increase in sales and stability in profitability by optimizing the allocation of resources, reducing purchase costs, utilizing price leverage to adjust demand and supply and strengthening marketing efforts in high-profitability markets. We realized an operating profit of RMB17,885 million in this segment, which, after excluding the effect of the income of RMB22,807 million generated from the integration of certain pipeline assets in 2015, represented a decrease of RMB10,539 million in operating profit as compared with RMB51,231 million in 2015. In 2016, we recorded a net loss of RMB14,884 million in the natural gas and pipeline segment from sales of imported gas, representing a decrease of loss of RMB1,415 million as compared with 2015.

In 2016, we generated a revenue of RMB515,848 million from our international operations, representing 31.9% of our total revenue. Profit before income tax expense amounted to RMB32,265 million, including an income of RMB24,534 million derived from disposal of certain equity interest in the Trans-Asia Pipeline. We maintained a healthy development with further improved operating ability in our international operations.

Our four operating segments are exploration and production, refining and chemicals, marketing as well as natural gas and pipeline. Overseas operations do not constitute a separate operating segment. The financial data of overseas operations are included in the financial data of the respective operating segment mentioned above.

Liquidity and Capital Resources

Our primary sources of funding include cash generated by operating activities and short-term and long-term borrowings. Our primary uses of funds were for operating activities, capital expenditures, repayment of

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short-term and long-term borrowings and distributions of dividends to shareholders. Our payments to CNPC are limited to dividends and payments for services provided to us by CNPC. For the year ended December 31, 2017, we distributed as dividends 45% of our reported income for the year attributable to our shareholders together with additional interim and final special dividends in return to our shareholders. See “Item 8 — Financial Information — Dividend Policy” for a discussion of factors which may affect the determination by our board of directors of the appropriate level of dividends.

Our financing ability may be limited by our financial condition, our results of operations and the international and domestic capital markets. Prior to accessing the international and domestic capital markets, we must obtain approval from the relevant PRC government authorities. In general, we must obtain PRC government approval for any project involving significant capital investment for our refining and chemicals, marketing and natural gas and pipeline segments. For a more detailed discussion of factors which may affect our ability to satisfy our financing requirements, see “Item 3 — Key Information — Risk Factors — Risks Related to Liquidity”.

We plan to fund the capital and related expenditures described in this annual report principally through cash from operating activities, short-term and long-term borrowings and cash and cash equivalents. Net cash flows from operating activities in the year ended December 31, 2017 was RMB366,655 million. As of December 31, 2017, we had cash and cash equivalents of RMB122,777 million. While each of the projects described in this annual report for which significant capital expenditures will be required is important to our future development, we do not believe that failure to implement any one of these projects would have a material adverse effect on our financial condition or results of operations. If the price of crude oil declines sharply in the future, it is likely that we would delay or reduce the scale of the capital expenditures for our exploration and production segment.

We currently do not have any outstanding options, warrants or other rights for any person to require us to issue any common stock at a price below its market value. We do not currently intend to issue any such rights or to otherwise issue any common stock for a price below its market value.

In addition, as of December 31, 2017, we did not have any transactions, arrangements or other relationships with unconsolidated entities or other persons that are reasonably likely to materially affect the liquidity or availability of or requirements for our capital resources.

The table below sets forth our cash flows for each of the years ended December 31, 2015, 2016 and 2017 and our cash equivalents at the end of each year.

	Year Ended December 31,
	2015			2016			2017
	(RMB in millions)
Net cash flows from operating activities		261,312			265,179			366,655
Net cash flows used for investing activities		(215,879	)		(175,887	)		(243,546	)
Net cash flows used for financing activities		(45,439	)		(67,007	)		(94,725	)
Currency translation difference		(999	)		2,873			(3,538	)
Cash and cash equivalents at year end		72,773			97,931			122,777

Our cash and cash equivalents increased by 25.4% from RMB97,931 million as of December 31, 2016 to RMB122,777 million as of December 31, 2017.

Net Cash Flows from Operating Activities

Our net cash flows from operating activities amounted to RMB366,655 million for the year ended December 31, 2017, representing an increase of 38.3% from RMB265,179 million for the year ended December 31, 2016. This was mainly due to a combined effect of an increase in profit and strengthened

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management over inventories, payables and other working capital during the reporting period. As of December 31, 2017, we had cash and cash equivalents of RMB122,777 million. Our cash and cash equivalents were denominated in Renminbi, US Dollars, HK Dollars and other currencies (approximately 57.8% were denominated in Renminbi, approximately 36.4% were denominated in US Dollars, approximately 4.9% were denominated in HK Dollars and approximately 0.9% were denominated in other currencies).

Our net cash flows from operating activities amounted to RMB265,179 million for the year ended December 31, 2016, representing an increase of 1.5% from RMB261,312 million for the year ended December 31, 2015. This was mainly due to a combined effect of a decrease in profit and the decrease in tax expenses during the reporting period. As of December 31, 2016, we had cash and cash equivalents of RMB97,931 million. Our cash and cash equivalents were denominated in Renminbi, US Dollars, HK Dollars and other currencies (approximately 52.6% were denominated in US Dollars, approximately 44.3% were denominated in Renminbi, approximately 1.7% were denominated in HK Dollars and approximately 1.4% were denominated in other currencies).

Our net cash flows from operating activities amounted to RMB261,312 million for the year ended December 31, 2015, representing a decrease of 26.7% from RMB356,477 million for the year ended December 31, 2014. This was mainly due to a combined effect of a decrease in profit and the change of working capital during the reporting period. As of December 31, 2015, we had cash and cash equivalents of RMB72,773 million. Our cash and cash equivalents were denominated in Renminbi, US Dollars, HK Dollars and other currencies (approximately 52.9% were denominated in Renminbi, approximately 43.3% were denominated in US Dollars, approximately 2.2% were denominated in HK Dollars and approximately 1.6% were denominated in other currencies).

Net Cash Flows Used for Investing Activities

Our net cash flows used for investing activities in 2017 amounted to RMB243,546 million, representing an increase of 38.5% from RMB175,887 million in 2016. The increase was primarily due to a combined effect of the adjustment of our investment plans based on the oil price trend and market change and the increase in capital expenditures in 2017.

Our net cash flows used for investing activities in 2016 amounted to RMB175,887 million, representing a decrease of 18.5% from RMB215,879 million in 2015. The decrease was primarily due to a combined effect of the adjustment of our investment plans based on the oil price trend and market change, a decrease in capital expenditures during the current reporting period and payment of considerations for integration of certain pipelines assets in 2015.

Our net cash flows used for investing activities in 2015 amounted to RMB215,879 million, representing a decrease of 25.8% from RMB290,838 million in 2014. The decrease was primarily due to a combined effect of the adjustment of our investment plans based on the oil price trend and market change, a decrease in capital expenditures during the reporting period and payment of considerations for integration of certain pipelines assets.

Net Cash Flows Used for Financing Activities

Our net cash flows used for financing activities in 2017 was RMB94,725 million, representing an increase of 41.4% from RMB67,007 million in 2016. This was primarily due to a combined effect of (i) our efforts in optimizing financial arrangement and debt structure; (ii) the decrease in amount of debts and financing cost, (iii) the decrease in long-term borrowings in 2017, and (iv) the increase in balance of short-term borrowings as of December 31, 2017.

Our net cash flows used for financing activities in 2016 was RMB67,007 million, representing an increase of 47.5% from RMB45,439 million in 2015. This was primarily due to a combined effect of (i) our efforts in

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optimizing financial arrangement and debt structure, and strengthening the management of our interest-bearing borrowings, (ii) the decrease in financing cost, (iii) the decrease in long-term borrowings in 2016, and (iv) the increase in balance of short-term borrowings as of December 31, 2016.

Our net cash flows used for financing activities in 2015 was RMB45,439 million, representing an increase of 2.5% from RMB44,312 million in 2014. This was primarily due to a combined effect of our efforts in optimizing financial arrangement, strengthening the management of our interest-bearing borrowings, overall arrangement and optimization of our debt structure and the increase of repayments of borrowings in 2015, and the decrease of balance of short-term borrowings as of December 31, 2015.

Our net borrowings as of December 31, 2015, 2016 and 2017 were as follows:

	As of December 31,
	2015		2016		2017
	(RMB in millions)
Short-term borrowings (including current portion of long-term borrowings)		106,226		143,384		175,417
Long-term borrowings		434,475		372,887		289,858
Total borrowings		540,701		516,271		465,275
Less:
Cash and cash equivalents		72,773		97,931		122,777
Net borrowings		467,928		418,340		342,498

Our total borrowings as of December 31, 2017 consisted of approximately 54.5% of fixed-rate loans and approximately 45.5% of floating-rate loans. Of our borrowings as of December 31, 2017, approximately 71.4% were denominated in Renminbi, approximately 26.7% were denominated in US Dollars and approximately 1.9% were denominated in other currencies.

Our total borrowings as of December 31, 2016 consisted of approximately 54.8% of fixed-rate loans and approximately 45.2% of floating-rate loans. Of our borrowings as of December 31, 2016, approximately 72.1% were denominated in Renminbi, approximately 26.5% were denominated in US Dollars and approximately 1.4% were denominated in other currencies.

Our total borrowings as of December 31, 2015 consisted of approximately 66.3% of fixed-rate loans and approximately 33.7% of floating-rate loans. Of our borrowings as of December 31, 2015, approximately 76.4% were denominated in Renminbi, approximately 22.2% were denominated in US Dollars and approximately 1.4% were denominated in other currencies.

Our debt to capital ratio (calculated by dividing interest-bearing debts by the aggregate of interest-bearing debts and shareholder’s equity) as of December 31, 2015, 2016 and 2017 was 28.7%, 27.3% and 25.2%.

As of December 31, 2017, the outstanding amount of our debts secured by CNPC and its subsidiaries and other third parties was RMB45,463 million.

Capital Expenditures and Investments

In 2017, we focused on the principles of quality and profitability for capital expenditures, continued to optimize our investment structure and control our overall capital expenditures, with a focus on the investment in upstream oil and gas projects in order to enhance our sustainable development capability. In 2017, our capital expenditures were RMB216,227 million, representing an increase of 25.4% from RMB172,386 million in 2016.

The table below sets forth our capital expenditures and investments by business segment for each of the years ended December 31, 2015, 2016 and 2017 as well as those anticipated for the year ending December 31,

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2018. Actual capital expenditures and investments for periods after January 1, 2018 may differ from the amounts indicated below.

	2015				2016				2017				2018 Anticipated
	(RMB in millions)		%		(RMB in millions)		%		(RMB in millions)		%		(RMB in millions)		%
Exploration and production(1)		157,822		78.04		130,248		75.56		161,997		74.92		167,600		74.22
Refining and chemicals		15,725		7.78		12,847		7.45		17,705		8.19		19,800		8.77
Marketing		7,061		3.49		7,983		4.63		10,982		5.08		16,500		7.31
Natural gas and pipeline		20,360		10.07		20,340		11.80		24,529		11.34		20,000		8.86
Headquarters and others		1,270		0.62		968		0.56		1,014		0.47		1,900		0.84
Total		202,238		100.00		172,386		100.00		216,227		100.00		225,800		100.00

(1) If investments related to geological and geophysical exploration costs are included, the capital expenditures and investments for the exploration and production segment in 2015, 2016, 2017 and the estimates for the same in 2018 would be RMB166,594 million, RMB139,135 million, RMB176,426 million and RMB178,600 million, respectively.

As of December 31, 2017, the capital commitments contracted but not provided for were approximately RMB70,563 million.

Exploration and Production

A majority of our capital expenditures and investments relate to our exploration and production segment. For each of the three years ended December 31, 2015, 2016 and 2017, capital expenditures in relation to the exploration and production segment amounted to RMB157,822 million, RMB130,248 million and RMB161,997 million, respectively. In 2017, our capital expenditures were primarily used for the exploration projects in our 16 domestic oil and gas fields, construction of production facilities in our oil and gas fields, and the exploration and development projects in our five major overseas oil and gas cooperation regions.

We anticipate that the capital expenditures for our exploration and production segment in 2018 would amount to RMB167,600 million. Domestic exploration activities will be focused on the key basins such as Songliao Basin, Erdos Basin, Tarim Basin, Sichuan Basin and Bohai Bay Basin. Domestic development activities will be focused on maintaining a stable production of crude oil and a growth in the output of natural gas by developing oil and gas fields in Daqing, Changqing, Liaohe, Xinjiang, Tarim and the Southwest region and enhancing the development of unconventional resources such as shale gas. Overseas operations will be aimed at continued cooperation with our current partners in the operation of the existing projects and the development of new projects in the Middle East, Central Asia, the Americas and the Asia-Pacific regions to ensure an effective growth of our reserves and production.

Refining and Chemicals

Our capital expenditures for our refining and chemicals segment for each of the years ended December 31, 2015, 2016 and 2017 were RMB15,725 million, RMB12,847 million and RMB17,705 million, respectively. In 2017, our capital expenditures were mainly spent on the construction of large-scale refining and chemicals facilities, including the Yunnan petrochemical project and certain other oil product quality upgrading projects.

We anticipate that the capital expenditures for the refining and chemicals segment in 2018 would amount to RMB19,800 million, which are expected to be used primarily for the construction of large-scale refining and chemical projects, refined oil quality upgrading projects and refining-chemical transformation and upgrading projects, such as the Liaoyang Petrochemical’s optimization and efficiency renovation project for processing

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crude oil imported from Russia, Huabei Petrochemical’s project for quality upgrading, technical reformation with respect to safety production and environmental protection, the refining-chemical integration project in Guangdong, Daqing Petrochemical’s project in relation to adjustment and upgrading of product structure and the large-scale refining-chemical project of producing ethylene out of ethane.

Marketing

Our capital expenditures for our marketing segment for each of the years ended December 31, 2015, 2016 and 2017 were RMB7,061 million, RMB7,983 million and RMB10,982 million, respectively. Our capital expenditures for the marketing segment in 2017 were mainly used for the construction of service stations, storage facilities and other facilities for our sales network.

We anticipate that the capital expenditures for our marketing segment for the year of 2018 will amount to RMB16,500 million, which are expected to be used primarily for the construction and expansion of high-profitability refined oil sales networks and the construction of the overseas oil and gas operation centers.

Natural Gas and Pipeline

Our capital expenditures for the natural gas and pipeline segment for each of the three years ended December 31, 2015, 2016 and 2017 were RMB20,360 million, RMB20,340 million and RMB24,529 million, respectively. Our capital expenditures for the natural gas and pipeline segment in 2017 were mainly used for construction projects including the Third West-East Gas Pipeline, the Fourth Shaanxi-Beijing Gas Pipeline, the second Sino-Russia Crude Oil Pipeline and the Jinzhou-Zhengzhou Refined Oil Pipeline.

We anticipate that our capital expenditures for the natural gas and pipeline segment in 2018 will amount to approximately RMB20,000 million, which are expected to be used primarily for the construction of key natural gas transmission projects such as the China-Russia East Natural Gas Pipeline Project, Fujian-Guangdong main branch, gas storage and LNG equipment for storage and transportation, as well as the construction of gas branches and sales terminals.

Headquarters and Others

Our non-segment-specific capital expenditures and investments for each of the years ended December 31, 2015, 2016 and 2017 were RMB1,270 million, RMB968 million and RMB1,014 million, respectively, which were primarily used for research activities and development of the IT system.

Our anticipated capital expenditures for the headquarters and others in 2018 will amount to RMB1,900 million. These planned capital expenditures and investments mainly include capital expenditures for scientific research activities and the development of the IT system.

Off-Balance Sheet Arrangements

As of December 31, 2017, there were no off-balance sheet arrangements that had or were reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Long-Term Contractual Obligations and Other

Commercial Commitments and Payment Obligations

All information that is not historical in nature disclosed under “Item 5 — Operating and Financial Review and Prospects — Long-Term Contractual Obligations and Other Commercial Commitments and Payment Obligations” is deemed to be a forward looking statement. See “Forward-Looking Statements” for additional information.

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The tables below set forth our long-term contractual obligations outstanding as of December 31, 2017.

	Payment Due by Period
Contractual Obligations	Total		Less Than 1 Year		1-3 Years		3-5 Years		After 5 Years
	(RMB in millions)
Long-term debt		371,394		81,536		134,829		99,290		55,739
Capital lease obligations		1,934		235		506		233		960
Operating leases		229,384		11,519		18,967		18,066		180,832
Capital commitments		70,563		12,811		37,057		2,524		18,171
Other long-term obligations		—		—		—		—		—
Debt-related interest		52,798		11,439		16,657		10,262		14,440
Total		726,073		117,540		208,016		130,375		270,142

We are obligated to make annual payment with respect to our exploration and production licenses to the Ministry of Natural Resources. The table below sets forth the estimated amount of the annual payments in the next five years:

Year	Annual Payment
	(RMB in millions)
2018		800
2019		800
2020		800
2021		800
2022		800

Assets Retirement Obligation

A number of provinces and regions in which our oil and gas exploration and production activities are located have promulgated environmental protection regulations, which set forth specific abandonment and disposal processes for oil and gas exploration and production activities. We have established standard abandonment procedures, including plugging all retired wells, dismantling all retired metering stations and other related facilities and performing site restoration, in response to the issuance of these provincial and regional regulations. As of December 31, 2017, the balance of assets retirement obligation was RMB131,546 million.

Research and Development

We have a research and development management department, directly under which there are three research institutions. Except for our branch companies which are engaged in marketing activities, each of our branch companies has its own research and development management department. Most of our branch companies have their own research institutions. Our research and development management departments are mainly responsible for managing and coordinating the research and development activities conducted by each of the research institutions. As of December 31, 2017, we had 39,377 employees in our research and development departments and institutions.

In each of the years ended December 31, 2015, 2016 and 2017, our total expenditures for research and development were approximately RMB19,300 million, RMB17,565 million and RMB18,601 million, respectively.

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Exploration and Production

Most of China’s major oil and gas fields are characterized by a broad range of geological conditions, and a majority of China’s oil and gas fields are in continental sedimentary basins with complex structures. Our research and development efforts with respect to our exploration and production business focus on:

• theories and technologies of crude oil and natural gas exploration;

• oil and gas development theories and technologies;

• engineering technologies and equipment;

• theories and technologies for oil and gas storage and transportation; and

• technologies for security, energy conservation and environment protection.

Refining and Chemicals

Currently, our research and development efforts in the refining and chemicals segment are focusing on the following areas:

• technologies for clean refined oil products;

• technologies for unqualified heavy oil processing;

• refining-chemical integration technologies;

• technologies for production of olefin aromatics;

• technologies for new products of synthetic resin and synthetic rubber;

• new catalyst and catalytic materials; and

• technologies for safety, energy saving and environment protection.

Trend Information

In 2018, the global economy is expected to grow stronger although it still faces challenges. As the global oil market gradually tends to be balanced, international oil price is likely to remain volatile at a low or medium level. China’s economy is expected to keep growing in a stable manner with an expected GDP growth of approximately 6.5% in 2018. The consumption demand for oil and gas in China remains a growth momentum as a whole. With the implementation of system reform in the oil and gas sector and the implementation of the “Belt and Road” initiative, sources of resources and the manners of cooperation in the oil and gas sector will become more diversified. Meanwhile, with the newly issued regulation on oil product consumption tax, a fairer market environment will be nurtured in China which will facilitate our long-term development. We will continue to adhere to our guidelines of steady development and endeavor to implement our four major strategies with respect to resources, markets, globalization and innovation. We will continue to optimize the structure of our industry chain, improve the value of our oil and gas business chains, and vigorously broaden our source of income, reduce expenditures, cut costs and improve efficiency in an effort to maintain a steady and positive improvement of our operations, and continue to improve our competitiveness and our company value.

With respect to the exploration and production segment, we will focus on efficient exploration and development and make great efforts to increase reserves and production as well as improve profitability. With respect to our oil and gas exploration, we will aim to explore large-scale and high quality reserves, strengthen centralized exploration and fine exploration of the major basins and key series and strata, promote comprehensive exploration of resources including tight oil and gas, shale oil and gas and coalbed methane, and consolidate the resource base. With respect to our oil and gas production, we will, on the basis of stable output of oil and increase of gas, carry out construction of key projects of production capacity, focus on optimization,

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arrangement and adjustment of development plans, achieve lean manufacturing driven by innovation and a balance between production and efficiency, advance the unconventional oil and gas businesses such as coalbed methane and shale gas in an orderly manner and endeavor to increase both production and efficiency.

With respect to the refining and chemicals segment, we will, focus on market demand and facility features, make reasonable arrangement for processing workload, continuously optimize resource allocation and product structure, in order to achieve the most efficient utilization of resources and maximum of overall value. With respect to the refining business, we will control the diesel-gasoline ratio, increase production of high-profitability and featured products. With respect to the chemical business, we will, considering market cycle, broaden sources of raw materials of fine quality, accelerate the research and development in new products, and improve the proportion of products of high-end, high value-added and high profitability. With respect to the sales of chemical products, we will pay close attention to the market trend, promote integration of production, marketing, research and application, and enhance market cultivation and development so as to increase sales and boost profit. We will implement the transformation and upgrading plan for oil refining and chemical businesses, accelerate structure adjustment and optimization, and continuously improve sustainable development capability and profitability.

With respect to the marketing segment, we will pay close attention to the changes of the market, strengthen the interaction between production and marketing, improve marketing network and enhance overall profitability. We will improve our strategy on competitiveness, deepen the integrated marketing of refined oil, fuel cards, non-oil business, lubricants and natural gas, promote reconstruction and upgrading of intelligent gas stations, give full play to advantages of our brand “uSmile”, enhance innovation efforts on “Internet + Marketing”, deepen cross-industry cooperation, create an ecosystem of “people, vehicle and life”, and continuously enhance our profitability and market competitiveness.

With respect to the natural gas and pipeline segment, we will devote efforts to coordinating resources and market, creating a strategic and value-oriented natural gas business chain. We will carry out overall management of the production, import, storage, transportation and marketing links, give play to comprehensive peak arrangement capability, form a pipeline network system featuring effective operation, flexible dispatch and stability and safety. We will continue to optimize sales flow, implement flexible sales strategy, track new business growth area of natural gas, carry out orderly market development and enhance the scale and strength of the development of end markets including urban gas. We will continue to push forward the construction of key pipelines and reinforce the construction of natural gas branches and terminal facilities.

With respect to the international operations, we will continue to improve the strategic layout of the five major overseas oil and gas cooperation zones, the four major strategic oil and gas channels and the three major oil and gas operation hubs, further integrate resources and adjust structures, and increase operation efficiency as well as profitability. We will enhance comprehensive assessment and business negotiation of new projects, emphasize the exploration and development of existing key projects and high-profitability projects, and endeavor to increase reserve, output and profit. We will leverage the synergy and cooperation between international trading, production and sales, make overall arrangements for import and export structures as well as domestic and foreign resources, improve the trading channels and marketing network, and improve the capability to allocate resources and profit creation capability.

Other than as disclosed above and elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the periods covered in this annual report that are reasonably likely to have a material adverse effect on our net revenue, profit, liquidity or capital resources, or that would cause the disclosed financial information to be misleading.

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Other Information

Inflation

Inflation or deflation did not have a significant impact on our results of operations for the year ended December 31, 2017.

Related Party Transactions

For a discussion of related party transactions, see “Item 7 — Major Shareholders and Related Party Transactions — Related Party Transactions” and Note 36 to our consolidated financial statements included elsewhere in this annual report.

Recent Developments in IFRS

For a detailed discussion of recent developments in IFRS, see Note 3 to our consolidated financial statements.

Item 6 — DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

Directors, Senior Management and Supervisors

As of the date of this report, our board of directors consisted of 13 directors, five of whom were independent non-executive directors. Directors are elected at shareholder meetings for three-year term. The directors may be re-elected and re-appointed upon the expiration of his/her term of office. The functions and duties conferred on the board of directors include:

• convening shareholders’ meetings and reporting its work to the shareholders’ meeting;

• implementing the resolutions of the shareholders’ meeting;

• determining our business plans and investment programs;

• formulating our annual budget and final accounts;

• formulating our profit distribution and loss recovery proposals;

• formulating proposals for the increase or reduction of our registered capital and the issuance of our debentures or other securities and listings;

• proposing to redeem shares, merge, spin-off, dissolve or otherwise change the form of the Company;

• deciding on our internal management structure;

• appointing or dismissing the president of the company, and upon the nomination of the president, appointing or dismissing the senior vice president, vice president, chief financial officer and other senior management, and determining matters relating to their remuneration;

• formulating our basic management system;

• preparing amendments to our articles of association;

• managing the information disclosures of our company; and

• exercising any other powers and duties conferred by the shareholders at general meetings.

Eight of the directors are affiliated with CNPC or its subsidiaries.

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The PRC Company Law requires a joint stock company with limited liability to establish a supervisory board. This requirement is reflected in our articles of association. The supervisory board is responsible for monitoring our financial matters and overseeing the corporate actions of our board of directors and our senior management personnel. At the end of this reporting period, the supervisory board consisted of nine supervisors, five of whom were elected, and may be removed, by the shareholders in a general meeting, and four of whom are employees representatives who were elected by our staff, and may be removed, by our staff. Five of our supervisors are affiliated with CNPC. The term of office of our supervisors is three years. The supervisors may be re-elected and re-appointed. An elected supervisor cannot concurrently hold the position of a director, manager or financial controller.

The supervisory board shall be responsible to the shareholders’ meeting and shall exercise the following functions and powers in accordance with law:

• to review the periodic reports prepared by the board of directors and issue written opinions in connection with such review;

• to review our financial condition;

• to oversee the performance of duties by the directors, the president, senior vice presidents, vice presidents, the chief financial officer and other senior officers of the company and to propose the removal of any of the foregoing persons who acts in contravention of any law, regulation, the company’s articles of association or any resolutions of the shareholders’ meeting;

• to demand any director, the president, senior vice president, vice president, the chief financial officer or any other senior officer who acts in a manner which is harmful to the company’s interest to rectify such behavior;

• to check the financial information such as the financial report, business report and plans for distribution of profits to be submitted by the board of directors at the shareholders’ meetings and to authorize, in the company’s name, publicly certified and practicing auditors to assist in the re-examination of such information should any doubt arise in respect thereof;

• to propose the convening of an extraordinary shareholders’ meeting, and convene and preside over a shareholders’ meeting when the board fails to perform its duties to do so as set forth in the PRC Company Law;

• to submit proposals at the shareholders’ meetings;

• to confer with any director, or initiate legal proceedings on behalf of the company against any director, the president, senior vice president, vice president, the chief financial officer or any other senior officer in accordance with Article 152 of the PRC Company Law;

• to initiate investigations upon being aware of any extraordinary development in the operational conditions of the company;

• together with the audit committee of the board of directors, to review the performance of the outside auditors on a yearly basis, and to propose the engagement, renewal of engagement and termination of engagement of the outside auditors, as well as the service fees with respect to the audit services;

• to oversee the compliance of related party transactions; and

• other functions and powers as set forth in the articles of association of the company.

Supervisors shall attend meetings of the board of directors as observers.

In the event that any action of our directors adversely affects our interests, supervisors shall confer with or initiate legal proceedings against such directors on our behalf. A resolution proposed at any meeting of the supervisory board shall be adopted only if it is approved by two-thirds or more of our supervisors.

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Our senior management is appointed by and serves at the supervision of our board of directors. The board of directors will review, evaluate and supervise the performance of the management and reward or punish the members of the management in accordance with relevant rules and regulations.

The following table sets forth certain information concerning our directors, supervisors and executive officers as of the date of this report:

Name(1)	Age		Position	Time of Election(2)
Wang Yilin		61	Chairman of the Board of Directors	June 2015
Zhang Jianhua		53	Vice-Chairman and Non-executive Director	October 2016
Yu Baocai		52	Non-executive Director	May 2011
Liu Yuezhen		56	Non-executive Director	May 2014
Liu Hongbin		54	Non-executive Director	May 2014
Hou Qijun		51	Executive Director and Vice President	June 2017
Duan Liangwei		50	Non-executive Director	June 2017
Qin Weizhong		46	Non-executive Director	June 2017
Lin Boqiang		60	Independent Non-executive Director	May 2014
Zhang Biyi		64	Independent Non-executive Director	October 2014
Elsie Leung Oi-sie		78	Independent Non-executive Director	June 2017
Tokuchi Tatsuhito		65	Independent Non-executive Director	June 2017
Simon Henry		56	Independent Non-executive Director	June 2017
Xu Wenrong		56	Chairman of the Board of Supervisors
Zhang Fengshan		56	Supervisor
Jiang Lifu		54	Supervisor
Lu Yaozhong		52	Supervisor
Wang Liang		55	Supervisor
Fu Suotang		55	Supervisor appointed by employees’ representatives
Li Jiamin		54	Supervisor appointed by employees’ representatives
Liu Xianhua		54	Supervisor appointed by employees’ representatives
Li Wendong		53	Supervisor appointed by employees’ representatives
Sun Longde		55	Vice President
Lin Aiguo		59	Chief Engineer
Wu Enlai		57	Secretary to the Board of Directors
Tian Jinghui		55	Vice President
Chai Shouping		56	Chief Financial Officer
Ling Xiao		54	Vice President
Yang Jigang		54	Vice President
Wang Zhongcai		58	Vice President

(1) The following changes have taken place to our board and senior management since our last annual report:

Directors

On June 8, 2017, at the annual general meeting of the Company for 2016, Mr. Wang Yilin, Mr. Wang Dongjin, Mr. Yu Baocai, Mr. Liu Yuezhen, Mr. Liu Hongbin, Mr. Hou Qijun, Mr. Duan Liangwei and Mr. Qin Weizhong were elected as the Company’s directors; Mr. Lin Boqiang, Mr. Zhang Biyi, Ms. Elsie Leung Oi-sie, Mr. Tokuchi Tatsuhito and Mr. Simon Henry were elected as independent non-executive

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directors of the Company. Mr. Xu Wenrong, Mr. Shen Diancheng, Mr. Zhao Zhengzhang, Mr. Richard H. Matzki and Mr. Chen Zhiwu no longer served as directors of the Company. On June 8, 2017, the board of directors elected Wang Yilin as the chairman of the Company, and each of Mr. Zhang Jianhua and Mr. Wang Dongjin as the Company’s vice chairman. On April 2, 2018, Mr. Wang Dongjin resigned from the positions of vice chairman, director and president of the Company due to position adjustment.

Supervisors

On June 8, 2017, at the annual general meeting of the company for 2016, Mr. Xu Wenrong, Mr. Zhang Fengshan, Mr. Jiang Lifu and Mr. Lu Yaozhong were elected as supervisors of the Company. Each of Mr. Fu Suotang and Mr. Li Jiamin was elected as an employee representative supervisor of the Company. Mr. Guo Jinping, Mr. Li Qingyi, Mr. Jia Yimin, and Mr. Yang Hua no longer served as supervisors of the Company. On June 8, 2017, the supervisory board of the Company elected Mr. Xu Wenrong as the chairman of the supervisory board at its third meeting. On October 26, 2017, Mr. Wang Liang was elected as a supervisor of the Company at the extraordinary general meeting of the Company.

Senior Officers

On June 8, 2017, Mr. Hou Qijun was appointed as a vice president of the Company. Mr. Zhao Zhengzhang and Ms. Wang Lihua no longer served as vice presidents of the Company due to age. On December 28, 2017, Mr. Ling Xiao, Mr. Yang Jigang and Mr. Wang Zhongcai were appointed as vice presidents of the Company. Mr. Huang Weihe, Mr. Xu Fugui and Mr. Lv Gongxun no longer served as vice presidents of the Company due to age.

(2) For directors only.

Directors

Wang, Yilin, age 61, is the chairman of our company, the chairman of CNPC and the secretary of the Communist Party of China (“CPC”) Leadership Group of CNPC. Mr. Wang is a professor-level senior engineer and holds a doctorate degree. He has over 35 years of work experience in China’s oil and gas industry. Mr. Wang was appointed as the standing member of the CPC Committee, deputy director and chief exploration geologist of Xinjiang Petroleum Administration Bureau in June 1996, and the general manager and secretary of the CPC Committee of our Xinjiang Oilfield Company in September 1999. He served as the assistant general manager of CNPC since July 2003. Mr. Wang was appointed as a deputy general manager and a member of the CPC Leadership Group of CNPC in December 2003. From July 2004, he worked concurrently as the chief safety officer of CNPC. He was a director of our company from November 2005 to April 2011. From April 2011, Mr. Wang was the chairman of CNOOC, the secretary of the CPC Leadership Group of CNOOC and the chairman of CNOOC Limited.    He was appointed as the chairman of CNPC and the secretary of the CPC Leadership Group of CNPC in April 2015, and the chairman of our company in June 2015.

Zhang, Jianhua, age 53, is the vice chairman of our company, a director and the general manager of CNPC, and the deputy secretary of the CPC Leadership Group of CNPC. Mr. Zhang is a professor-level senior engineer and holds a doctorate degree. He has over 30 years of work experience in China’s petrochemical industry. He was appointed as a deputy manager of Shanghai Gaoqiao Petrochemical Company of Sinopec Group in April 1999, a deputy manager of Sinopec Shanghai Gaoqiao Company in February 2000, and the general manager of Sinopec Shanghai Gaoqiao Company in September 2000. He was appointed as a vice president of China Petroleum & Chemical Corporation, or Sinopec Corp., in April 2003, and concurrently served as the general director of the Production and Operation Management Department of Sinopec Corp. from November 2003. He was appointed as a member of the CPC Leadership Group of Sinopec Group in February 2005, and a senior vice president of Sinopec Corp in March 2005. He was appointed as a director of Sinopec Corp in May 2006, and concurrently served as the chairman of Sinopec (Hong Kong) Limited from June 2007, and concurrently served

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as the chairman of Sinopec Engineering (Group) Co., Ltd. from October 2014. He was appointed as a director and the general manager of CNPC and deputy secretary of the CPC Leadership Group of CNPC in July 2016. In October 2016, Mr. Zhang was appointed as a director and vice chairman of our company.

Yu, Baocai, age 52, is a director of our company, a deputy general manager of CNPC and a member of the CPC Leadership Group of CNPC. Mr. Yu is a senior engineer, holds a master’s degree and has over 30 years of work experience in China’s oil and petrochemical industry. He was appointed as a deputy general manager and a member of the CPC Committee of PetroChina Daqing Petrochemical Company in September 1999 and was promoted to general manager and deputy secretary of the CPC Committee in December 2001. In September 2003, Mr. Yu was appointed as the secretary of the CPC Committee and the general manager of PetroChina Lanzhou Petrochemical Company, and in September 2008, he was appointed as the deputy general manager and a member of the CPC Leadership Group of CNPC. Mr. Yu was elected as a representative of the 10th National People’s Congress of PRC in February 2003 and a representative of the 11th National People’s Congress of PRC in February 2008. In May 2011, Mr. Yu was elected as a director of our company.

Liu, Yuezhen, age 56, is a director of our company and the chief accountant and a member of the CPC Leadership Group of CNPC. Mr. Liu is a researcher-level senior accountant, holds a master’s degree and has over 35 years of financial and accounting experience. He served as deputy general manager and chief accountant of AVIC Jianghan Aviation Life-saving Appliance Corporation since March 1996. In February 2000, he was promoted to general manager of Jianghan Aviation Life-saving Appliance Corporation and concurrently served as the director of the 610 Research Institute. Mr. Liu served as the chairman of the board of directors and general manager of AVIC Beijing Qingyun Aviation Instruments Co., Ltd. from May 2003 and as the chief accountant and a member of the CPC Leadership Group of CASIC (Group) Company from November 2006. Mr. Liu has been the chief accountant and a member of the CPC Leadership Group of CNPC since December 2013. He was elected as a director of our company in May 2014.

Liu, Hongbin, age 54, is a director of our company and a deputy general manager and a member of the CPC Leadership Group of CNPC. Mr. Liu is a senior engineer, holds a bachelor’s degree and has nearly 35 years of work experience in China’s oil and gas industry. He was appointed as the chief engineer of Tuha Petroleum Exploration & Development Headquarters in June 1995, a deputy general manager and a member of the CPC Committee of PetroChina Tuha Oilfield Company in July 1999, the commander and deputy secretary of the CPC Committee of Tuha Petroleum Exploration & Development Headquarters in July 2000, the general manager of the Planning Department of our company in March 2002, and the director of the Planning Department of CNPC in September 2005. Mr. Liu was appointed as a vice president of our company in June 2007. He was appointed as the general manager and secretary of the CPC Committee of PetroChina Marketing Company in November 2007. In July 2013, he was appointed as a deputy general manager and a member of the CPC Leadership Group of CNPC. Mr. Liu was appointed as an executive director and general manager of Daqing Oilfield Company Ltd. in August 2013, and he was elected as a director of our company in May 2014.

Hou Qijun, age 51, is a director and vice president of our company, and concurrently the deputy general manager of CNPC. Mr. Hou is a professor-level senior engineer and holds a doctorate degree. He has nearly 30 years of work experience in China’s oil and gas industry. He served as a director, deputy general manager and a member of the CPC Committee of Daqing Oilfield Company Limited since October 2002. He served as the general manager and deputy secretary of the CPC Committee of Jilin Oilfield Company from October 2004, and concurrently an executive director and the general manager of Jilin Petroleum (Group) Company Limited from July 2007. He served as the secretary of the CPC Committee and deputy general manager of PetroChina Natural Gas and Pipelines Company from September 2011, and concurrently a deputy general manager of PetroChina Natural Gas Marketing Company from November 2011. He served concurrently as the director of PetroChina Oil & Gas Pipeline Control Center from March 2012. He served as the general manager of the Planning Department of the company and concurrently the general manager of the Planning Department of CNPC from November 2013. He was appointed as a deputy general manager of CNPC in March 2017. Mr. Hou has served concurrently as the general manager and deputy secretary of the CPC Committee of PetroChina Exploration and

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Production Company from April 2017. In June 2017, he was appointed as a director and vice president of our company.

Duan Liangwei, age 50, is a director of our company, and concurrently a deputy general manager and the chief safety officer of CNPC. Mr. Duan is a professor-level senior engineer and holds a doctorate degree. He has nearly 30 years of work experience in China’s petrochemical industry. From February 2006, Mr. Duan served as a deputy general manager, the chief safety officer and a member of the CPC Committee of Jilin Petrochemical Company. From March 2010, he served concurrently as the general manager of Jilin Fuel Ethanol Company Limited. From September 2011, he served as the general manager of Dagang Petrochemical Company. From July 2013, he served as the general manager and the deputy secretary of the CPC Committee of PetroChina Dalian Petrochemical Company, the manager of Dalian Petrochemical Corporation, and the director of Dalian Regional Companies Coordination Group. He was appointed as a deputy general manager of CNPC in March 2017. Mr. Duan has served concurrently as the chief safety director of CNPC since April 2017. In June 2017, he was appointed as a director of our company.

Qin Weizhong, age 46, is a director of our company and a deputy general manager of CNPC. Mr. Qin is a senior engineer and holds a doctorate degree. He has over 20 years of work experience in China’s oil and petrochemical industry. From October 2004, he served as a deputy director of the Development & Planning Department of Sinopec Corp. From May 2007, he worked concurrently as a director of New Energy Office of Sinopec Corp. From July 2010, he served as the director and deputy secretary of the CPC Committee of Sinopec Group Jiujiang Petrochemical Plant and the general manager of Sinopec Jiujiang Company. He was appointed as a deputy general manager of CNPC in March 2017. In June 2017, he was appointed as a director of our company.

Independent Non-executive Directors

Lin, Boqiang, age 60, is an independent non-executive director of our company. Mr. Lin holds a doctorate degree in economics from the University of California. He was formerly a senior energy economist at the Asian Development Bank, and is currently working at Xiamen University in such capacity as a Distinguished Professor of the Changjiang Scholars Program at the School of Management, the director of Research Institute for China’s Energy Policy, the director of 2011 Collaborative Innovation Center for Energy Economics and Energy Policy, and a doctoral advisor. Mr. Lin is a member of the National Energy Consultation Committee under the National Energy Commission, a member of the Energy Price Consultation Committee under the National Development and Reform Commission, a guest economic analyst of Xinhua News Agency, a guest commentator of China National Radio, the vice-chairman of China Energy Society, and a member of the Board of Stewards of Future of Energy of the World Economic Forum based in Davos Switzerland. Mr. Lin was elected as an independent non-executive director of our company in May 2014.

Zhang, Biyi, age 64, is an independent non-executive director of our company. Mr. Zhang is a senior accountant. He graduated from the department of finance and banking from Xiamen University in February 1982. He served as the head of the Enterprise Division, assistant to the director, and deputy director of the Finance Bureau at China Ship Industry Corporation. In July 1999, Mr. Zhang was appointed as a deputy general manager of China Shipbuilding Industry Corporation, and he served as deputy general manager and chief accountant of China Shipbuilding Industry Corporation from December 2004 to February 2014. From March 2008 to January 2010, he also served concurrently as the general manager of China Shipbuilding Industry Company Ltd. Mr. Zhang was elected as an independent non-executive director of our company in October 2014.

Elsie Leung Oi-sie, age 78, is an independent non-executive director of our company. She is a consultant of Iu, Lai & Li Solicitors & Notaries, and an independent non-executive director of China Life Insurance Company Limited, United Company RUSAL, Plc. and China Resources Power Holdings Co., Ltd. Ms. Leung obtained her LLM degree from the University of Hong Kong, and is an academician of College of International Marriage Law. She holds the practicing qualifications for attorney of Hong Kong and Britain. Ms. Leung was the first Secretary for Justice of the Hong Kong Special Administrative Region and a member of Executive Council of

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HKSAR. Ms. Leung was appointed as the Justice of the Peace, the Notary Public, and the China-Appointed Attesting Officer, and was awarded a Grand Bauhinia Medal. In June 2017, she was appointed as a non-executive independent director of our company.

Tokuchi Tatsuhito, age 65, is an independent non-executive director of our company. He is also the executive director & research fellow of the Center for Industrial Development and Environment Governance (CIDEG), Tsinghua University, the senior fellow of Rebuild Japan Initiative Foundation, and the member & experts adviser to the Foreign Advisory Committee of State Administration of Foreign Experts Affairs of the PRC. Mr. Tokuchi graduated from the Department of Chinese Language and Literature, Peking University, and received his master’s degree in East Asian Economy from the Center for East Asian Studies of Stanford University. He previously held such positions as the general manager of Investment Banking Division of Daiwa Securities SMBC Co., Ltd., the president of Daiwa Securities Singapore Limited, the Executive Vice President of Daiwa Securities (Hong Kong) Inc.in charge of investment banking business, a vice president of Daiwa Securities (America) Inc., the vice chairman of Singapore Investment Banking Association, and a deputy general manager, managing director, general manager, and Investment Banking Committee chairman of CITIC Securities Co., Ltd. In 2009, Mr. Tokuchi was awarded the China Friendship Award, China’s highest award for foreigners. In June 2017, he was appointed as a non-executive independent director of our company.

Simon Henry, age 56, is an independent non-executive director of our company. He is a fellow of the UK Chartered Institute of Management Accountants, and has rich experience in the areas of finance management, strategic planning, marketing, and investor relations. Mr. Henry obtained a first class Bachelor’s degree in mathematics from Cambridge University in 1982 and was awarded a Master’s degree in 1986 by Cambridge. He joined Royal Dutch Shell in 1982. He worked for 8 years until March 2017 as the Chief Finance Officer and an executive director of the Board of Royal Dutch Shell. He now serves as a non-executive director and the chairman of the audit committee of the board of directors of Lloyds Banking Group and as a non-executive director of Rio Tinto plc. In addition, Mr. Henry is currently also a member of the UK Defense Board. In June 2017, he was appointed as a non-executive independent director of our company.

Supervisors

Xu, Wenrong, age 56, is the chairman of the supervisory board of our company and a deputy secretary of the CPC Leadership Group and deputy general manager of CNPC. Mr. Xu is a professor-level senior engineer and holds a doctorate degree. Mr. Xu has nearly 30 years of work experience in China’s oil and gas industry. Mr. Xu served as a deputy director of Bureau of Geophysical Prospecting of CNPC from November 1997, the director and deputy secretary of the CPC Committee of the Bureau of Geophysical Prospecting of CNPC from December 1999, and the vice chairman of the board of directors, general manager and deputy secretary of the CPC Committee of BGP Inc. from December 2002. He was appointed as an assistant president of CNPC in January 2004, and from September 2005 Mr. Xu concurrently served as the director general of the Development and Research Department of CNPC, and the chairman of CNPC Services & Engineering Ltd from June 2006. He served as a member of the CPC Leadership Group and chief of the Discipline Inspection Group of China Shipping (Group) Company from May 2011. He was appointed as a director of China Shipping (Group) Company in October 2011. He served concurrently as the principal of China Shipping Party School from December 2011, and the chairman of the Labor Union of China Shipping (Group) Company from January 2012. He served concurrently as the president of China Shipping Management Cadre College from May 2013. He was appointed as a deputy general manager, a member of the CPC Leadership Group and chief of Discipline Inspection Group of China Shipping (Group) Company in February 2014. He served as a deputy general manager and member of the CPC Leadership Group of CNPC from January 2016. He was appointed as a deputy secretary of the CPC Leadership Group and deputy general manager of CNPC in November 2016. Mr. Xu was appointed as a director of our company in May 2016. In June 2017, he was appointed as a member and the chairman of the board of supervisors of our company.

Zhang, Fengshan, age 56, is a supervisor and the chief safety officer of our company and the general manager of our Quality, Security and Environmental Protection Department. He is concurrently the deputy chief

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safety officer of CNPC, the general manager of Quality, Security and Environmental Protection Department of CNPC and the director of the Security, Environmental Protection Supervision Center of CNPC. Mr. Zhang is a professor-level senior engineer, holds a master’s degree and has over 35 years of experience in China’s oil and gas industry. He was appointed as a deputy director and a standing member of the CPC Committee of Liaohe Oil Exploration Bureau in July 2000, the safety director of Liaohe Oil Exploration Bureau in May 2002, the director and deputy secretary of the CPC Committee of Liaohe Petroleum Exploration Bureau in August 2004 and in February 2008, the general manager and deputy secretary of the CPC Committee of Great Wall Drilling and Exploration Company Ltd., where he also served as an executive director from July 2008. Mr. Zhang has been the general manager of the Security, Environment, and Energy Conservation Department of our company and of CNPC since June 2012. He was elected to our board of supervisors in May 2014. In July 2014, Mr. Zhang was appointed as the chief safety officer of our company and the deputy chief safety officer of CNPC. In December 2015, Mr. Zhang was appointed as the director of the Security, Environmental Protection Supervision Center of CNPC. In December 2016, Mr. Zhang was appointed as the general manager of our Quality, Security and Environmental Protection Department and the general manager of the Quality, Security and Environmental Protection Department of CNPC.

Jiang, Lifu, age 54, is a supervisor of our company, the general manager of our Reform and Enterprise Management Department and the general manager of the Reform and Enterprise Management Department of CNPC. Mr. Jiang is a professor-level senior economist, holds a doctorate degree and has over 20 years of work experience in China’s oil and gas industry. He was appointed as a deputy general manager of our Capital Operation Department in August 2003, a deputy director of CNPC’s Planning Department in May 2005, a deputy general manager of our Planning Department in June 2007 and a deputy director of CNPC’s Planning Department. Since April 2014, Mr. Jiang has been the general manager of the Enterprise Management Department of our company and the general manager of the Enterprise Management Department of CNPC. He was elected as a supervisor of our company in October 2014. In April 2015, Mr. Jiang was appointed as the general manager of our Reform and Enterprise Management Department and the general manager of the Reform and Enterprise Management Department of CNPC.

Lu Yaozhong, age 52, is a supervisor of our company, the general manager of our Capital Operation Department, and the general manager of the Capital Operation Department of CNPC. Mr. Lu is a professor-level senior accountant and holds a master’s degree. He has over 30 years of work experience in China’s oil and gas industry. He served as the chief accountant and a member of the CPC Committee of PetroChina Kazakhstan Company from December 2009 and the chief accountant of Overseas Exploration and Development Branch Company of China National Oil and Gas Exploration and Development Corporation from August 2013. Mr. Lu has served as the general manager of the Capital Operation Department of our company and concurrently the general manager of the Capital Operation Department of CNPC since April 2017. In June 2017, he was appointed as a supervisor of our company.

Wang Liang, age 55, is a supervisor of our company, the general manager of our Audit Department, and concurrently the general manager of the Audit Department, and the director and deputy secretary of the CPC Committee of the Audit Service Center of CNPC. Mr. Wang is a professor-level senior accountant and holds a bachelor’s degree. He has over 35 years of work experience in China’s oil and gas industry. He served as a director, chief accountant and member of the CPC Committee of CNPC Offshore Engineering Company Limited from January 2005, a member of the CPC Leadership Group and deputy director of Liaoning Provincial Finance Department from April 2006, the chairman of the board of directors Generali China Insurance Co., Ltd. from April 2007, the chief accountant and a member of the CPC Committee of CNPC Chuanqing Drilling Engineering Company Limited from February 2008, the general manager and deputy secretary of the CPC Committee of CNPC Assets Management Co., Ltd. from October 2009, the chairman of the board of directors, general manager, and deputy secretary of the CPC Committee of Kunlun Trust Co., Ltd. from March 2014, the chairman of the board of directors, secretary of the CPC Committee, secretary of the discipline inspection commission, and chairman of the Labor Union of CNPC Assets Management Co., Ltd. from July 2014, and the secretary of the CPC Committee, secretary of the Discipline Inspection Commission, chairman of the Labor Union and deputy

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general manager of China Petroleum Finance Co., Ltd. from July 2016. He has been the general manager of our Audit Department, and concurrently the general manager of the Audit Department and director of the Audit Service Center of CNPC since May 2017. In October 2017, he was appointed as a supervisor of our company.

Fu Suotang, age 55, is an employee representative supervisor of our company. He is also the general manager and the secretary of the CPC Committee of PetroChina Changqing Oilfield Company, and the director of Changqing Petroleum Exploration Bureau. Mr. Fu is a professor-level senior engineer and holds a doctorate degree. He has over 35 years of work experience in China’s oil and gas industry. He served as the chief geologist and member of the CPC Committee of PetroChina Qinghai Oilfield Company from April 2007. He served as the general manager and deputy secretary of the CPC Committee of PetroChina Qinghai Oilfield Company and concurrently the director of Qinghai Petroleum Management Bureau from April 2014. He has served as the general manager and deputy secretary of the CPC Committee of PetroChina Changqing Oilfield Company and concurrently the director of Changqing Petroleum Exploration Bureau since April 2017. In June 2017, he was appointed as an employee representative supervisor of our company.

Li, Jiamin, age 54, is an employee representative supervisor of our company. He is also the general manager and the secretary of the CPC Committee of PetroChina Lanzhou Petrochemical Company, and the general manager of Lanzhou Petroleum & Chemical Company. Mr. Li is a professor-level senior engineer and holds a master’s degree. He has over 30 years of work experience in China’s oil and petrochemical industry. He was appointed as a deputy general manager, chief security officer and member of the CPC Committee of Lanzhou Petroleum & Chemical Company in August 2004. He was promoted to general manager and deputy secretary of the CPC Committee of PetroChina Lanzhou Petrochemical Company and the general manager Lanzhou Petroleum & Chemical Company in March 2012. Mr. Li was appointed as an employee representative supervisor of our company in May 2014.

Liu, Xianhua, age 54, is an employee representative supervisor of our company. He is also the general manager and deputy secretary of the CPC Committee of PetroChina Liaoning Marketing Company and the general manager of Liaoning Petroleum Corporation. Mr. Liu is a professor-level senior economist and holds a master’s degree. He has nearly 35 years of work experience in China’s oil and petrochemical industry. In May 2005, he was appointed as the general manager and deputy secretary of the CPC Committee of PetroChina Shandong Marketing Company. In March 2012, he was appointed as the general manager and deputy secretary of the CPC Committee of PetroChina Northeast Marketing Company. In December 2015, he was appointed as the general manager and deputy secretary of the CPC Committee of PetroChina Liaoning Marketing Company, and the general manager of Liaoning Petroleum Corporation. Mr. Liu was appointed as an employee representative supervisor of our company in May 2016.

Li, Wendong, age 53, is an employee representative supervisor of our company. He is also the general manager and the secretary of the CPC Committee of Beijing Natural Gas Pipelines Company. Mr. Li is a professor-level senior engineer and holds a master’s degree. He has over 35 years of work experience in China’s oil and gas industry. In January 2006, he was appointed as a deputy director and a member of the CPC Committee of China Petroleum Pipeline Bureau. In August 2011, he was appointed as the secretary of the CPC Committee, the secretary of the Discipline Inspection Commission, the chairman of the Labor Union and deputy general manager of PetroChina West Pipelines Company. In November 2013, he was appointed as the general manager, the secretary of the CPC Committee, the secretary of the Discipline Inspection Commission and the chairman of the Labor Union of PetroChina West Pipeline Company, and the general manager of PetroChina West-East Natural Gas Sales Company. Since March 2016, he has served as the general manager and secretary of the CPC Committee of PetroChina West-East Natural Gas Transmission Pipelines Company, and the general manager of PetroChina West-East Natural Gas Sales Company. Mr. Li was appointed as an employee representative supervisor of our company in May 2016.

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Other Senior Management

Sun, Longde, age 55, is a vice president of our company. He is also an executive director and the general manager of Daqing Oilfield Company Ltd., an executive director and the general manager of Daqing Petroleum Administration Bureau Co., Ltd, and a deputy secretary of the CPC Committee of Daqing Oilfield. Mr. Sun is a professor-level senior engineer and holds a doctorate degree. He has nearly 35 years of work experience in China’s oil and geological industry. He was appointed as the manager of Exploration & Development Company of the Shengli Petroleum Administration Bureau in September 1997, the chief geologist and a member of the CPC Committee of Tarim Petroleum Exploration & Development Headquarters in November 1997, a deputy general manager and a member of the CPC Committee of PetroChina Tarim Oilfield Company in September 1999, and the general manager and secretary of the CPC Committee of PetroChina Tarim Oilfield Company in July 2002. He has been a vice president of our company since June 2007 and was elected as an academician to the Chinese Academy of Engineering in December 2011. In April 2014, Mr. Sun was appointed as the director of the consultancy center of CNPC. In July 2015, Mr. Sun was appointed as the general manager of our Science and Technology Management Company and the general manager of the Science and Technology Department of CNPC. He was appointed as an executive director and the general manager of Daqing Oilfield Company Ltd., the director of Daqing Petroleum Administration Bureau, and a deputy secretary of the CPC Committee of Daqing Oilfield in March 2016.

Lin, Aiguo, age 59, is the chief engineer of our company. Mr. Lin is a professor-level senior engineer and holds a bachelor’s degree. He has over 35 years of work experience in China’s oil and petrochemical industry. Mr. Lin was appointed as a deputy manager and standing deputy manager of the Shengli Refinery of Qilu Petrochemical Company in July 1993, a deputy general manager and a member of the CPC Committee of Dalian West Pacific Petrochemical Co. Ltd. in May 1996, the general manager and secretary of the CPC Committee of Dalian West Pacific Petrochemical Co. Ltd. in August 1998, and the general manager and secretary of the CPC Committee of our Refining & Marketing Company in December 2002. Mr. Lin has served as the chief engineer of our company since June 2007 and concurrently as the director and deputy secretary of the CPC Committee of the Petrochemical Research Institute since February 2011.

Tian, Jinghui, age 55, is a vice president of our company, and an executive director and secretary of the CPC Committee of PetroChina International Company Ltd., and the chairman of China National United Oil Corporation. Mr. Tian is a professor-level senior economist and holds a master’s degree. He has nearly 35 years of experience in China’s oil and gas industry. In May 1998, he was appointed as the chief of the Preparatory Group of PetroChina Northwest Marketing Company. He was appointed as a deputy general manager and member of the CPC Committee of our Refining & Marketing Company from December 1999, a deputy general manager, chief safety officer and member of the CPC Committee of PetroChina Marketing Company from November 2007. In June 2009, he was appointed as the secretary of the CPC Committee and deputy general manager of PetroChina Marketing Company. In August 2013, he was appointed as the general manager and secretary of the CPC Committee of PetroChina Marketing Company. In November 2015, Mr. Tian was appointed as a vice president of our company. In April 2017, Mr. Tian was appointed as the general manager and deputy secretary of the CPC Committee of PetroChina Marketing Company, an executive director of the board of directors and secretary of the CPC Committee of PetroChina International Company Ltd., and the chairman of China National United Oil Corporation.

Chai, Shouping, age 56, is the chief financial officer of our company. Mr. Chai is a professor-level senior accountant and holds a master’s degree. He has nearly 30 years of work experience in financial operations and management in China’s oil and petrochemical industry. In April 2002, he was appointed as a deputy general manager of the Finance Department of our company. In September 2012, he was appointed as the chief accountant and a member of the CPC Committee of China National Oil and Gas Exploration and Development Corporation (overseas exploration and development branch), the deputy general manager and the chief financial officer of CNPC Exploration and Development Company Limited and the chief financial officer of PetroChina International Investment Company Limited. In March 2013, he was appointed as the general manager of the

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Finance Department of our company. Mr. Chai was appointed as the chief financial officer of our company in January 2017.

Ling Xiao, age 54, is a vice president of our company, the general manager and deputy secretary of the CPC Committee of our Natural Gas Sales Company (PetroChina Natural Gas Pipelines Company), the chairman of the board of directors and the secretary of the CPC Committee of PetroChina Pipelines Co., Ltd., and the chairman of Kunlun Energy Co., Ltd. Mr. Ling is a professor-level senior engineer and holds a doctorate degree. He has over 35 years of experience in China’s oil industry. He was appointed as a deputy director and member of the CPC Committee of Xinjiang Petroleum Administration Bureau in June 2001, the chairman of the board of directors and general manager of West Pipeline Co., Ltd. in August 2004, the secretary of the CPC Committee of West Pipeline Co., Ltd. in January 2015, the general manager and deputy secretary of the CPC Committee of PetroChina West Pipeline Company in March 2009, the general manager and secretary of the CPC Committee of West-East Gas Transmission Pipeline Company and concurrently the general manager of West-East Gas Transmission Sales Company in November 2013, the secretary of the CPC Committee and deputy general manager of PetroChina Natural Gas and Pipelines Company and concurrently the deputy general manager of our Natural Gas Sales Company in March 2016, the secretary of the CPC Committee and deputy general manager of our Natural Gas Sales Company (PetroChina Natural Gas and Pipelines Company) and general manager and secretary of the CPC Committee of PetroChina Pipelines Co., Ltd. in September 2016. Mr. Ling was appointed as the general manager and deputy secretary of the CPC Committee of our Natural Gas Sales Company (PetroChina Natural Gas and Pipelines Company), and the chairman of the board of directors and secretary of the CPC Committee of PetroChina Pipelines Co., Ltd. in November 2017. He was appointed as a vice president of our company in December 2017.

Yang Jigang, age 54, is a vice president of our company, and the general manager and the secretary of the CPC Committee of our Refinery and Chemical Engineering Company. Mr. Yang is a professor-level senior engineer and holds a master’s degree. He has over 30 years of experience in China’s petroleum and petrochemical industry. He was appointed as the deputy manager of Lanzhou Chemical Industry Corporation in August 1997, the chief engineer of the Oil Refinery and Chemical Engineering Department of CNPC in November 1998, a member of the preparatory group for the establishment of our Refining and Chemicals Marketing Company in September 1999, the chief engineer and member of the CPC Committee of our Refinery and Marketing Branch Company in December 1999, a deputy general manager, chief engineer and member of the CPC Committee of our Chemical Engineering and Marketing Company in August 2000, the general manager and deputy secretary of the CPC Committee of PetroChina Daqing Petrochemical Company in May 2005, the secretary of the CPC Committee and deputy general manager of our Refinery and Chemical Engineering Company in December 2009, and the general manager and secretary of the CPC Committee of our Refinery and Chemical Engineering Company in November 2017. He was appointed as a vice president of our company in December 2017.

Wang Zhongcai, age 58, is a vice president of our company, and the chairman of the board of directors, the secretary of the CPC Committee and chairman of the Labor Union of China National Oil and Gas Exploration and Development Company Ltd. Mr. Wang is a professor-level senior engineer and holds a doctorate degree. He has over 35 years of experience in China’s oil industry. He served as the deputy general manager of CNPC International (Kazakhstan) Ltd. and concurrently the chairman of JSC CNPC International Aktobe Petroleum from March 1999, a senior deputy general manager of CNPC International (Kazakhstan) Ltd. and concurrently the general manager of JSC CNPC International Aktobe Petroleum from April 2000, a deputy general manager of China National Oil and Gas Exploration and Development Corporation and concurrently the general manager of CNPC International (Russia) Ltd. from May 2003, a deputy general manager of China National Oil and Gas Exploration and Development Corporation and concurrently the chief of the CNPC Russian Coordination Leading Group from March 2005, a deputy general manager of China National Oil and Gas Exploration and Development Corporation and concurrently the general manager of CNPC International (Kazakhstan) Ltd. and JSC CNPC International Aktobe Petroleum from November 2005, the general manager, secretary of the CPC Committee and the chief of Kazakhstan Coordination Group of CNPC International (Kazakhstan) Ltd. from

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September 2008, a senior deputy general manager and a member of the CPC Committee of Overseas Exploration and Development Branch (China National Oil and Gas Exploration and Development Corporation) from December 2009, and the secretary of the CPC Committee, senior deputy general manager and chairman of the Labor Union of Overseas Exploration and Development Branch (China National Oil and Gas Exploration and Development Corporation) from April 2014. Mr. Wang was appointed as the chairman of the board of directors, secretary of the CPC Committee and the chairman of the Labor Union of China National Oil and Gas Exploration and Development Company Ltd. in November 2017. Mr. Wang was appointed as a vice president of our company in December 2017.

Secretary to the Board of Directors

Wu, Enlai, age 57, is the secretary to the board of directors of our company. He is a professor-level senior engineer and holds a master’s degree. Mr. Wu has over 35 years of work experience in China’s oil and petrochemical industry. Mr. Wu was appointed as a deputy director general of Tarim Petrochemical Engineering Construction Headquarters in August 1997, a deputy director general of the Capital Operation Department of CNPC in August 2002 and a deputy general manager of China National Oil and Gas Exploration and Development Corporation in January 2004. He was appointed as the chief of the Preparatory Work Group for PetroChina Guangxi Petrochemical Company in May 2005, and the general manager, secretary of the CPC Committee, secretary of the Discipline Inspection Commission and chairman of the Labor Union of PetroChina Guangxi Petrochemical Company in October 2005, and the head of the Enterprise Coordination Group of our company in Guangxi in September 2012. Mr. Wu was appointed as the secretary to our board of directors in November 2013. He was appointed as an executive director and the general manager of CNPC Hong Kong (Holding) Ltd. and a director and the chairman of Kunlun Energy Company Ltd. in December 2013.

Compensation

The senior management members’ compensation has two components, namely, fixed salaries and variable compensation. The variable component, which accounts for approximately 75% of the total compensation package, is linked to the attainment of specific performance targets, such as our income for the year, return on capital and the individual performance evaluation results. All of our senior management members have entered into performance contracts with us.

Our directors and supervisors, who hold senior management positions or are otherwise employed by us and other senior management of our company receive compensation in the form of salaries, insurance and other benefits in kind, including our contribution to the pension plans for them.

The aggregate amount of salaries, insurance and other benefits in kind paid by us to the five highest paid individuals during the year ended December 31, 2017 was RMB4,095,987. We paid RMB572,959 as our contribution to the pension plans with respect to these individuals in the year ended December 31, 2017.

The aggregate amount of salaries or other compensation, insurance and other benefits in kind paid by us to our directors, who hold senior management positions or are otherwise employed by us, during the year ended December 31, 2017 was RMB1,386,770 which does not include the fees totaling RMB1,159,223 paid to our independent directors. The aggregate amount of salaries or other compensation, insurance and other benefits in kind paid by us to our supervisors, who hold senior management position or are otherwise employed by us during the year ended December 31, 2017 was RMB2,930,080. The aggregate amount of salaries or other compensation, insurance and other benefits in kind paid by us to other senior management during the year ended December 31, 2017 was RMB6,303,173.

In 2017, we paid RMB1,644,562 as our contribution to the pension plans for our directors and supervisors, who hold senior management positions or are otherwise employed by us and other senior management of our company.

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Save as disclosed, no other payments have been paid or are payable, with respect to the year ended December 31, 2017, by us or any of our subsidiaries to our directors. In addition, we have no service contracts with our directors that provide for benefits to our directors upon the termination of their employment with us.

For discussions about the compensations of our individual directors and supervisors, please see Note 11 to our consolidated financial statements included elsewhere in this annual report.

Board Practices

Our board of directors has five committees: a nominating committee, an audit committee, an investment and development committee, an evaluation and remuneration committee and a health, safety and environment committee.

Nominating Committee

The current members of our nominating committee are Mr. Wang Yilin, the chairman of the committee, Mr. Lin Boqiang and Mr. Zhang Biyi. The nominating committee’s major responsibilities include:

• reviewing and discussing the structure, size and composition of the board of directors regularly, and making recommendations on changes to the board to follow the company’s corporate strategy;

• considering the criteria and procedures for selection of directors, president and other senior management, and making recommendations to the board of directors;

• considering the board diversity policy and the training systems for directors and management;

• extensively selecting qualified candidates for directorship and members of senior management, reviewing the qualifications of candidates for directorship and president, and making recommendations;

• reviewing the proposals on candidates nominated by the nominators who have the nominating rights under the Articles of Association;

• reviewing and making assessment on the independence of independent non-executive directors; and

• attending the shareholders’ meeting and answer the investor’s consultation on the work of the Nomination Committee, as well as the relevant laws, regulations, listing rules and other matters authorized by the board of directors.

Audit Committee

Our audit committee is currently composed of two non-executive independent directors, Mr. Lin Boqiang and Mr. Zhang Biyi, and one non-executive director, Mr. Liu Yuezhen. Mr. Lin Boqiang serves as the chairman of the committee. Under our audit committee charter, the chairman of the committee must be an independent director and all resolutions of the committee must be approved by independent directors. The audit committee’s major responsibilities include:

• reviewing and supervising the engagement of external auditors and their performance;

• reviewing and ensuring the completeness of annual reports, interim reports and quarterly reports, if any, and related financial statements and accounts, and reviewing any material opinion contained in the aforesaid statements and reports with respect to financial reporting;

• reporting to the board of directors in writing on the financial reports of the company and related information, having considered the issues raised by external auditors;

• reviewing and scrutinizing the work conducted by the internal audit department in according with the applicable PRC and international rules;

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• monitoring the financial reporting system and internal control procedures of the company, as well as checking and assessing matters relating to, among others, the financial operations, internal control and risk management of the company;

• receiving, keeping and dealing with complaints or anonymous reports regarding accounting, internal accounting control or audit matters and ensuring the confidentiality of such complaints or reports;

• reporting regularly to the board of directors with respect to any significant matters which may affect the financial position of the company and its operations and with respect to the self-evaluation of the committee on the performance of their duties; and

• performing other responsibilities as may be required under relevant laws, regulations and the listing rules of the stock exchanges where the shares of the company are listed (as amended from time to time).

Investment and Development Committee

The current members of our investment and development committee are Mr. Liu Hongbin and Mr. Simon Henry. The investment and development committee’s major responsibilities include:

• studying the strategies of the company as proposed by our president and making recommendations to the board of directors;

• studying the annual investment budget and the adjustment proposal regarding the investment plan as proposed by our president and making recommendations to the board of directors; and

• reviewing feasibility studies and preliminary feasibility studies for material investment projects subject to the approval of the board of directors and making recommendations to the board of directors.

Evaluation and Remuneration Committee

The current members of our evaluation and remuneration committee are Ms. Elsie Leung Oi-sie, the chairman of the committee, Mr. Yu Baocai and Mr. Tokuchi Tatsuhito. The evaluation and remuneration committee’s major responsibilities include:

• studying the evaluation criteria for directors and senior officers, conducting the evaluations and proposing suggestions;

• studying and evaluating the remuneration policies and plans for directors and senior officers (including the compensation in connection with the removal or retirement of the director and senior officers);

• organizing the evaluation of the performance of our president and reporting the evaluation result to the board of directors, supervising the evaluation of the performance of our senior vice presidents, vice presidents, chief financial officer and other senior management members conducted under the leadership of the president;

• studying our incentive plan and compensation plan, supervising and evaluating the implementation of these plans and making recommendations for improvements to and perfection of such plans; and

• studying the relevant laws, regulations and the listing rules of the stock exchanges where the shares of the company are listed (as amended from time to time) and other matters authorized by the board of directors.

Health, Safety and Environment Committee

The current members of our health, safety and environment committee are Mr. Zhang Jianhua, the chairman of the committee, Mr. Hou Qijun, Mr. Duan Liangwei and Mr. Qin Weizhong. The health, safety and environment committee’s major responsibilities include:

• supervising the effective implementation of our Health, Safety and Environmental Protection Plan, or the HSE Plan;

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• making recommendations to the board of directors and our president regarding major decisions with respect to health, safety and environmental protection; and

• inquiring about the occurrence of and determining the responsibilities for material accidents of the company, and examining and supervising the treatment of such accidents.

Employees

As of December 31, 2015, 2016 and 2017, we had 521,566, 508,757 and 494,297 employees (not including the temporary employees), respectively. During 2017, we employed 319,407 temporary employees on an average. As of December 31, 2017, we had 318,561 temporary employees. The table below sets forth the number of our employees by business segment as of December 31, 2017.

	Employees		% of Total
Exploration and production		277,553		56.15
Refining and chemicals		143,253		28.98
Marketing		51,863		10.49
Natural gas and pipeline		15,919		3.22
Headquarters and others(1)		5,709		1.16
Total		494,297		100.00

(1) Including the numbers of employees of the management of our headquarters, specialized companies, PetroChina Exploration & Development Research Institute, PetroChina Planning & Engineering Institute, Petrochemical Research Institute and other units.

Our employees participate in various basic social insurance plans organized by municipal and provincial governments whereby we are required to make monthly contributions to these plans at certain rates of the employees’ salary as stipulated by relevant local regulations. Expenses incurred by us in connection with the retirement benefit plans were approximately RMB16,357 million, RMB16,184 million and RMB16,010 million, respectively, for the years ended December 31, 2015, 2016 and 2017, respectively.

In 2017, we did not experience any strikes, work stoppages, labor disputes or actions that affected the operation of any of our businesses. Our company maintains good relationship with our employees.

Share Ownership

As of December 31, 2017 our directors, senior officers and supervisors did not have share ownership in us or any of our affiliates.

Item 7 — MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

Major Shareholders

We were established on November 5, 1999 with CNPC as its sole promoter. As of March 31, 2018, CNPC beneficially owned 151,380,211,528 shares, which include 291,518,000 H shares indirectly held by CNPC through Fairy King Investments Limited, an overseas wholly owned subsidiary of CNPC, representing approximately 82.71% of the share capital of us, and, accordingly, CNPC is our controlling shareholder.

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The following table sets forth the major shareholders of our A shares as of March 31, 2018:

Name of Shareholders	Class of Shares		Number of Shares Held		Percentage of Such Share in That Class of the Issued Shares Capital (%)		Percentage of the Total Share Capital(%)
CNPC		A shares		151,088,693,528		93.31		82.55

The following table sets forth the major shareholders of our H shares as of March 31, 2018:

Name of Shareholders	Number of Shares Held	Percentage of Such Share in That Class of the Issued Shares Capital (%)		Percentage of the Total Share Capital (%)
CNPC	291,518,000 (Long Position )(1)		1.38		0.16
BlackRock, Inc.(2)	2,133,602,075 (Long Position)		10.11		1.17
	45,656,400 (Short Position)		0.22		0.02
JPMorgan Chase & Co.(3)	1,166,628,093 (Long Position)		5.52		0.64
	157,271,150 (Short Position)		0.74		0.09
	608,978,090 (Lending Pool)		2.88		0.33
Citigroup Inc.(4)	1,106,487,132 (Long Position)		5.24		0.6
	37,885,954 (Short Position)		0.17		0.02
	950,545,797 (Lending Pool)		4.50		0.52

(1) Held by Fairy King Investments Limited, an overseas wholly-owned subsidiary of CNPC.

(2) Blackrock, Inc., through various subsidiaries, had an interest in the H shares of the Company, of which 2,133,602,075 H shares (long position) and 45,656,400 H shares (short position) were held in its capacity as interest of corporation controlled by the substantial shareholder.

(3) JPMorgan Chase & Co., through various subsidiaries, had an interest in the H shares of the Company, of which 437,607,586 H shares (long position) and 157,271,150 H shares (short position) were held in its capacity as beneficial owner, 120,017,317 H shares (long position) were held in its capacity as investment manager, 25,100 H shares (long position) were held in its capacity as trustee, and 608,978,090 H shares (long position) were held in its capacity as approved lending agent. These 1,166,628,093 H shares (long position) included the interests held in its capacity as beneficial owner, investment manager, trustee and approved lending agent.

(4) Citigroup Inc., through various subsidiaries, had an interest in the H shares of the Company, of which 15,486,776 H shares (long position) were held in its capacity as holder of the guaranteed interest of shares, 140,454,559 H shares (long position) and 37,885,954 H shares (short position) were held in its capacity as interest of corporation controlled by the substantial shareholder, and 950,545,797 H shares (long position) were held in its capacity as approved lending agent. These 1,106,487,132 H shares (long position) included the interests held in its capacity as holder of the guaranteed interest of shares, corporation controlled by the substantial shareholder and approved lending agent.

Related Party Transactions

CNPC is a controlling shareholder of our company. We enter into extensive transactions with CNPC and other members of the CNPC group, all of which constitute related party transactions for us. We also continued to carry out existing continuing transactions with other related parties in the year ended December 31, 2017.

Continuing Related Party Transactions

Since 2000, our company has engaged a variety of continuing related party transactions with CNPC. CNPC provides various services to us and our company also provides specific products and services to CNPC. These

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transactions are governed by several agreements between CNPC and us, including the comprehensive products and services agreement, land lease, building lease, intellectual property licensing contracts and contract for the transfer of rights under production sharing contracts, as amended.

1. Renewal of the comprehensive products and services agreement

The comprehensive products and services agreement entered into between CNPC and us is updated every three years. Given that the agreement signed in August 2014 would expire on December 31, 2017, we and CNPC signed the new agreement on August 24, 2017, which covers the period from January 1, 2018 to December 31, 2020. In the new agreement, we added certain categories of products and services provided by our company to CNPC, and partially amended the pricing basis in accordance with relevant laws and regulations. Other terms and conditions of the agreement remain unchanged. The new agreement was approved at the extraordinary general meeting held on October 26, 2017.

The products and services provided by CNPC to us include (a) engineering and technical services, mainly to be provided before the commercial operation of projects, including but not limited to, exploration technological services, downhole operational services, oilfield construction services, refinery construction services and engineering design services; (b) production services, mainly for our daily operations after the projects commence operations, including but not limited to crude oil, natural gas, refined products, chemical products, supply of water, power and gas, and communication services; (c) materials supply services, which are mainly intermediary services for the procurement of materials provided before and after the official commissioning are granted, including but not limited to purchase of materials, quality inspections, storage and transport of materials; (d) social and life services, including but not limited to security, education, hospitals, property management, staff canteens, training centers and hotels; and (e) financial services, including loans and other financial assistance, deposit services, entrusted loans, settlement services, financial leasing services and others.

The products and services provided by our company to CNPC and the companies jointly-held by CNPC and us include: (a) general products and services, including refined oil products, chemical products, natural gas, crude oil, supply of water, power and gas and heating, metering, and commissioned operations, supply of materials, other products and services that CNPC may request us to provide from time to time for itself to consume, use or sell; and (b) financial services provided by the company to jointly held companies, including provision of entrusted loans, guarantees and other financial services .

The general principle of the comprehensive agreement is that the products and services provided are in accordance with the needs of the recipients, and the prices are fair and reasonable. The terms and conditions are not inferior to those of independent third party providers. The pricing of the general agreement follows government pricing, market price, cost price, and agreement price, depending on the circumstances. The comprehensive agreement is not exclusive, and the parties may provide and purchase products and services from other third parties, but all parties are obliged to provide the products and services set forth in the comprehensive agreement and the provisions of the annual plan.

2. Land Lease

We entered into a land lease agreement with CNPC in March 2000, pursuant to which, CNPC leased to us land across China totaling approximately 1,145 million square meters, which were related to our various operations and businesses, for a term of 50 years. We may adjust the land area and the rent every three years based on our production and operating requirement and the market prices. In 2014, we and CNPC confirmed that since January 1, 2015, the total area of land leased by us was adjusted to 1,777.21 million square meters and the rent was adjusted to no more than RMB 4,831.21 million. On August 24, 2017, the parties signed a new confirmation letter, pursuant to which, since January 1, 2018, the total area of land was adjusted to 1,772.65 million square meters and the annual rent was adjusted to no more than RMB5,783 million. Other terms of the lease remain unchanged. The independent valuer Savills Valuation and Professional Consultancy Co., Ltd.

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has reviewed the confirmation letter and confirmed that the rent as adjusted is fair and reasonable, and such rent is not higher than the market level. The new confirmation letter of the land lease was approved at the extraordinary general meeting held on October 26, 2017.

3. Real Estate Lease

We entered into a real estate lease with CNPC in March 2000, which was amended in September 2002. Pursuant to the lease, CNPC leased 712,500 square meters of real estate across China to us for our business operations. Both parties agreed to adjust the number and rent of leased properties every three years based on the needs of production and operation or changes in the market price of real estate. According to the adjustment in 2014, starting from January 1, 2015, we agreed to lease from CNPC a total of approximately 1,179,585.57 square meters of real estate for a total rent of approximately RMB707.71 million per year. Other terms of the lease remain unchanged. On August 24, 2017, we and CNPC signed a new real estate lease, effective from January 1, 2018, for a term of 20 years. Pursuant to the new agreement, starting from January 1, 2018, the company agreed to lease a total gross floor area of 1,152,968 square meters from CNPC, and agreed to pay a total annual rent of RMB730 million. The area and rent are to be adjusted every three years and the rent should not be higher than the fair market price. The independent valuer Savills Valuation & Professional Consultants Limited has reviewed the new real estate lease and confirmed that the adjusted rent is fair and reasonable and not higher than the market level. The new real estate lease was approved at the extraordinary general meeting held on October 26, 2017.

As of December 31, 2017, the outstanding amount of our debts secured by CNPC and its subsidiaries was RMB45,182 million.

During the reporting period, we carried out a number of continuing related party transactions with certain companies including CNPC Exploration and Development Company Limited. A detailed discussion of our relationships and transactions with these parties is set forth in “Item 7 — Major Shareholders and Related Party Transactions — Related Party Transactions” in our annual report on Form 20-F filed with the SEC on May 27, 2008, and the 6-K filed with the SEC on August 28, 2014, August 24, 2017 and September 8, 2017, respectively.

Loans from Related Parties

As of December 31, 2017, we had unsecured short-term and long-term loans from CNPC and its affiliates in an aggregate amount of RMB216,721 million with an average annual interest rate of 4.02%.

One-off Related Party Transactions

On September 28, 2017, we entered into a share transfer agreement with PetroChina Kunlun Gas Co., Ltd. (“Kunlun Gas”), a wholly-owned subsidiary of Kunlun Energy Co., Ltd., which is controlled by us. Pursuant to the agreement, we agreed to sell and Kunlun Gas agreed to acquire a 51% stake in CNPC Jingtang LNG Co., Ltd. (“Jingtang”) held by us for a consideration of RMB1,547 million, which shall be adjusted based on the profit and loss during the transition period. The consideration was negotiated and determined by the two parties based on the independent appraiser’s appraisal of the net assets value of Jingtang, and considering the industry’s development prospects and business conditions. Jingtang was established on September 28, 2012 by our company and two third party shareholders. The registered capital of Jingtang before acquisition was RMB2.6 billion. Prior to the acquisition, we were the controlling shareholder of Jingtang in which we held 51% of the shares. Jingtang’s main business includes receipt, storage and re-evaporation of LNG. The transaction was completed by the end of 2017.

Interests of Experts and Counsel

Not applicable.

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Item 8 — FINANCIAL INFORMATION

Financial Statements

See pages F-1 to F-62 following Item 19.

Dividend Policy

Our board of directors will declare dividends, if any, in Renminbi on a per share basis and will pay such dividends in Renminbi with respect to A Shares and HK dollars with respect to H Shares. Any final dividend for a financial year shall be subject to shareholders’ approval. The Bank of New York will convert the HK dollar dividend payments and distribute them to holders of ADSs in U.S. dollars, less expenses of conversion. The holders of the A Shares and H Shares will share proportionately on a per share basis in all dividends and other distributions declared by our board of directors.

The declaration of dividends is subject to the discretion of our board of directors. Our board of directors will take into account factors including the following:

• general business conditions;

• our financial results;

• capital requirements;

• contractual restrictions on the payment of dividends by us to our shareholders or by our subsidiaries to us;

• our shareholders’ interests;

• the effect on our debt ratings; and

• other factors our board of directors may deem relevant.

We may only distribute dividends after we have made allowances for:

• recovery of losses, if any;

• allocations to the statutory common reserve fund; and

• allocations to a discretionary common reserve fund if approved by our shareholders.

The allocation to the statutory funds is 10% of our income for the year attributable to our shareholders determined in accordance with PRC accounting rules. Under PRC law, our distributable earnings will be equal to our income for the year attributable to our shareholders determined in accordance with PRC accounting rules or IFRS, whichever is lower, less allocations to the statutory and discretionary funds.

We believe that our dividend policy strikes a balance between two important goals:

• providing our shareholders with a competitive return on investment; and

• assuring sufficient reinvestment of profits to enable us to achieve our strategic objectives.

In 2017, a dividend of RMB0.06926 per share (inclusive of applicable taxes) for the six months ended June 30, 2017 was paid to our A shareholders and H shareholders. The board of directors recommended that a final dividend of RMB0.02489 per share (which is 45% of the net profit of the Company for the second half of 2017) and an additional special final dividend of RMB0.03585 per share, totaling RMB0.06074 (inclusive of applicable taxes) should be paid. The final dividend for the year ended December 31, 2017 is subject to the approval by the annual general meeting to be held on June 5, 2018, and shall be paid to our shareholders listed on our shareholder register as of the close of business on June 20, 2018.

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Significant Changes

None.

Item 9 — THE OFFER AND LISTING

Nature of the Trading Market and Market Price Information

Our ADSs, each representing 100 H Shares, par value RMB1.00 per H Share, have been listed and traded on the New York Stock Exchange since April 6, 2000 under the symbol “PTR”. Our H Shares have been listed and traded on the Hong Kong Stock Exchange since April 7, 2000. In September 2005, our company issued an additional 3,196,801,818 H Shares. CNPC also sold 319,680,182 state-owned shares it held concurrently with our company’s issuance of new H Shares in September 2005. In October 2007, we issued 4 billion A Shares and these shares were listed on the Shanghai Stock Exchange on November 5, 2007. Following the issuance of A Shares, all the domestic shares of our company existing prior to the issuance of A Shares, i.e. the shares held by CNPC (our controlling shareholder) in our company, have been registered with China Securities Depository and Clearing Corporation Limited as tradable A Shares. The New York Stock Exchange, the Hong Kong Stock Exchange and Shanghai Stock Exchange are the principal trading markets for our ADSs, H Shares and A Shares, respectively.

As of December 31, 2017, there were 21,098,900,000 H Shares and 161,922,077,818 A Shares issued and outstanding. As of December 31, 2017, there were 188 registered holders of American depositary receipts evidencing 38,586 ADSs and the total ADSs outstanding was 7,893,556. The depositary of the ADSs is the Bank of New York.

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The high and low closing sale prices of our A Shares on the Shanghai Stock Exchange, of H Shares on the Hong Kong Stock Exchange and of the ADSs on the New York Stock Exchange for each year from 2013 through 2017, for each quarter from 2016 to 2018 (up to the end of the first quarter of 2018), and for each month from October 2017 to April 2018 (through April 23, 2018) are set forth below.

	Price Per H Share				Price Per ADS				Price Per A Share
	HK$				US$				RMB
	High		Low		High		Low		High		Low
Annual Data
2013		11.30		7.86		145.80		101.47		9.40		7.31
2014		11.62		7.33		149.48		94.75		10.81		7.47
2015		10.64		5.02		136.37		63.90		14.65		8.23
2016		6.02		4.18		76.15		54.05		8.35		8.23
2017		6.23		4.73		81.36		60.94		8.70		7.39
Quarterly Data
2016
First quarter		5.42		4.18		71.84		54.05		8.35		7.08
Second quarter		5.92		4.85		75.86		61.95		7.79		7.12
Third quarter		5.50		4.96		70.65		63.87		7.54		7.19
Fourth quarter		6.02		5.09		76.15		65.67		8.16		7.22
2017
First quarter		6.32		5.66		81.36		72.34		8.76		7.85
Second quarter		5.70		4.74		73.90		61.28		8.04		7.39
Third quarter		5.03		4.73		65.30		60.94		8.19		7.70
Fourth quarter		5.58		4.93		71.79		63.33		8.59		7.87
2018
First quarter		6.48		5.24		82.14		67.10		9.35		7.60
Monthly Data
2017
October		5.09		4.93		65.60		63.33		8.30		7.97
November		5.58		5.11		71.79		65.97		8.59		8.08
December		5.52		5.13		70.91		65.91		8.22		7.87
2018
January		6.48		5.50		82.14		71.67		9.33		8.25
February		6.33		5.29		78.58		67.94		9.35		7.95
March		5.53		5.24		71.25		67.10		8.11		7.60
April(through April 23 2017)		5.94		5.31		75.17		67.28		7.75		7.46

The closing prices per A Share, per H Share and per ADS on April 23, 2018 were RMB7.58, HK$5.82 and US$74.95, respectively.

Item 10 — ADDITIONAL INFORMATION

Memorandum and Articles of Association

Our Articles of Association Currently in Effect

On October 26, 2017, the company approved the amendment to the Articles of Association at the extraordinary general meeting. The amendment took effect as of the same day. The amendment includes, among others, (i) according to the PRC Company Law and the Constitution of the Communist Party of China, the company shall set up the Party’s organizations and working bodies with adequate staff and funds; the Party organizations shall play the role of the core of leadership and political center of the company. The board of

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directors of the company shall take the Party organization’s advices before it determines such material matters as the orientations of the company’s reform and development, key objectives and tasks and major work arrangements. With respect to appointment of management of the company, the Party organizations shall consider and provide their comments and suggestions on the candidates nominated by the board of directors or the president, or the Party organizations may recommend candidates to the board of directors and the president; (ii) a cumulative voting system of the company is implemented for election of directors and supervisors at general meeting; and (iii)  the tenure of re-elected independent directors cannot exceed six years.

Material Contracts

We have not entered into any material contracts other than in the ordinary course of business and other than those described under Item 4 — Information on the Company, Item 7 — Major Shareholders and Related Party Transactions or elsewhere in this Form annual report.

Foreign Exchange Controls

The Renminbi currently is not a freely convertible currency. We receive most of our revenues in Renminbi. A portion of our Renminbi revenues must be converted into other currencies to meet our foreign currency obligations, including:

• debt service on foreign currency-denominated debt;

• external capital expenditures and equity investment;

• purchases of imported equipment and materials; and

• payment of any dividends declared with respect to the H Shares.

Under the existing foreign exchange regulations in China, we may undertake current account foreign exchange transactions, including the payment of dividends, without prior approval from the State Administration of Foreign Exchange by producing commercial documents evidencing such transactions, provided that they are processed through Chinese banks licensed to engage in foreign exchange transactions.

Foreign exchange transactions under the capital account, including principal payments with respect to foreign currency-denominated obligations, continue to be subject to limitations and require the prior approval of the State Administration of Foreign Exchange. These limitations could affect our ability to obtain foreign exchange through debt financing, or to obtain foreign exchange for capital expenditures.

We have been, and will continue to be, affected by changes in exchange rates in connection with our ability to meet our foreign currency obligations and will be affected by such changes in connection with our ability to pay dividends on the H Shares in Hong Kong dollars and on ADSs in U.S. dollars. We believe that we have or will be able to obtain sufficient foreign exchange to continue to satisfy these obligations. We do not engage in any financial contract or other arrangement to hedge our currency exposure.

We are not aware of any other PRC laws, decrees or regulations that restrict the export or import of capital or that affect the remittance of dividends, interest or other payments to non-resident holders.

Taxation

The following discussion addresses the main PRC and United States federal income tax consequences of the ownership of H Shares or ADSs purchased held by the investor as capital assets.

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PRC Taxation

Dividends and Individual Investors

Pursuant to the Individual Income Tax Law of the PRC, all foreign individuals are subject to a 20% withholding tax on dividends paid by a PRC company on its shares listed overseas, or Overseas Shares, unless specifically exempt by the financial authority of the State Council of the PRC. However, pursuant to the Notice on the Collection of Individual Income Tax after the Abolishment of Guoshuifa [1993] No. 045, or Circular 348, issued by the State General Administration of Taxation of the PRC on June 28, 2011, foreign individual shareholders holding H shares, or Individual H Shareholders, in a PRC company listed in Hong Kong may be subject to different levels of withholding taxes on dividends based on the tax treaties of their home countries with China. Individual H Shareholders, who are residents of Hong Kong or Macau or who enjoy a 10% tax rate on dividends based on the tax treaties of their home countries with China, are subject to a withholding tax rate of 10% with respect to the H-share dividends they receive. For those Individual H Shareholders whose home countries have tax treaties with China prescribing a tax rate on dividends lower than 10%, the PRC company, whose shares are held by such Individual H Shareholders, need to make tax filings on behalf of the Individual H Shareholders in order for them to enjoy such tax treatment. For Individual H Shareholders whose home countries have tax treaties with China prescribing a tax rate on dividends between 10% and 20%, the PRC company, whose shares are held by such Individual H Shareholders, shall withhold the individual income tax at the agreed-upon tax rate. For Individual H Shareholders whose home countries have no tax treaties with China or whose home countries have tax treaties with China prescribing a tax rate on dividends higher than 20%, the PRC company shall withhold the tax at a rate of 20%.

Dividends and Foreign Enterprises

Pursuant to the Enterprise Income Tax Law of the PRC and the implementing rules thereunder, the Circular on Issues Concerning the Withholding of Corporate Income Tax by PRC Resident Enterprises from Dividends Payable to H Share Non-resident Corporate Shareholders, and the Measures for the Administration of the Enjoyment by Non-residents of the Treatments under the Tax Treaties, when paying any of its H share non-resident corporate shareholders any dividends, we withhold the corporate income tax from such dividends at a rate of 10%. For an H share non-resident corporate shareholder, whose home country has tax treaty with China prescribing a tax rate on dividends lower than 10%, such H share non-resident corporate shareholder may by itself or through an agent or us, make filings with the competent taxation authority for the treatment under the applicable tax treaty and present the documents evidencing that such shareholder is qualified to be a beneficial owner as defined under the applicable tax treaty.

Tax Treaties

If you are a tax resident or citizen of a country that has entered into a double-taxation treaty with the PRC, you may be entitled to a reduction in the amount of tax withheld, if any, imposed on the payment of dividends. The PRC currently has such treaties with a number of countries, including but not limited to:

• the United States;

• Australia;

• Canada;

• France;

• Germany;

• Japan;

• Malaysia;

• Singapore;

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• the United Kingdom; and

• the Netherlands.

Under certain treaties, the rate of withholding tax imposed by China’s taxation authorities may be reduced. Pursuant to the Measures for the Administration of the Enjoyment by Non-residents of the Treatments under the Tax Treaties promulgated by the State Administration of Taxation on August 27, 2015, non-PRC residents are entitled to the applicable benefit under tax treaties when they make tax filings or upon withholding by third parties and no prior approvals of the taxation authorities are required.

Capital Gains

The Individual Income Tax Law of the PRC, provides for a capital gain tax of 20% on individuals. The Provisions for Implementing the Individual Income Tax Law of the PRC, provides that the measures to levy individual income tax on the gains realized on the sale of shares will be made in the future by the Ministry of Finance and subject to the approval of the State Council. However, the Ministry of Finance has not so far promulgated a specific taxation method to levy tax on the capital gains realized by individual holders of H Shares or ADSs from sale of shares. If in the future such specific taxation method is promulgated, an individual holder of H Shares or ADSs may be subject to a 20% tax on capital gains under the Individual Income Tax Law of the PRC as amended from time to time, unless exempted or reduced by an applicable double taxation treaty or relevant PRC law or regulation.

Under the Enterprise Income Tax Law of the PRC, capital gains realized by foreign enterprises which are non-resident enterprises in the PRC upon the sale of Overseas Shares by PRC companies are generally subject to a PRC withholding tax levied at a rate of 10%, unless exempted or reduced pursuant to an applicable double-taxation treaty or other exemptions.

Shanghai-Hong Kong Stock Connect

In April 2014, China launched the Shanghai-Hong Kong Stock Connect Program, which is a cross-boundary investment channel that connects the Shanghai Stock Exchange and the Hong Kong Stock Exchange. Under the program, investors in each market are able to trade shares on the other market using their local brokers and clearing agencies. In accordance with the current PRC tax policies, foreign investors are temporarily exempt from income tax on capital gains derived from the trading of A-shares under the program and will be subject to a 10% withholding tax on the dividends received under the program. For a shareholder whose home country has tax treaty with China prescribing a tax rate on dividends lower than 10%, such shareholder may by itself or through an agent or the withholding agent, apply to the competent taxation authority for the treatment under the applicable tax treaty and present the documents evidencing that such shareholder is qualified to be a beneficial owner as defined under the applicable tax treaty.

Additional PRC Tax Considerations

Under the Provisional Regulations of the People’s Republic of China Concerning the Stamp Duty, a stamp duty is not imposed by the PRC on the transfer of shares, such as the H Shares or ADSs, of PRC publicly traded companies that take place outside of China.

United States Federal Income Taxation

The following is a general discussion of the material United States federal income tax consequences of purchasing, owning and disposing of the H Shares or ADSs if you are a U.S. holder, as defined below, and hold the H Shares or ADSs as capital assets within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended, or the Code. This discussion does not address all of the tax consequences relating to the

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purchase, ownership and disposition of the H Shares or ADSs, and does not take into account U.S. holders who may be subject to special rules including:

• tax-exempt entities;

• certain insurance companies;

• broker-dealers;

• traders in securities that elect to mark to market;

• U.S. holders liable for alternative minimum tax;

• U.S. holders that own 10% or more of our voting stock;

• U.S. holders that hold the H Shares or ADSs as part of a straddle or a hedging or conversion transaction; or

• U.S. holders whose functional currency is not the U.S. dollar.

This discussion is based on the Code, its legislative history, final, temporary and proposed United States Treasury regulations promulgated thereunder, published rulings and court decisions as in effect on the date hereof, all of which are subject to change, or changes in interpretation, possibly with retroactive effect. In addition, this discussion is based in part upon representations of the depositary and the assumption that each obligation in the deposit agreement and any related agreements will be performed according to its terms.

You are a “U.S. holder” if you are:

• a citizen or resident of the United States for United States federal income tax purposes;

• a corporation, or other entity treated as a corporation for United States federal income tax purposes, created or organized under the laws of the United States, or any state thereof or the District of Columbia;

• an estate the income of which is subject to United States federal income tax without regard to its source; or

• a trust:

• subject to the primary supervision of a United States court and the control of one or more United States persons; or

• that has elected to be treated as a United States person under applicable United States Treasury regulations.

If a partnership (or other entity treated as a partnership for United States federal income tax purposes) holds the H Shares or ADSs, the tax treatment of a partner generally will depend on the status of the partner and the activities of the partnership. If you are a partner of a partnership that holds the H Shares or ADSs, we urge you to consult your tax advisors regarding the consequences of the purchase, ownership and disposition of the H Shares or ADSs.

This discussion does not address any aspects of United States taxation other than federal income taxation.

We urge you to consult your tax advisors regarding the United States federal, state, local and non-United States tax consequences of the purchase, ownership and disposition of the H Shares or ADSs.

In general, if you hold American depositary receipts evidencing ADSs, you will be treated as owner of the H Shares represented by the ADSs. The following discussion assumes that we are not a passive foreign investment company, or PFIC, as discussed under “PFIC Rules” below.

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Distributions on the H Shares or ADSs

The gross amount of any distribution (without reduction for any PRC tax withheld) we make on the H Shares or ADSs out of our current or accumulated earnings and profits (as determined for United States federal income tax purposes) will be includible in your gross income as dividend income when the distribution is actually or constructively received by you, in the case of the H Shares, or by the depositary in the case of ADSs. Subject to certain limitations, dividends paid to non-corporate U.S. holders, including individuals, currently are eligible for a reduced rate of taxation if we are deemed to be a “qualified foreign corporation” for United States federal income tax purposes. A qualified foreign corporation includes:

• a foreign corporation that is eligible for the benefits of a comprehensive income tax treaty with the United States that includes an exchange of information program; or

• a foreign corporation if its stock with respect to which a dividend is paid (or ADSs backed by such stock) is readily tradable on an established securities market within the United States (as determined for United States federal income tax purposes),

but does not include an otherwise qualified foreign corporation that is a PFIC in the taxable year that the dividend is paid or in the prior taxable year. We believe that we will be a qualified foreign corporation so long as we are not a PFIC and we are considered eligible for the benefits of the Agreement between the Government of the United States of America and the Government of the People’s Republic of China for the Avoidance of Double Taxation and the Prevention of Tax Evasion with Respect to Taxes on Income, or the Treaty. Our status as a qualified foreign corporation, however, may change.

Distributions that exceed our current and accumulated earnings and profits will be treated as a return of capital to you to the extent of your tax basis in the H Shares or ADSs and thereafter as capital gain. Any dividend will not be eligible for the dividends-received deduction generally allowed to United States corporations with respect to dividends received from United States corporations. The amount of any distribution of property other than cash will be the fair market value of such property on the date of such distribution.

If we make a distribution paid in HK dollars, you will be considered to receive the U.S. dollar value of the distribution determined at the spot HK dollar/ U.S. dollar rate on the date such distribution is received by you or by the depositary, regardless of whether you or the depositary convert the distribution into U.S. dollars. Any gain or loss resulting from currency exchange fluctuations during the period from the date the dividend payment is includible in your income to the date you or the depositary convert the distribution into U.S. dollars will be treated as United States source ordinary income or loss for foreign tax credit limitation purposes.

Subject to various limitations, any PRC tax withheld from distributions in accordance with PRC law, as limited by the Treaty, will be deductible or creditable against your United States federal income tax liability. For foreign tax credit limitation purposes, dividends paid on the H Shares or ADSs will be foreign source income, and will be treated as “passive category income” or, in the case of some U.S. holders, “general category income.” You may not be able to claim a foreign tax credit (and instead may claim a deduction) for non-United States taxes imposed on dividends paid on the H Shares or ADSs if you (i) have held the H Shares or ADSs for less than a specified minimum period during which you are not protected from risk of loss with respect to such Shares, or (ii) are obligated to make payments related to the dividends (for example, pursuant to a short sale).

Sale, Exchange or Other Disposition

Upon a sale, exchange or other disposition of the H Shares or ADSs, you will recognize a capital gain or loss for United States federal income tax purposes in an amount equal to the difference between the U.S. dollar value of the amount realized and your tax basis, determined in U.S. dollars, in such H Shares or ADSs. Any gain or loss will generally be United States source gain or loss for foreign tax credit limitation purposes. Capital gain of certain non-corporate U.S. holders, including individuals, is generally taxed at a reduced rate where the

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property has been held more than one year. Your ability to deduct capital losses is subject to limitations. If any PRC tax is withheld from your gain on a sale, exchange or other disposition of H Shares or ADSs, such tax would only be creditable against your United States federal income tax liability to the extent that you have foreign source income. However, in the event that such PRC tax is withheld, a U.S. holder that is eligible for the benefits of the Treaty may be able to treat the gain as foreign source income for foreign tax credit satisfaction purposes. You are urged to consult your tax advisors regarding the United States federal income tax consequences if PRC tax is withheld from your gain on the sale or other disposition of H Shares or ADSs, including the availability of a foreign tax credit under your particular circumstances.

If you are paid in a currency other than U.S. dollars, any gain or loss resulting from currency exchange fluctuations during the period from the date of the payment resulting from sale, exchange or other disposition to the date you convert the payment into U.S. dollars will be treated as United States source ordinary income or loss for foreign tax credit limitation purposes.

PFIC Rules

In general, a foreign corporation is a PFIC for any taxable year in which, after applying relevant look-through rules with respect to the income and assets of subsidiaries:

• 75% or more of its gross income consists of passive income, such as dividends, interest, rents and royalties; or

• 50% or more of the average quarterly value of its assets consists of assets that produce, or are held for the production of, passive income.

We believe that we did not meet either of the PFIC tests in the taxable year that ended December 31, 2017 and believe that we will not meet either of the PFIC tests in the current or subsequent taxable years and therefore will not be treated as a PFIC for such periods. However, there can be no assurance that we will not be a PFIC in the current or subsequent taxable years.

If we were a PFIC in any taxable year that you held the H Shares or ADSs, you generally would be subject to special rules with respect to “excess distributions” made by us on the H Shares or ADSs and with respect to gain from your disposition of the H Shares or ADSs. An “excess distribution” generally is defined as the excess of the distributions you receive with respect to the H Shares or ADSs in any taxable year over 125% of the average annual distributions you have received from us during the shorter of the three preceding years or your holding period for the H Shares or ADSs. Generally, you would be required to allocate any excess distribution or gain from the disposition of the H Shares or ADSs ratably over your holding period for the H Shares or ADSs. The portion of the excess distribution or gain allocated to a prior taxable year, other than a year prior to the first year in which we became a PFIC, would be taxed at the highest United States federal income tax rate on ordinary income in effect for such taxable year, and you would be subject to an interest charge on the resulting tax liability, determined as if the tax liability had been due with respect to such particular taxable years. The portion of the excess distribution or gain that is not allocated to prior taxable years, together with the portion allocated to the years prior to the first year in which we became a PFIC, would be included in your gross income for the taxable year of the excess distribution or disposition and taxed as ordinary income.

The foregoing rules with respect to excess distributions and dispositions may be avoided or reduced if you are eligible for and timely make a valid “mark-to-market” election. If your H Shares or ADSs were treated as shares regularly traded on a “qualified exchange” for United States federal income tax purposes and a valid and timely mark-to-market election was made, in calculating your taxable income for each taxable year, you generally would be required to take into account as ordinary income or loss the difference, if any, between the fair market value and the adjusted tax basis of your H Shares or ADSs at the end of your taxable year. However, the amount of loss you would be allowed is limited to the extent of the net amount of previously included income as a result of the mark-to -market election. The New York Stock Exchange on which the ADSs are traded is a qualified exchange for United States federal income tax purposes.

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Alternatively, a timely election to treat us as a qualified electing fund under Section 1295 of the Code could be made to avoid the foregoing rules with respect to excess distributions and dispositions. You should be aware, however, that if we become a PFIC, we do not intend to satisfy record keeping requirements that would permit you to make a qualified electing fund election.

If you own the H Shares or ADSs during any year that we are a PFIC, you must annually file Internal Revenue Service, or IRS, Form 8621(or any other form subsequently specified by the United States Treasury Department), subject to certain exceptions based on the value of PFIC stock held. We encourage you to consult your own tax advisor concerning the United States federal income tax consequences of holding the H Shares or ADSs that would arise if we were considered a PFIC.

Backup Withholding and Information Reporting

In general, information reporting requirements will apply to dividends with respect to the H Shares or ADSs or the proceeds of the sale, exchange or other disposition of the H Shares or ADSs paid within the United States, and in some cases, outside of the United States, other than to various exempt recipients, including corporations. In addition, you may, under some circumstances, be subject to “backup withholding” with respect to dividends paid on the H Shares or ADSs or the proceeds of any sale, exchange or other disposition of the H Shares or ADSs, unless you:

• are a corporation or fall within various other exempt categories, and, when required, demonstrate this fact; or

• provide a correct taxpayer identification number on a properly completed IRS Form W-9 or a substitute form, certify that you are exempt from backup withholding and otherwise comply with applicable requirements of the backup withholding rules.

Any amount withheld under the backup withholding rules generally will be creditable against your United States federal income tax liability provided that you furnish the required information to the IRS in a timely manner. If you do not provide a correct taxpayer identification number you may be subject to penalties imposed by the IRS.

Certain U.S. holders who are individuals that hold certain foreign financial assets (which may include the H Shares or ADSs) may be required to report information relating to such assets, subject to certain exceptions. You should consult your own tax advisors regarding the effect, if any, of this requirement on your ownership and disposition of the H Shares or ADSs.

Documents on Display

You may read and copy documents referred to in this annual report on Form 20-F that have been filed with the U.S. Securities and Exchange Commission at the Commission’s public reference room located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the Commission at 1-800-SEC-0330 for further information on the public reference rooms and their copy charges. You may also find our annual reports on Form 20-F and other documents filed with the SEC on its website www.sec.gov.

The Commission allows us to “incorporate by reference” the information we file with the Commission. This means that we can disclose important information to you by referring you to another document filed separately with the Commission. The information incorporated by reference is considered to be part of this annual report on Form 20-F.

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Item 11 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the normal course of business, we hold or issue various financial instruments which expose us to interest rate and foreign exchange rate risks. Additionally, our operations are affected by certain commodity price movements. We historically have not used derivative instruments for hedging or trading purposes. Such activities are subject to policies approved by our senior management. Substantially all of the financial instruments we hold are for purposes other than trading. We regard an effective market risk management system as an important element of our treasury function and are currently enhancing our systems. A primary objective of our market risk management is to implement certain methodologies to better measure and monitor risk exposures.

The following discussions and tables, which constitute “forward-looking statements” that involve risks and uncertainties, summarize our market-sensitive financial instruments including fair value, maturity and contract terms. Such discussions address market risk only and do not present other risks which we face in the normal course of business.

Interest Rate Risk

Our interest risk exposure arises from changing interest rates. The tables below provide information about our financial instruments including various debt obligations that are sensitive to changes in interest rates. The tables present principal cash flows and related weighted-average interest rates at expected maturity dates. Weighted-average variable rates are based on effective rates as of December 31, 2015, 2016 and 2017. The information is presented in Renminbi equivalents, our reporting currency.

Foreign Exchange Rate Risk

We conduct our business primarily in Renminbi. However, a portion of our RMB revenues are converted into other currencies to meet foreign currency financial instrument obligations and to pay for imported equipment and other materials. Foreign currency payments for imported equipment represented 1.9%, 1.1% and 3.2% of our total payments for equipment in 2015, 2016 and 2017, respectively. Foreign currency payments for other imported materials represented 0.05%, 0.02% and 0.01% of our total payments for materials in 2015, 2016 and 2017, respectively.

The Renminbi is not a freely convertible currency. Limitation in foreign exchange transactions imposed by the PRC government could cause future exchange rates to vary significantly from current or historical exchange rates.

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The tables below provide information about our financial instruments including foreign currency denominated debt instruments that are sensitive to foreign currency exchange rates. The tables below summarize such information by presenting principal cash flows and related weighted-average interest rates at expected maturity dates in RMB equivalents, using the exchange rates in effect as of December 31, 2015, 2016 and 2017, respectively.

December 31, 2017

	Expected Maturity Date																				Percentage to Total Long-Term Borrowings			Fair Value
	2018			2019			2020			2021			2022			Thereafter			Total
	(RMB equivalent in millions, except percentages)
Long term debt
Loans in RMB
Fixed Rate Loan Amount		244			35,999			6,044			13,109			23,083			30,594			109,073		29.37	%		92,939
Average interest rate		3.28	%		4.33	%		4.30	%		3.51	%		3.86	%		4.56	%		—		—			—
Variable Rate Loan Amount		33,142			6,750			2,802			66			232			6,650			49,642		13.37	%		49,642
Average interest rate		3.80	%		4.03	%		4.57	%		4.55	%		4.74	%		3.98	%		—		—			—
Loans in Euro
Fixed Rate Loan Amount		13			21			8			—			—			49			91		0.02	%		113
Average interest rate		—			—			—			—			—			4.08	%		—		—			—
Variable Rate Loan Amount								2,341			—			—			—			2,341		0.63	%		2,341
Average interest rate		—			—			2.35	%		—			—			—			—		—			—
Loans in United States Dollar
Fixed Rate Loan Amount		36			36			36			36			18			106			268		0.07	%		240
Average interest rate		1.11	%		1.11	%		1.11	%		1.11	%		0.68	%		0.05	%		—		—			—
Variable Rate Loan Amount		12,084			13,140			38,577			218			14,522			115			78,656		21.18	%		78,656
Average interest rate		3.53	%		3.68	%		3.78	%		4.13	%		3.62	%		4.35	%		—		—			—
Loans in Japanese Yen
Fixed Rate Loan Amount		17			4			3			3			3			7			37		0.01	%		41
Average interest rate		—			—			—			—			—			—			—		—			—
Variable Rate Loan Amount		—			—			—			—			—			—			—		—			—
Average interest rate		—			—			—			—			—			—			—		—			—
Loans in Hong Kong Dollar
Variable Rate Loan Amount		—			620			—			—			—			—			620		0.17	%		620
Average interest rate		—			—			—			—			—			—			—		—			—
Debentures in Canadian Dollar
Fixed Rate Loan Amount		—			—			—			—			—			—			—		—			—
Average interest rate		—			—			—			—			—			—			—		—			—
Variable Rate Loan Amount		—			—			—			—			—			—			—		—			—
Average interest rate		—			—			—			—			—			—			—		—			—
Debentures in United States Dollar
Fixed Rate Loan Amount		—			—			—			—			—			—			—		—			—
Average interest rate		—			—			—			—			—			—			—		—			—
Debentures in RMB
Fixed Rate Loan Amount		16,000			3,230			2,000			31,000			2,000			15,000			69,230		18.64	%		62,631
Average interest rate		4.47	%		1.61	%		4.30	%		—			4.90	%		4.12	%		—		—			—
Medium term note in RMB
Fixed Rate Loan Amount		20,000			—			20,000			15,000			—			—			55,000		14.81	%		50,333
Average interest rate		4.03	%		—			3.85	%		3.45	%		—			—			—		—			—
Medium term note in United State Dollar
Fixed Rate Loan Amount		—			—			3,218			—			—			3,218			6,436		1.73	%		6,151
Average interest rate		—			—			2.89	%		—			—			3.76	%		—		—
Total		81,536			59,800			75,029			59,432			39,858			55,739			371,394		100.00	%		343,707

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December 31, 2016

	Expected Maturity Date																				Percentage to Total Long-Term Borrowings			Fair Value
	2017			2018			2019			2020			2021			Thereafter			Total
	(RMB equivalent in millions, except percentages)
Long term debt
Loans in RMB
Fixed Rate Loan Amount		9,796			245			36,317			10,112			3,110			40,143			99,723		22.45	%		97,691
Average interest rate		3.83	%		3.27	%		4.35	%		3.96	%		2.09	%		4.61	%		—		—			—
Variable Rate Loan Amount		13,193			33,639			6,634			70			218			31,998			85,752		19.30	%		85,752
Average interest rate		3.94	%		3.81	%		4.05	%		4.86	%		4.89	%		3.93	%		—		—			—
Loans in Euro
Fixed Rate Loan Amount		12			24			24			16			9			6			91		0.02	%		106
Average interest rate		2.03	%		2.67	%		2.67	%		2.96	%		3.72	%		3.56	%		—		—			—
Variable Rate Loan Amount		—			—			—			2,197			—			—			2,197		0.49	%		2,197
Average interest rate		—			—			—			2.35	%		—			—			—		—			—
Loans in United States Dollar
Fixed Rate Loan Amount		38			39			38			38			38			130			321		0.07	%		297
Average interest rate		1.12	%		1.09	%		1.12	%		1.12	%		1.12	%		0.14	%		—		—			—
Variable Rate Loan Amount		13,732			20,494			14,684			41,596			779			368			91,653		20.63	%		91,653
Average interest rate		2.33	%		3.13	%		3.27	%		3.22	%		5.66	%		3.99	%		—		—			—
Loans in Japanese Yen
Fixed Rate Loan Amount		14			22			7			4			3			7			57		0.01	%		60
Average interest rate		2.52	%		2.38	%		2.46	%		2.00	%		2.66	%		2.26	%		—		—			—
Variable Rate Loan Amount		—			—			—			—			—			—			—		—			—
Average interest rate		—			—			—			—			—			—			—		—			—
Loans in Hong Kong Dollar
Variable Rate Loan Amount		—			—			666			—			—			—			666		0.15	%		666
Average interest rate		—			—			2.27	%		—			—			—			—		—			—
Debentures in Canadian Dollar
Fixed Rate Loan Amount		—			—			—			—			—			—			—		—			—
Average interest rate		—			—			—			—			—			—			—		—			—
Variable Rate Loan Amount		—			—			—			—			—			—			—		—			—
Average interest rate		—			—			—			—			—			—			—		—			—
Debentures in United States Dollar
Fixed Rate Loan Amount		—			—			—			—			—			—			—		—			—
Average interest rate		—			—			—			—			—			—			—		—			—
Debentures in RMB
Fixed Rate Loan Amount		16,000			16,000			3,350			—			31,000			17,000			83,350		18.76	%		81,637
Average interest rate		4.55	%		4.47	%		1.63	%		—			3.09	%		4.21	%		—		—			—
Medium term note in RMB
Fixed Rate Loan Amount		18,630			20,000			—			20,000			15,000			—			73,630		16.57	%		71,999
Average interest rate		4.21	%		4.03	%		—			3.85	%		3.45	%		—			—		—			—
Medium term note in United State Dollar
Fixed Rate Loan Amount		—			—			—			3,431			—			3,431			6,862		1.55	%		6,747
Average interest rate		—			—			—			2.88	%		—			3.75	%		—		—			—
Total		71,415			90,463			61,720			77,464			50,157			93,083			444,302		100.00	%		438,805

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December 31, 2015

	Expected Maturity Date																				Percentage to Total Long-Term Borrowings			Fair Value
	2016			2017			2018			2019			2020			Thereafter			Total
	(RMB equivalent in millions, except percentages)
Long term debt
Loans in RMB
Fixed Rate Loan Amount		9,294			38,070			20,527			34,512			30,609			71,212			204,224		43.39	%		198,074
Average interest rate		4.03	%		3.79	%		4.51	%		4.31	%		3.96	%		4.27	%		—		—			—
Variable Rate Loan Amount		10,471			13,018			33,268			40			45			6,313			63,155		13.42	%		63,155
Average interest rate		4.40	%		3.94	%		4.51	%		4.90	%		4.90	%		4.73	%		—		—			—
Loans in Euro
Fixed Rate Loan Amount		12			22			2,151			23			16			6			2,230		0.47	%		2,318
Average interest rate		2.12	%		2.76	%		2.35	%		2.64	%		2.93	%		3.49	%		—		—			—
Variable Rate Loan Amount		—			—			—			—			—			—			—		—			—
Average interest rate		—			—			—			—			—			—			—		—			—
Loans in United States Dollar
Fixed Rate Loan Amount		36			488			36			36			36			154			786		0.17	%		774
Average interest rate		1.10	%		2.26	%		1.10	%		1.10	%		1.10	%		0.37	%		—		—			—
Variable Rate Loan Amount		15,841			12,845			21,500			11,048			32,136			1,300			94,670		20.12	%		94,670
Average interest rate		2.29	%		2.00	%		2.77	%		3.11	%		2.44	%		3.41	%		—		—			—
Loans in Japanese Yen
Fixed Rate Loan Amount		15			16			16			7			3			8			65		0.01	%		68
Average interest rate		2.47	%		2.46	%		2.46	%		2.40	%		2.30	%		2.30	%		—		—			—
Variable Rate Loan Amount		—			—			—			—			—			—			—		—			—
Average interest rate		—			—			—			—			—			—			—		—			—
Debentures in Canadian Dollar
Fixed Rate Loan Amount		—			—			—			—			—			—			—		—			—
Average interest rate		—			—			—			—			—			—			—		—			—
Variable Rate Loan Amount		—			—			—			—			—			—			—		—			—
Average interest rate		—			—			—			—			—			—			—		—			—
Debentures in United States Dollar
Fixed Rate Loan Amount		—			—			—			—			—			—			—		—			—
Average interest rate		—			—			—			—			—			—			—		—			—
Debentures in RMB
Fixed Rate Loan Amount		—			16,000			16,000			—			—			8,000			40,000		8.50	%		41,430
Average interest rate		—			4.55	%		4.47	%		—			—			4.93	%		—		—			—
Medium term note in RMB
Fixed Rate Loan Amount		498			18,630			20,000			—			20,000			—			59,128		12.56	%		59,157
Average interest rate		5.63	%		4.21	%		4.03	%		—			3.85	%		—			—		—			—
Medium term note in United State Dollar
Fixed Rate Loan Amount		—			—			—			—			3,192			3,192			6,384		1.36	%		6,202
Average interest rate		—			—			—			—			2.88	%		3.75	%		—		—			—
Total		36,167			99,089			113,498			45,666			86,037			90,185			470,642		100.00	%		465,848

See “Item 3 — Key Information — Risk Factors — Risks Related to Pricing and Exchange Rate”.

Commodity Price Risk

We are engaged in a wide range of petroleum-related activities and purchase certain quantity of oil from the international market to meet our demands. The prices of crude oil and refined products in the international market are affected by various factors such as changes in global and regional politics and economy, the demand and supply of crude oil and refined products, as well as unexpected events and disputes with international repercussions. The domestic crude oil price is determined with reference to the international price of crude oil whereby the prices of domestic refined products were allowed to adjust more in line with the prices in the international crude oil market. Other than certain subsidiaries of our company, we generally do not use any

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derivative instruments to evade such price risks. See “Item 3 — Key Information — Risk Factors — Risks Related to Pricing and Exchange Rate”.

Item 12 — DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Fees paid by our ADS holders

The Bank of New York Mellon, the depositary of our ADS program, collects its fees for delivery and surrender of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may refuse to deliver ADSs or the deposited shares or provide any distributions until its fees for those services are paid.

Persons Depositing or Withdrawing Shares Must Pay:	For:
$5.00 (or less) per 100 ADSs (or portion thereof)	Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property
	Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates
$0.02 (or less) per ADS (or portion thereof)	Any cash distribution to ADS holders
A fee equivalent to the fee that would be payable if securities distributed to you had been shares and the shares had been deposited for issuance of ADSs	Distribution of securities distributed to holders of deposited securities which are distributed by the depositary to ADS holders
Registration or transfer fees	Transfer and registration of shares on our share register to or from the name of the depositary or its agent when you deposit or withdraw shares
Expenses of the depositary	Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement)
	Converting foreign currency to U.S. dollars
Taxes and other governmental charges the depositary or the custodian have to pay on any ADS or share underlying an ADS, for example, stock transfer taxes, stamp duty or withholding taxes	As necessary
Any charges incurred by the depositary or its agents for servicing the deposited securities	As necessary

Fees and Payments from the Depositary to Us

In the year ended December 31, 2017, we did not receive any fees and payments from our depositary.

PART II

Item 13 — DEFAULTS, DIVIDENDS ARREARAGES AND DELINQUENCIES

None.

Item 14 — MATERIAL MODIFICATIONS TO THE RIGHTS TO SECURITY HOLDERS AND USE OF PROCEEDS

None.

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Item 15 — CONTROLS AND PROCEDURES

Evaluation of the Management on Disclosure Controls and Procedures

Our Chairman, who currently performs the function of Chief Executive Officer, and our Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in the United States Exchange Act Rules 13a-15(e) and 15d(e)) as of the end of the period covered by this annual report, have concluded that, as of such date, our company’s disclosure controls and procedures were effective to ensure that material information required to be disclosed in the reports that we file and furnish under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and regulations and that such information is accumulated and communicated to our company’s management, including our principal executive and financial officers, as appropriate, to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

Our company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rules 13a-15(f). Under the supervision and with the participation of our company’s management, including our principal executive officer and principal financial officer, our company evaluated the effectiveness of the its internal control over financial reporting based on criteria established in the framework in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our company’s management has concluded that our internal control over financial reporting was effective as of December 31, 2017.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

The effectiveness of our company’s internal control over financial reporting as of December 31, 2017 has been audited by KPMG Huazhen LLP, our company’s independent registered public accountants, as stated below.

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

PetroChina Company Limited:

Opinion on Internal Control over Financial Reporting

We have audited PetroChina Company Limited and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statements of financial position of the Company as of December 31, 2017 and 2016, the related consolidated statements of comprehensive income, changes in equity, and cash flows for the years then ended, and the related notes (collectively, the consolidated financial statements), and our report dated April 27, 2018 expressed an unqualified opinion on those consolidated financial statements.

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Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG Huazhen LLP

Beijing, China

April 27, 2018

Changes in Internal Control over Financial Reporting

During the year ended December 31, 2017, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our company’s internal control over financial reporting. On May 14, 2013, the COSO published an updated Internal Control — Integrated Framework (2013) and related illustrative documents. We adopted the new framework in 2014.

Item 16A — AUDIT COMMITTEE FINANCIAL EXPERT

Our audit committee is composed of two non-executive independent directors, Mr. Lin Boqiang and Mr. Zhang Biyi, and one non-executive director, Mr. Liu Yuezhen. See “Item 6 — Directors, Senior Management and Employees — Board Practices — Audit Committee”. Mr. Zhang Biyi, our non-executive independent director has been confirmed as a “financial expert” as defined in Item 16A of Form 20-F.

105

Item 16B — CODE OF ETHICS

We adopted our code of business conduct and ethics for senior management on March 23, 2004 and our code of business conduct and ethics for employees on March 2, 2005 and have disclosed the content of both codes on our website.

These two Codes of Ethics may be accessed as follows:

1. From our main web page, first click on “Investor Relations”.

2. Next, click on “Corporate Governance Structure”.

3. Finally, click on “Code of Ethics for Senior Management” or “Code of Ethics for Employees of PetroChina Company Limited”.

Item 16C — PRINCIPAL ACCOUNTANT FEES AND SERVICES

KPMG Huazhen LLP served as our independent accountant for the fiscal years of 2016 and 2017. The office of KPMG Huazhen LLP is located at 8th Floor, KPMG Tower, Oriental Plaza, 1 East Chang An Avenue, Beijing.

The following table presents the aggregate fees paid by us (not including our subsidiaries) for professional audit services, tax and other services rendered by KPMG Huazhen LLP to us for each of the years ended December 31, 2016 and 2017, respectively.

	December 31,
	2016		2017
	RMB		RMB
	(In millions)
Audit fees		53		53
Audit-related fees		—		—
Tax fees		—		—
All other fees		—		—
Total		53		53

The auditors’ remuneration above represented the annual fees paid by us for the years indicated. The remuneration did not include fees of RMB52 million (2016: RMB66 million) paid by our subsidiaries to KPMG Huazhen LLP and its network firms which primarily included audit fees of RMB40 million (2016: RMB50 million), audit-related fees of RMB8 million (2016: RMB8 million) and tax fees of RMB3 million (2016: RMB7 million), and other service fees of RMB1 million (2016: RMB1 million), respectively. The decrease in our fees paid in 2017 compared to 2016 was primarily due to the decrease in the audit fees of certain subsidiaries, such as Kunlun Gas and its subsidiaries.

Audit Committee Pre-approved Policies and Procedures

Currently, all audit services to be provided by our independent registered public accountant, KPMG Huazhen LLP, must be approved by our audit committee.

During the year ended December 31, 2017, services relating to all non-audit related fees provided to us by KPMG Huazhen LLP were approved by our audit committee in accordance with the de minimis exception to the pre-approval requirement provided by paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

Item 16D — EXEMPTIONS FROM LISTING STANDARDS FOR AUDIT COMMITTEES

We rely on an exemption contained in paragraph (b)(1)(iv)(D) of Rule 10A-3 under the Securities and Exchange Act of 1934, as amended, from the New York Stock Exchange listing requirement that each member of

106

the audit committee of a listed issuer must be independent. Our single non-independent audit committee member, who is a representative of CNPC, has only observer status and is not entitled to take any action at the audit committee of our board of directors, which qualifies us for the exemption from the independence requirements available under paragraph (b)(1)(iv)(D) of Rule 10A-3. See “Item 6 — Directors, Senior Management and Employees — Board Practice — Audit Committee.” We believe our reliance on this exemption does not have any adverse effect on the ability of our audit committee to act independently.

Item 16E — PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

Not applicable.

Item 16F — CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not applicable.

Item 16G — CORPORATE GOVERNANCE

We are incorporated under the laws of the PRC, with A Shares publicly traded on the Shanghai Stock Exchange, or the SSE, and H Shares publicly traded on the Hong Kong Stock Exchange, or the HKSE, and American Deposit Shares representing H Shares on the NYSE. As a result, our corporate governance framework is subject to the mandatory provisions of the PRC Company Law and the Corporate Governance Rules as well as the securities laws, regulations and the listing rules of Hong Kong and the United States.

The following discussion summarizes the significant differences between our corporate governance practices and those that would apply to a U.S. domestic issuer under the NYSE corporate governance rules.

Director Independence

Under the NYSE corporate governance rule 303A.01, a listed company must have a majority of independent directors on its board of directors. A company of which more than 50% of the voting power is held by an individual, a group or another company, or a controlled company, is not required to comply with this requirement. We are not required under the PRC Company Law and the HKSE Listing Rules to have a majority of independent directors on our board of directors. As of the date of this report, four of our 13 directors were independent non-executive directors.

Under the NYSE corporate governance rule 303A.03, the non-management directors of a listed company must meet at regularly scheduled executive sessions without management. There are no mandatory requirements under the PRC Company Law and the HKSE Listing Rules that a listed company should hold, and we currently do not hold, such executive sessions.

Nominating/Corporate Governance Committee

Under the NYSE corporate governance rule 303A.04, a listed company must have a nominating/corporate governance committee composed entirely of independent directors, with a written charter that covers certain minimum specified duties, but a controlled company is not required to comply with this requirement. The Corporate Governance Code as amended by the Stock Exchange of Hong Kong provides that issuers shall establish a nominating committee, and a majority of which should be independent non-executive directors and the chairman shall be served by an independent non-executive director or the board chairman. We are not required under the PRC Company Law to have a nominating/corporate governance committee. We set up a nominating committee in August 2015, which consists of the chairman of our board of directors and two independent directors.

107

Compensation Committee

Under the NYSE corporate governance rule 303A.05, a listed company must have a compensation committee composed entirely of independent directors, with a written charter that covers certain minimum specified duties. A controlled company is not required to comply with this requirement. We are not required under the PRC Company Law to have a compensation committee. Under the Corporate Governance Code of the HKSE Listing Rules, a listed company must have a remuneration committee composed of a majority of independent non-executive directors, with a written term of references that covers certain minimum specified duties.

We currently do not have a compensation committee composed entirely of independent directors. However, we have an evaluation and remuneration committee including a majority of independent non-executive directors.

Corporate Governance Guidelines

Under the NYSE corporate governance rule 303A.09, a listed company must adopt and disclose corporate governance guidelines that cover certain minimum specified subjects. We are not required under the PRC Company Law and the HKSE Listing Rules to have, and we do not currently have, formal corporate governance guidelines. However, we have the Articles of Association, the Rules and Procedures of Board of Directors and the Trial Implementation Rules for Compensation of Senior Management that address the following subjects:

• director qualification standards and responsibilities;

• key board committee responsibilities;

• director compensation; and

• director orientation and continuing education.

In addition, under the HKSE Listing Rules, we are expected to comply with, but may choose to deviate from, certain code provisions in the Corporate Governance Code of the Listing Rules which sets forth the principles and standards of corporate governance for listed companies. Pursuant to the HKSE Listing Rules, if we choose to deviate from any code provisions of the Corporate Governance Code, we must disclose such deviations in our annual report.

In 2009, we formulated the Administrative Measures on Independent Directors, the Administrative Rules on Holding of Company Shares by Directors, Supervisors and Senior Management, the Administrative Measures on Investor’s Relationship and the rules and procedures of the Audit Committee, the Performance Review and Compensation Committee, the Investment and Development Committee, and the Safety and Environmental Protection Committee. All these policies have further enhanced our corporate governance system and can ensure the better performance of duties of directors, supervisors, senior managers and committee members. In 2015, we set up a nominating committee and formulated the Rules of Procedures of the Nominating Committee.

In 2017, we revised our articles of association according to relevant regulatory requirements. We added the cumulative voting provisions, and defined the role of the Party’s core leadership in the articles of association. Our by-laws with respect to general meeting, board of directors and board of supervisors were also amended in line with the amendment to the articles.

Code of Business Conduct and Ethics

Under the NYSE corporate governance rule 303A.10, a listed company must adopt and disclose its code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or executive officers. See “Item 16B – Code of Ethics”. We are not required under the PRC Company Law and the HKSE Listing Rules to have, and we do not currently have, a code of business conduct

108

and ethics for directors. However, pursuant to the HKSE Listing Rules, all of our directors must comply with the Model Code for Securities Transactions by Directors of Listed Companies (the “Model Code”) as set out in the Listing Rules. The Model Code sets forth required standards with which the directors of a listed company must comply in securities transactions of the listed company.

CEO Certification Requirements

Under the NYSE corporate governance rule 303A.12(a), each listed company’s CEO must certify to the NYSE each year that he or she is not aware of any violation by the company of NYSE corporate governance listing standards. Our CEO is not required under the PRC Company Law and the HKSE Listing Rules to submit, and our CEO does not currently submit, such certification. Instead, our chairman, who performs the duties of the CEO, does the certification.

Item 16H — MINE SAFETY DISCLOSURE

Not applicable.

PART III

Item 17 — FINANCIAL STATEMENTS

We have elected to provide the financial statements and related information specified in Item 18 in lieu of Item 17.

Item 18 — FINANCIAL STATEMENTS

See page F-1 to F-62 following Item 19.

Item 19 — EXHIBITS

(a) See Item 18 for a list of the financial statements as part of this annual report.

(b) Exhibits to this annual report.

Exhibit Number	Description of Exhibits
1.1	Articles of Association (as amended on October  26, 2017) (English translation)(3)
4.1	Non-competition Agreement between CNPC and PetroChina (English translation)(1)
4.2	Trademark Licensing Contract between CNPC and PetroChina (English translation)(1)
4.3	Patent and Know-how Licensing Contract between CNPC and PetroChina (English translation)(1)
4.4	Computer Software Licensing Contract between CNPC and PetroChina (English translation)(1)
4.5	Contract for Transfer of Rights under Production Sharing Contracts between CNPC and PetroChina (English translation)(1)
4.6	Contract for the Supervision of Certain Sales Enterprises between CNPC and PetroChina (English translation)(1)
4.7	Form of Agreement for the Transfer of Rights and Interests under the Retainer Contracts relating to Oil Exploration and Exploitation in Lengjiapu Area, Liaohe Oil Region and No. 9.1 — 9.5 Areas, Karamay Oil Field (English translation)(1)

109

Exhibit Number	Description of Exhibits
4.8*	Comprehensive Products and Services Agreement, dated August 24, 2017, between CNPC and PetroChina.
4.9*	Land Lease Agreement, dated August 24, 2017, between CNPC and PetroChina
4.10*	Building Lease Agreement, dated August 24, 2017, between CNPC and PetroChina
4.11*	Annual Crude Oil Mutual Supply Framework Agreement, dated January 1, 2018, between China Petroleum and Chemical Corporation and PetroChina (English translation)
8.1*	List of major subsidiaries
11.1	Code of Ethics for Senior Management (2)
11.2	Code of Ethics for Employees (2)
12.1*	Certification of Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of 2002
12.2*	Certification of Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002
13.1*	Certification of Chief Executive Officer required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
13.2*	Certification of Chief Financial Officer required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
15.1*	Reserves Report for the year ended on December 31, 2017 prepared by DeGolyer and MacNaughton
15.2*	Reserves Report for the year ended on December 31, 2017 prepared by Ryder Scott
15.3*	Reserves Report for the year ended on December 31, 2017 prepared by GLJ Petroleum Consultants
15.4*	Reserves Report for the year ended on December 31, 2017 prepared by McDaniel & Associates Consultants, Ltd.
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

* To be filed as exhibits to this Form 20-F.

(1) Paper filing; incorporated by reference to our Registration Statement on Form F-1 (File No. 333-11566) filed with the Commission, as declared effective on March 29, 2000.

(2) Incorporated by reference to our annual report on Form 20-F for the fiscal year ended December 31, 2004 (File No. 1-15006) filed with the Commission.

(3) Incorporated by reference to our report on Form 6-K (File No. 1-15006) filed with the Commission on October 26, 2017.

110

SIGNATURE

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

PETROCHINA COMPANY LIMITED

/s/Wu Enlai

Name: Wu Enlai

Title: Secretary to Board of Directors

Date: April 27, 2018

111

INDEX OF CONSOLIDATED FINANCIAL STATEMENTS

	Page
PetroChina Company Limited and its Subsidiaries Consolidated Financial Statements
Reports of Independent Registered Public Accounting Firms		F-2
Consolidated Statements of Comprehensive Income for the years ended December 31, 2017, 2016 and 2015		F-4
Consolidated Statements of Financial Position as of December  31, 2017 and 2016		F-5
Consolidated Statements of Cash Flows for the years ended December  31, 2017, 2016 and 2015		F-6
Consolidated Statements of Changes in Equity for the years ended December 31, 2017, 2016 and 2015		F-8
Notes to the Financial Statements		F-9
Supplementary Information on Oil and Gas Exploration and Production Activities (Unaudited)		F-55

F-1

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

PetroChina Company Limited:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statements of financial position of PetroChina Company Limited and subsidiaries (the Company) as of December 31, 2017 and 2016, the related consolidated statements of comprehensive income, changes in equity, and cash flows for the years then ended, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for the years then ended, in conformity with International Financial Reporting Standards as issued by International Accounting Standards Board.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated April 27, 2018 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ KPMG Huazhen LLP

We have served as the Company’s auditor since 2013.

Beijing, China

April 27, 2018

F-2

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

PetroChina Company Limited:

We have audited the accompanying consolidated statements of comprehensive income, changes in equity, and cash flows of PetroChina Company Limited and subsidiaries (the Company) for the year ended December 31, 2015. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of the operations and the cash flows of the Company for the year ended December 31, 2015, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

/s/ KPMG

Hong Kong, China

April 28, 2016

F-3

PETROCHINA COMPANY LIMITED

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Years Ended December 31, 2017, 2016 and 2015

(Amounts in millions, except for the per share data)

	Notes		2017			2016			2015
			RMB			RMB			RMB
REVENUE		6		2,015,890			1,616,903			1,725,428
OPERATING EXPENSES
Purchases, services and other				(1,285,716	)		(959,640	)		(1,056,795	)
Employee compensation costs		8		(125,384	)		(117,662	)		(118,082	)
Exploration expenses, including exploratory dry holes				(23,884	)		(18,576	)		(18,380	)
Depreciation, depletion and amortization				(237,375	)		(218,147	)		(202,875	)
Selling, general and administrative expenses				(77,042	)		(74,255	)		(71,270	)
Taxes other than income taxes		9		(198,022	)		(189,608	)		(205,884	)
Other (expenses) / income, net				(745	)		21,620			27,110
TOTAL OPERATING EXPENSES				(1,948,168	)		(1,556,268	)		(1,646,176	)
PROFIT FROM OPERATIONS				67,722			60,635			79,252
FINANCE COSTS
Exchange gain				8,217			12,828			9,536
Exchange loss				(9,311	)		(11,571	)		(10,168	)
Interest income				2,901			2,491			2,019
Interest expense		10		(22,408	)		(23,348	)		(24,328	)
TOTAL NET FINANCE COSTS				(20,601	)		(19,600	)		(22,941	)
SHARE OF PROFIT OF ASSOCIATES AND JOINT VENTURES		16		5,968			4,105			1,504
PROFIT BEFORE INCOME TAX EXPENSE		7		53,089			45,140			57,815
INCOME TAX EXPENSE		12		(16,296	)		(15,768	)		(15,726	)
PROFIT FOR THE YEAR				36,793			29,372			42,089
OTHER COMPREHENSIVE INCOME RECLASSIFIABLE TO PROFIT OR LOSS
Currency translation differences				(431	)		9,404			(20,965	)
Fair value (loss)/ gain from available-for-sale financial assets, net of tax				(608	)		(128	)		596
Share of the other comprehensive (loss) / income of associates and joint ventures accounted for using the equity method				(326	)		313			130
OTHER COMPREHENSIVE (LOSS) / INCOME, NET OF TAX				(1,365	)		9,589			(20,239	)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR				35,428			38,961			21,850
PROFIT FOR THE YEAR ATTRIBUTABLE TO:
Owners of the Company				22,798			7,857			35,517
Non-controlling interests				13,995			21,515			6,572
				36,793			29,372			42,089
TOTAL COMPREHENSIVE INCOME FOR THE YEAR ATTRIBUTABLE TO:
Owners of the Company				23,685			15,814			18,965
Non-controlling interests				11,743			23,147			2,885
				35,428			38,961			21,850
BASIC AND DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY(RMB)		13		0.12			0.04			0.19

The accompanying notes are an integral part of these financial statements.

F-4

PETROCHINA COMPANY LIMITED

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As of December 31, 2017 and 2016

(Amounts in millions)

	Notes		2017			2016
			RMB			RMB
NON-CURRENT ASSETS
Property, plant and equipment		15		1,702,813			1,739,545
Investments in associates and joint ventures		16		81,159			78,967
Available-for-sale financial assets		17		1,917			2,011
Advance operating lease payments		19		73,896			71,353
Intangible and other non-current assets		20		92,941			102,750
Deferred tax assets		30		26,724			20,360
TOTAL NON-CURRENT ASSETS				1,979,450			2,014,986
CURRENT ASSETS
Inventories		21		144,669			146,865
Accounts receivable		22		53,143			47,315
Prepayments and other current assets		23		72,014			77,583
Notes receivable		24		19,215			11,285
Time deposits with maturities over three months but within one year				13,344			686
Cash and cash equivalents		25		122,777			97,931
TOTAL CURRENT ASSETS				425,162			381,665
CURRENT LIABILITIES
Accounts payable and accrued liabilities		26		343,819			310,680
Income taxes payable				9,533			8,743
Other taxes payable				47,898			36,456
Short-term borrowings		27		175,417			143,384
TOTAL CURRENT LIABILITIES				576,667			499,263
NET CURRENT LIABILITIES				(151,505	)		(117,598	)
TOTAL ASSETS LESS CURRENT LIABILITIES				1,827,945			1,897,388
EQUITY
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY:
Share capital		28		183,021			183,021
Retained earnings				712,437			711,197
Reserves		29		298,062			294,806
TOTAL EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY				1,193,520			1,189,024
NON-CONTROLLING INTERESTS				187,799			183,711
TOTAL EQUITY				1,381,319			1,372,735
NON-CURRENT LIABILITIES
Long-term borrowings		27		289,858			372,887
Asset retirement obligations		31		131,546			125,392
Deferred tax liabilities		30		12,660			13,640
Other long-term obligations				12,562			12,734
TOTAL NON-CURRENT LIABILITIES				446,626			524,653
TOTAL EQUITY AND NON-CURRENT LIABILITIES				1,827,945			1,897,388

The accompanying notes are an integral part of these financial statements.

F-5

PETROCHINA COMPANY LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2017, 2016 and 2015

(Amounts in millions)

	2017			2016			2015
	RMB			RMB			RMB
CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the year		36,793			29,372			42,089
Adjustments for:
Income tax expense		16,296			15,768			15,726
Depreciation, depletion and amortization		237,375			218,147			202,875
Capitalized exploratory costs charged to expense		9,455			9,689			9,608
Safety fund reserve		327			1,614			1,434
Share of profit of associates and joint ventures		(5,968	)		(4,105	)		(1,504	)
Provision for impairment of receivables, net		3,254			1,609			74
Write down in inventories, net		1,069			2,634			3,335
Impairment of available-for-sale financial assets		—			(2	)		74
Impairment of other non-current assets		3,784			115			—
Loss on disposal of property, plant and equipment		4,939			7,972			4,661
Remeasurement to fair value of pre-existing interest in acquiree		—			—			(22,807	)
Gain on disposal of other non-current assets		(108	)		(37	)		(1,476	)
Gain on disposal of subsidiaries		(613	)		(24,674	)		(280	)
Dividend income		—			(60	)		(288	)
Interest income		(2,901	)		(2,491	)		(2,019	)
Interest expense		22,408			23,348			24,328
Changes in working capital:
Accounts receivable, prepaid expenses and other current assets		(2,779	)		5,281			5,581
Inventories		1,141			(22,638	)		36,256
Accounts payable and accrued liabilities		65,229			16,825			(28,163	)
CASH FLOWS GENERATED FROM OPERATIONS		389,701			278,367			289,504
Income taxes paid		(23,046	)		(13,188	)		(28,192	)
NET CASH FLOWS FROM OPERATING ACTIVITIES		366,655			265,179			261,312

The accompanying notes are an integral part of these financial statements.

F-6

PETROCHINA COMPANY LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

For the Years Ended December 31, 2017, 2016 and 2015

(Amounts in millions)

	2017			2016			2015
	RMB			RMB			RMB
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures		(229,239	)		(181,054	)		(217,750	)
Acquisition of investments in associates and joint ventures		(3,901	)		(2,008	)		(1,637	)
Acquisition of available-for-sale financial assets		(16	)		(400	)		(625	)
Prepayments on long-term operating leases		(3,928	)		(2,586	)		(2,524	)
Acquisition of intangible assets and other non-current assets		(3,837	)		(5,781	)		(3,586	)
Payments for acquisition of joint venture and subsidiaries		(1,106	)		—			(6,496	)
Proceeds from disposal of property, plant and equipment		1,146			2,127			1,923
Acquisition of subsidiaries		—			—			(17,855	)
Proceeds from disposal of other non-current assets		921			991			16,987
Interest received		2,227			2,079			1,585
Dividends received		7,181			10,505			9,617
(Increase) / decrease in time deposits with maturities over three months		(12,994	)		240			4,482
NET CASH FLOWS USED FOR INVESTING ACTIVITIES		(243,546	)		(175,887	)		(215,879	)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of short-term borrowings		(578,129	)		(458,780	)		(530,808	)
Repayments of long-term borrowings		(195,984	)		(285,519	)		(250,745	)
Interest paid		(19,590	)		(19,276	)		(20,777	)
Dividends paid to non-controlling interests		(12,621	)		(2,401	)		(5,314	)
Dividends paid to owners of the Company		(19,626	)		(8,450	)		(29,005	)
Increase in short-term borrowings		601,862			460,478			481,762
Increase in long-term borrowings		128,390			247,429			311,809
Capital contribution from non-controlling interests		1,470			940			1,596
Decrease in other long-term obligations		(497	)		(1,428	)		(3,957	)
NET CASH FLOWS USED FOR FINANCING ACTIVITIES		(94,725	)		(67,007	)		(45,439	)
TRANSLATION OF FOREIGN CURRENCY		(3,538	)		2,873			(999	)
Increase / (decrease) in cash and cash equivalents		24,846			25,158			(1,005	)
Cash and cash equivalents at beginning of the year		97,931			72,773			73,778
Cash and cash equivalents at end of the year		122,777			97,931			72,773

The accompanying notes are an integral part of these financial statements.

F-7

PETROCHINA COMPANY LIMITED

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Years Ended December 31, 2017, 2016 and 2015

(Amounts in millions)

	Attributable to Owners of the Company											Non-controlling Interests			Total Equity
	Share Capital		Retained Earnings			Reserves			Subtotal
	RMB		RMB			RMB			RMB			RMB			RMB
Balance at January 1, 2015		183,021		707,303			285,570			1,175,894			141,887			1,317,781
Profit for the year ended December 31, 2015		—		35,517			—			35,517			6,572			42,089
Other comprehensive loss for the year ended December 31, 2015		—		—			(16,552	)		(16,552	)		(3,687	)		(20,239	)
Special reserve-safety fund reserve		—		—			1,303			1,303			131			1,434
Transfer to reserves		—		(2,103	)		2,103			—			—			—
Dividends		—		(29,005	)		—			(29,005	)		(5,515	)		(34,520	)
Acquisition of subsidiaries		—		—			12,530			12,530			23,755			36,285
Capital contribution from non-controlling interests		—		—			—			—			2,040			2,040
Other		—		43			(14	)		29			(865	)		(836	)
Balance at December 31, 2015		183,021		711,755			284,940			1,179,716			164,318			1,344,034
Profit for the year ended December 31, 2016		—		7,857			—			7,857			21,515			29,372
Other comprehensive income for the year ended December 31, 2016		—		—			7,957			7,957			1,632			9,589
Special reserve-safety fund reserve		—		—			1,540			1,540			74			1,614
Dividends		—		(8,450	)		—			(8,450	)		(4,282	)		(12,732	)
Transaction with non-controlling interests in subsidiaries		—		—			224			224			(2,061	)		(1,837	)
Capital contribution from non-controlling interests		—		—			—			—			1,087			1,087
Other		—		35			145			180			1,428			1,608
Balance at December 31, 2016		183,021		711,197			294,806			1,189,024			183,711			1,372,735
Profit for the year ended December 31, 2017		—		22,798			—			22,798			13,995			36,793
Other comprehensive income / (loss) for the year ended December 31, 2017		—		—			887			887			(2,252	)		(1,365	)
Special reserve-safety fund reserve		—		—			178			178			149			327
Transfer to reserves		—		(1,929	)		1,929			—			—			—
Dividends		—		(19,626	)		—			(19,626	)		(10,404	)		(30,030	)
Transaction with non-controlling interests in subsidiaries		—		—			289			289			649			938
Capital contribution from non-controlling interests		—		—			—			—			2,584			2,584
Other		—		(3	)		(27	)		(30	)		(633	)		(663	)
Balance at December 31, 2017		183,021		712,437			298,062			1,193,520			187,799			1,381,319

The accompanying notes are an integral part of these financial statements.

F-8

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS

(All amounts in millions, except for the per share data and otherwise stated)

1 ORGANISATION AND PRINCIPAL ACTIVITIES

PetroChina Company Limited (the “Company”) was established as a joint stock company with limited liability on November 5, 1999 by China National Petroleum Corporation as the sole proprietor in accordance with the approval Guo Jing Mao Qi Gai [1999] No. 1024 “Reply on the approval of the establishment of PetroChina Company Limited” from the former State Economic and Trade Commission of the People’s Republic of China (“China” or “PRC”). CNPC restructured (“the Restructuring”) and injected its core business and the related assets and liabilities into the Company. 中国石油天然气集团公司 was renamed 中国石油天然气集团有限公司 (“CNPC” before and after the change of name) on December 19, 2017. CNPC is a wholly state-owned company registered in China. The Company and its subsidiaries are collectively referred to as the “Group”.

The Group is principally engaged in (i) the exploration, development and production and marketing of crude oil and natural gas; (ii) the refining of crude oil and petroleum products, production and marketing of primary petrochemical products, derivative petrochemical products and other chemical products; (iii) the marketing of refined products and trading business; and (iv) the transmission of natural gas, crude oil and refined products and the sale of natural gas (Note 37).

2 BASIS OF PREPARATION

The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (“IFRSs”) as issued by the International Accounting Standards Board (“IASB”). The consolidated financial statements have been prepared under the historical cost convention except as disclosed in the accounting policies below.

The preparation of financial statements in conformity with IFRSs requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the statement of financial position and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management’s best knowledge of current events and actions, actual results may ultimately differ from those estimates. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

3 SUMMARY OF PRINCIPAL ACCOUNTING POLICIES

(a) Basis of consolidation

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has right to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

A subsidiary is consolidated from the date on which control is transferred to the Group and is no longer consolidated from the date that control ceases. The acquisition method of accounting is used to account for the acquisition of subsidiaries except for business combinations under common control. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognizes any non-controlling interests in the acquiree either at fair value or at the non-controlling interests’ proportionate share of the acquiree’s net assets.

F-9

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

The excess of the consideration transferred, the amount of any non-controlling interests in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognized directly in the statement of comprehensive income.

An acquisition of a business which is a business combination under common control is accounted for in a manner similar to a uniting of interests whereby the assets and liabilities acquired are accounted for at carryover predecessor values to the other party to the business combination with all periods presented as if the operations of the Group and the business acquired have always been combined. The difference between the consideration paid by the Group and the net assets or liabilities of the business acquired is adjusted against equity.

Intercompany transactions, balances and unrealized gains on transactions between group companies are eliminated. Unrealized losses are also eliminated. Where necessary, accounting policies of subsidiaries have been changed to ensure consistency with the policies adopted by the Group.

A listing of the Group’s principal subsidiaries is set out in Note 18.

(b) Investments in associates

Associates are entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for by the equity method of accounting in the consolidated financial statements of the Group and are initially recognized at cost.

Under this method of accounting, the Group’s share of the post-acquisition profits or losses of associates is recognized in the consolidated profit or loss and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amounts of the investments. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred obligations or made payments on behalf of the associate.

Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates; unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. The Group’s investment in associates includes goodwill identified on acquisition, net of any accumulated loss and is tested for impairment as part of the overall balance. Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired associate at the date of acquisition. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

A listing of the Group’s principal associates is shown in Note 16.

(c) Investments in joint ventures

Ventures are arrangements in which the Group with one or more parties have joint control, whereby the Group has rights to the net assets of the arrangements, rather than rights to their assets and obligations for their liabilities. The Group’s interests in joint ventures are accounted for by the equity method of accounting (Note 3(b)) in the consolidated financial statements.

F-10

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

A listing of the Group’s principal joint ventures is shown in Note 16.

(d) Transactions with non-controlling interests

Transactions with non-controlling interests are treated as transactions with owners in their capacity as owners of the Group. Gains and losses resulting from disposals to non-controlling interests are recorded in equity. The differences between any consideration paid and the relevant share of the carrying value of net assets of the subsidiary acquired resulting from the purchase of non-controlling interests, are recorded in equity.

When the Group ceases to have control or significant influence, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognized in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified to profit or loss.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognized in other comprehensive income are reclassified to profit or loss where appropriate.

(e) Foreign currencies

Items included in the financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). Most assets and operations of the Group are located in the PRC (Note 37), and the functional currency of the Company and most of the consolidated subsidiaries is the Renminbi (“RMB”). The consolidated financial statements are presented in the presentation currency of RMB.

Foreign currency transactions of the Group are accounted for at the exchange rates prevailing at the respective dates of the transactions; monetary assets and liabilities denominated in foreign currencies are translated at exchange rates at the date of the statement of financial position; gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities are recognized in the consolidated profit or loss.

For the Group entities that have a functional currency different from the Group’s presentation currency, assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of the statement of financial position. Income and expenses for each statement of comprehensive income presented are translated at the average exchange rates for each period and the resulting exchange differences are recognized in other comprehensive income.

(f) Property, plant and equipment

Property, plant and equipment, including oil and gas properties (Note 3(g)), are initially recorded in the consolidated statement of financial position at cost where it is probable that they will generate future economic benefits. Cost represents the purchase price of the asset and other costs incurred to bring the asset into existing use. Subsequent to their initial recognition, property, plant and equipment are carried at cost less accumulated depreciation, depletion and amortization (including any impairment).

F-11

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

Depreciation, to write off the cost of each asset, other than oil and gas properties (Note 3(g)), to their residual values over their estimated useful lives is calculated using the straight-line method.

The Group uses the following useful lives for depreciation purposes:

Buildings	8 - 40 years
Equipment and machinery	4 - 30 years
Motor vehicles	4 - 14 years
Other	5 - 12 years

No depreciation is provided on construction in progress until the assets are completed and ready for use.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

Property, plant and equipment, including oil and gas properties (Note 3(g)), are reviewed for possible impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the carrying amount of a cash generating unit exceeds the higher of its fair value less costs to sell and its value in use. Value in use is the estimated net present value of future cash flows to be derived from the cash generating unit.

Gains and losses on disposals of property, plant and equipment are determined by reference to their carrying amounts and are recorded in the consolidated profit or loss.

Interest and other costs on borrowings to finance the construction of property, plant and equipment are capitalized during the period of time that is required to complete and prepare the asset for its intended use. Costs for repairs and maintenance activities are expensed as incurred except for costs of components that result in improvements or betterments which are capitalized as part of property, plant and equipment and depreciated over their useful lives.

(g) Oil and gas properties

The successful efforts method of accounting is used for oil and gas exploration and production activities. Under this method, all costs for development wells, support equipment and facilities, and proved mineral interests in oil and gas properties are capitalized. Geological and geophysical costs are expensed when incurred. Costs of exploratory wells are capitalized pending determination of whether the wells find proved oil and gas reserves. Proved oil and gas reserves are the estimated quantities of crude oil and natural gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulation before the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether the estimate is a deterministic estimate or probabilistic estimate. Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average price during the 12-month period before the ending date of the period covered by the proved oil and gas reserve report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period unless prices are defined by contractual arrangements, excluding escalations based upon future conditions. The costs shall be that prevailing at the end of the period.

Exploratory wells in areas not requiring major capital expenditures are evaluated for economic viability within one year of completion of drilling. The related well costs are expensed as dry holes if it is determined that

F-12

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

such economic viability is not attained. Otherwise, the related well costs are reclassified to oil and gas properties and are subject to impairment review (Note 3(f)). For exploratory wells that are found to have economically viable reserves in areas where major capital expenditure will be required before production can commence, the related well costs remain capitalized only if additional drilling is underway or firmly planned. Otherwise the related well costs are expensed as dry holes. The Group does not have any significant costs of unproved properties capitalized in oil and gas properties.

The Ministry of Land and Resources (Renamed as Department of Natural Resources) in China issues production licenses to applicants on the basis of the reserve reports approved by relevant authorities.

The cost of oil and gas properties is amortized at the field level based on the units of production method. Units of production rates are based on oil and gas reserves estimated to be recoverable from existing facilities based on the current terms of the Group’s production licenses.

(h) Intangible assets and goodwill

Expenditures on acquired patents, trademarks, technical know-how and licenses are capitalized at historical cost and amortized using the straight-line method over their estimated useful lives. Intangible assets are not subsequently revalued. The carrying amount of each intangible asset is reviewed annually and adjusted for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount and is recognized in the consolidated profit or loss. The recoverable amount is measured as the higher of fair value less costs to sell and value in use. Value in use is the estimated net present value of future cash flows to be derived from the asset.

Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over the interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree and the amount of any non-controlling interests in the acquiree.

Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognized immediately as an expense and is not subsequently reversed.

(i) Financial assets

Financial assets are classified into the following categories: financial assets at fair value through profit or loss, held-to-maturity investments, loans and receivables and available-for-sale financial assets. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. The Group has principally loans and receivables and available-for-sale financial assets and limited financial assets at fair value through profit or loss. The detailed accounting policies for loans and receivables, available-for-sale financial assets and financial assets at fair value through profit or loss held by the Group are set out below:

Classification

(i) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12

F-13

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

months after the date of the statement of financial position, which are classified as non-current assets. The Group’s loans and receivables comprise accounts receivable, notes receivable and other receivables. The recognition methods for loans and receivables are disclosed in the respective policy notes.

(ii) Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories; these are included in non-current assets unless management intends to dispose of the investment within 12 months of the date of the statement of financial position. The Group’s available-for-sale financial assets primarily comprise unquoted equity instruments.

(iii) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorized as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if expected to be settled within 12 months; otherwise, they are classified as non-current.

Recognition and measurement

Regular purchases and sales of financial assets are recognized on the trade-date, the date on which the Group commits to purchase or sell the asset. Investments are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognized at fair value, and transaction costs are expensed in profit or loss. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.

Available-for-sale financial assets are measured at fair value except where there are no quoted market prices in active markets and the fair values cannot be reliably measured using valuation techniques. Available-for-sale financial assets that do not have quoted market prices in active markets and whose fair value cannot be reliably measured are carried at cost. Changes in the fair value of monetary and non-monetary securities classified as available for sale are recognized in other comprehensive income. Financial assets at fair value through profit or loss are subsequently carried at fair value. Gains or losses arising from changes in the fair value of the “financial assets at fair value through profit or loss” category are presented in the statement of comprehensive income within “other income, net” in the period in which they arise.

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset is impaired. The amount of the impairment loss is measured as the difference between the carrying amount of the available-for-sale financial asset and the present value of the estimated cash flows.

(j) Leases

Leases of property, plant and equipment where the Group assumes substantially all the benefits and risks of ownership are classified as finance leases. The Group has no significant finance leases.

Leases of assets under which a significant portion of the risks and benefits of ownership are effectively retained by the lessors are classified as operating leases. Payments made under operating leases (net of any

F-14

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

incentives received from the lessors) are expensed on a straight-line basis over the lease terms. Payments made to the Department of Natural Resources to secure land use rights (excluding mineral properties) are treated as operating leases. Land use rights are generally obtained through advance lump-sum payments and the terms of use range up to 50 years.

(k) Inventories

Inventories include oil products, chemical products and materials and supplies which are stated at the lower of cost and net realizable value. Cost is primarily determined by the weighted average cost method. The cost of finished goods comprises raw materials, direct labor, other direct costs and related production overheads, but excludes borrowing costs. Net realizable value is the estimated selling price in the ordinary course of business, less the cost of completion and selling expenses.

(l) Accounts receivable

Accounts receivable are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision made for impairment of these receivables. Such provision for impairment is established if there is objective evidence that the Group will not be able to collect amounts due according to the original terms of the receivables. The factors the Group considers when assessing whether an account receivable is impaired include but are not limited to significant financial difficulties of the customer, probability that the debtor will enter bankruptcy or financial reorganization and default or delinquency in payments. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.

(m) Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, deposits held with banks and highly liquid investments with original maturities of three months or less from the time of purchase.

(n) Accounts payable

Accounts payable are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.

(o) Borrowings

Borrowings are recognized initially at fair value, net of transaction costs incurred. In subsequent periods, borrowings are stated at amortized cost using the effective interest method. Any difference between proceeds (net of transaction costs) and the redemption value is recognized in the consolidated profit or loss over the period of the borrowings.

General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognized in profit or loss in the period in which they are incurred.

F-15

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

Borrowings are classified as current liabilities unless the Group has unconditional rights to defer settlements of the liabilities for at least 12 months after the reporting period.

(p) Taxation

Deferred tax is provided in full, using the liability method, for temporary differences arising between the tax bases of assets and liabilities and their carrying values in the financial statements. However, deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates that have been enacted or substantively enacted by the date of the statement of financial position and are expected to apply to the period when the related deferred tax asset is realized or deferred tax liability is settled.

The principal temporary differences arise from depreciation on oil and gas properties and equipment and provision for impairment of receivables, inventories, investments and property, plant and equipment. Deferred tax assets relating to the carry forward of unused tax losses are recognized to the extent that it is probable that future taxable income will be available against which the unused tax losses can be utilized.

The Group also incurs various other taxes and levies that are not income taxes. “Taxes other than income taxes”, which form part of operating expenses, primarily comprise consumption tax (Note 9), resource tax (Note 9), crude oil special gain levy, urban construction tax, education surcharges and business tax.

(q) Revenue recognition

Sales are recognized upon delivery of products and customer acceptance or performance of services, net of value added taxes and discounts. Revenues are recognized only when the Group has transferred to the buyer the significant risks and rewards of ownership of the goods in the ordinary course of the Group’s activities, and when the amount of revenue and the costs incurred or to be incurred in respect of the transaction can be measured reliably and collectability of the related receivables is reasonably assured.

The Group markets a portion of its natural gas under take-or-pay contracts. Customers under the take-or-pay contracts are required to take or pay for the minimum natural gas deliveries specified in the contract clauses. Revenue recognition for natural gas sales and transmission tariff under the take-or-pay contracts follows the accounting policies described in this note. Payments received from customers for natural gas not yet taken are recorded as deferred revenues until actual deliveries take place.

(r) Provisions

Provisions are recognized when the Group has present legal or constructive obligations as a result of past events, it is probable that an outflow of resources will be required to settle the obligations, and reliable estimates of the amounts can be made.

Provision for future decommissioning and restoration is recognized in full on the installation of oil and gas properties. The amount recognized is the present value of the estimated future expenditure determined in accordance with local conditions and requirements. A corresponding addition to the related oil and gas properties of an amount equivalent to the provision is also created. This is subsequently depreciated as part of the costs of the oil and gas properties. Any change in the present value of the estimated expenditure other than due to passage of time which is regarded as interest expense, is reflected as an adjustment to the provision and oil and gas properties.

F-16

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

(s) Research and development

Research expenditure incurred is recognized as an expense. Costs incurred on development projects are recognized as intangible assets to the extent that such expenditure is expected to generate future economic benefits.

(t) Retirement benefit plans

The Group contributes to various employee retirement benefit plans organized by PRC municipal and provincial governments under which it is required to make monthly contributions to these plans at prescribed rates for its employees in China. The relevant PRC municipal and provincial governments undertake to assume the retirement benefit obligations of existing and future retired employees of the Group in China. The Group has similar retirement benefit plans for its employees in its overseas operations. Contributions to these PRC and overseas plans (“defined contribution plan”) are charged to expense as incurred. In addition, the Group joined the corporate annuity plan approved by relevant PRC authorities. Contribution to the annuity plan is charged to expense as incurred. The Group currently has no additional material obligations outstanding for the payment of retirement and other post-retirement benefits of employees in the PRC or overseas other than what described above.

(u) Related Parties

(a) A person, or a close member of that person’s family, is related to the Group if that person:

(i) has control or joint control over the Group;

(ii) has significant influence over the Group; or

(iii) is a member of the key management personnel of the Group or the Group’s parent.

(b) An entity is related to the Group if any of the following conditions applies:

(i) The entity and the Group are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

(iii) Both entities are joint ventures of the same third party.

(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

(v) The entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group.

(vi) The entity is controlled or jointly controlled by a person identified in (a).

(vii) A person identified in (a) (i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

(viii) The entity, or any member of a group of which it is a part, provides key management personnel services to the Group or to the Group’s parent.

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.

F-17

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

(v) New accounting developments

(i) New and amended standards adopted by the Group

There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning on or after January 1, 2017 that would be expected to have a material impact on the Group.

(ii) Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group.

IFRS 9 Financial Instruments (“IFRS 9”) published in July 2014, replaces the existing guidance in IAS 39 Financial Instruments: Recognition and Measurement (“IAS 39”). IFRS 9 includes revised guidance on the classification and measurement of financial instruments, a new expected credit loss model for calculating impairment on financial assets, and new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39.

IFRS 9 is effective for annual reporting periods beginning on or after January 1, 2018, on a retrospective basis. The Group plans to use the exemption from restating comparative information and will recognise any transition adjustments against the opening balance of equity at January 1, 2018. The adoption of this standard is expected to have an impact on the Group’s financial assets, but no impact on the Group’s financial liabilities. Under IFRS 9, the Group has designated equity investments classified as available-for-sale that are held for long-term strategic purpose as measured at fair value through other comprehensive income. Consequently, all fair value gains and losses will be recorded in other comprehensive income, no impairment losses will be recognised in profit or loss and no gains and losses will be reclassified to profit or loss on disposal.

The new impairment model in IFRS 9 replaces the “incurred loss” model in IAS 39 with an “expected credit loss” model. Under the expected credit loss model, it will no longer be necessary for a loss event to occur before an impairment loss is recognized. Instead, an entity is required to recognize and measure either a 12-month expected credit loss or a lifetime expected credit loss, depending on the asset and the facts and circumstances. The Group expects that the application of the expected credit loss model will result in earlier recognition of credit losses. Based on a preliminary assessment, the Group does not expect material change to the loss allowance for the Group’s loans and receivables.

IFRS 15 Revenue from contracts with customers (“IFRS 15”) establishes a comprehensive framework for determining whether, how much and when revenue is recognised and expands disclosure requirements relating to revenue recognition policies and how these relate to the revenue-generating contractual performance obligations. It replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes.

IFRS 15 is effective for annual reporting periods beginning on or after January 1, 2018, with early adoption permitted. The Group plans to adopt IFRS 15 using the cumulative effect method, with the effect of initially applying this standard recognised at the date of initial application. As a result, the Group will not apply the requirements of IFRS 15 to the comparative period presented. Based on the assessment of existing contracts with customers, the Group does not expect the application of IFRS 15 to have a significant impact on its consolidated financial statements.

IFRS 16 Lease (“IFRS 16”) introduces a single, on-balance lease sheet accounting model for lessees. A lessee recognizes a right-of-use asset representing its right to use the underlying asset and a lease liability

F-18

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

representing its obligation to make lease payments. IFRS 16 replaces existing leases guidance including IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases—Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

IFRS 16 is effective for annual periods beginning on or after January 1, 2019, with early adoption permitted for entities that apply IFRS 15 completed at or before the date of initial application of IFRS 16. The Group has started an initial assessment of the potential impact on its consolidated financial statements. So far, the most significant impact identified is that the Group will recognize new assets and liabilities for its operating leases of oil and gas stations and land use rights. In addition, the nature of expenses related to the operating leases will change as IFRS 16 replaces the straight-line operating lease expense with a depreciation charge for right-of-use assets and interest expense on lease liabilities. No significant impact on the consolidated financial statements is expected for the Group’s finance leases.

4 FINANCIAL RISK AND CAPITAL MANAGEMENT

4.1 Financial risk factors

The Group’s activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk.

(a) Market risk

Market risk is the possibility that changes in foreign exchange rates, interest rates and the prices of oil and gas products will adversely affect the value of assets, liabilities and expected future cash flows.

(i) Foreign exchange risk

The Group conducts its domestic business primarily in RMB, but maintains a portion of its assets in other currencies to pay for imported crude oil, imported equipment and other materials and to meet foreign currency financial liabilities. The Group is exposed to currency risks arising from fluctuations in various foreign currency exchange rates against the RMB. The RMB is not a freely convertible currency and is regulated by the PRC government. Limitations on foreign exchange transactions imposed by the PRC government could cause future exchange rates to vary significantly from current or historical exchange rates.

Additionally, the Group operates internationally and foreign exchange risk arises from future acquisitions and commercial transactions, recognized assets and liabilities and net investments in foreign operations. Certain entities in the Group might use currency derivatives to manage such foreign exchange risk.

(ii) Interest rate risk

The Group has no significant interest rate risk on interest-bearing assets. The Group’s exposure to interest rate risk arises from its borrowings. The Group’s borrowings at floating rates expose the Group to cash flow interest rate risk and its borrowings at fixed rates expose the Group to fair value interest rate risk. However, the exposure to interest rate risk is not material to the Group. A detailed analysis of the Group’s borrowings, together with their respective interest rates and maturity dates, is included in Note 27.

(iii) Price risk

The Group is engaged in a wide range of oil and gas products-related activities. Prices of oil and gas products are affected by a wide range of global and domestic factors which are beyond the control of the Group.

F-19

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

The fluctuations in such prices may have favorable or unfavorable impacts on the Group. The Group did not enter into any material hedging of its price risk during the year.

(b) Credit risk

Credit risk arises from cash and cash equivalents, time deposits with banks and credit exposure to customers with outstanding receivable balances.

A substantial portion of the Group’s cash at bank and time deposits are placed with the major state-owned banks and financial institutions in China and management believes that the credit risk is low.

The Group performs ongoing assessment of the credit quality of its customers and sets appropriate credit limits taking into account the financial position and past history of defaults of customers. The Group’s accounts receivable balances over 3 years have been substantially provided for and accounts receivable balances within one year are generally neither past due nor impaired. The aging analysis of accounts receivable (net of impairment of accounts receivable) is presented in Note 22. The Group’s accounts receivable balances that are neither past due nor impaired are with customers with no recent history of default.

The carrying amounts of cash and cash equivalents, time deposits placed with banks, accounts receivable, other receivables and notes receivable included in the consolidated statement of financial position represent the Group’s maximum exposure to credit risk. No other financial assets carry a significant exposure to credit risk.

The Group has no significant concentration of credit risk.

(c) Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities.

In managing its liquidity risk, the Group has access to funding at market rates through equity and debt markets, including using undrawn committed borrowing facilities to meet foreseeable borrowing requirements.

Given the low level of gearing and continued access to funding, the Group believes that its liquidity risk is not material.

Analysis of the Group’s financial liabilities based on the remaining period at the date of the statement of financial position to the contractual maturity dates is presented in Note 27.

4.2 Capital management

The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern, optimize returns for owners and to minimize its cost of capital. In meeting its objectives of managing capital, the Group may issue new shares, adjust its debt levels or the mix between short-term and long-term borrowings.

The Group monitors capital on the basis of the gearing ratio which is calculated as interest-bearing borrowings / (interest-bearing borrowings + total equity). The gearing ratio at December 31, 2017 is 25.2% (December 31, 2016: 27.3%).

F-20

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

4.3 Fair value estimation

The methods and assumptions applied in determining the fair value of each class of financial assets and financial liabilities of the Group at December 31, 2017 and 2016 are disclosed in the respective accounting policies.

The carrying amounts of the following financial assets and financial liabilities approximate their fair value as all of them are short-term in nature: cash and cash equivalents, time deposits with maturities over three months but within one year, accounts receivable, other receivables, trade payables, other payables and short-term borrowings. The fair values of fixed rate long-term borrowings are likely to be different from their respective carrying amounts. Analysis of the fair values and carrying amounts of long-term borrowings is presented in Note 27.

5 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgments are regularly evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The matters described below are considered to be the most critical in understanding the estimates and judgments that are involved in preparing the Group’s consolidated financial statements.

(a) Estimation of oil and gas reserves

Estimates of oil and natural gas reserves are key elements in the Group’s investment decision-making process. They are also an important element in testing for impairment. Changes in proved oil and gas reserves, particularly proved developed reserves, will affect unit-of-production depreciation, depletion and amortization recorded in the Group’s consolidated financial statements for property, plant and equipment related to oil and gas production activities. A reduction in proved developed reserves will increase depreciation, depletion and amortization charges. Proved oil and gas reserves estimates are subject to revision, either upward or downward, based on new information, such as from development drilling and production activities or from changes in economic factors, including product prices, contract terms, evolution of technology or development plans, etc.

(b) Estimation of impairment of property, plant and equipment

Property, plant and equipment, including oil and gas properties, are reviewed for possible impairments when events or changes in circumstances indicate that the carrying amount may not be recoverable. Determination as to whether and how much an asset is impaired involves management estimates and judgments such as the future price of crude oil, refined and chemical products, the operation costs, the product mix, production volumes and the oil and gas reserves. However, the impairment reviews and calculations are based on assumptions that are consistent with the Group’s business plans taking into account current economic conditions. Favorable changes to some assumptions, or not updating assumptions previously made, may allow the Group to avoid the need to impair any assets or make it necessary to reverse an impairment loss recognized in prior periods, whereas unfavourable changes may cause the assets to become impaired. For example, when the assumed future price and production volume of crude oil used for the expected future cash flows are different from the actual price and production volume of crude oil respectively experienced in future, the Group may either over or under recognize the impairment losses for certain assets.

F-21

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

(c) Estimation of asset retirement obligations

Provision is recognized for the future decommissioning and restoration of oil and gas properties. The amount of the provision recognized is the present values of the estimated future expenditures. The estimation of the future expenditures is based on current local conditions and requirements, including legal requirements, technology, price levels, etc. In addition to these factors, the present values of these estimated future expenditures are also impacted by the estimation of the economic lives of oil and gas properties and estimates of discount rates. Changes in any of these estimates will impact the operating results and the financial position of the Group over the remaining economic lives of the oil and gas properties.

(d) Deferred tax assets

According to the requirements of the competent tax authority, the Company paid income taxes of its branches in the eastern and western regions in aggregate. The tax losses recorded by the branches in the eastern region has given rise to deferred tax assets, which may be recoverable from future taxable profits generated by the branches in the eastern region. Any policy adjustments may increase or decrease the amount of tax expenses of the Company.

6 REVENUE

Revenue represents revenues from the sale of crude oil, natural gas, refined products and petrochemical products and from the transmission of crude oil, refined products and natural gas. Analysis of revenue by segment is shown in Note 37.

7 PROFIT BEFORE INCOME TAX EXPENSE

	2017		2016		2015
	RMB		RMB		RMB
Items credited and charged in arriving at the profit before income tax expense include:
Credited
Dividend income from available-for-sale financial assets		42		60		288
Reversal of provision for impairment of receivables		37		62		99
Reversal of write down in inventories		49		75		59
Government grants(i)		9,102		8,509		7,906
Remeasurement to fair value of pre-existing interest in acquiree		—		—		22,807
Gain on disposal of investment in subsidiaries(ii)		613		24,674		280
Charged
Amortization of intangible and other assets		4,495		4,896		4,141
Auditors’ remuneration (iii)		53		53		53
Cost of inventories recognized as expense		1,560,361		1,217,131		1,282,039
Provision for impairment of receivables		3,291		1,671		173
Loss on disposal of property, plant and equipment		4,939		7,972		4,661
Operating lease expenses		20,073		19,027		16,786
Research and development expenses		12,323		11,227		11,856
Write down in inventories		1,118		2,709		3,394

F-22

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

(i) Comprises proportionate refund of import value-added tax relating to the import of natural gas (including liquefied natural gas) provided by the PRC government. This value-added tax refund is applicable from January 1, 2011 to December 31, 2020 and available when the import prices of the natural gas and liquefied natural gas imported under any State-sanctioned pipelines are higher than their prescribed selling prices.

(ii) On November 24, 2015, the Board of Directors approved the sale by CNPC Exploration and Development Co., Ltd. (“CNPC E&D”), one of the Company’s wholly-owned subsidiaries, of its 50% of equity interest in Trans-Asia Gas Pipeline Co., Ltd. (“Trans-Asia Pipeline”) to CNIC Corporation Limited. The transaction was completed in the second quarter of 2016 and CNPC E&D lost control over Trans-Asia Pipeline accordingly. The gain recorded as “Other (expenses) / income, net” of RMB 24,534 represents the difference between the sum of total consideration equivalent to RMB 14,671 received from the transaction and the fair value of the remaining equity investment of RMB 14,527, and the net assets of the former subsidiary of RMB 4,034, together with the amounts of RMB 630 recognized previously in other comprehensive loss in relation to Trans-Asia Pipeline reclassified to profit or loss.

(iii) The auditors’ remuneration above represents the annual audit fees paid by the Company. This remuneration does not include fees of RMB 52 (2016: RMB 66, 2015: RMB 36) paid by subsidiaries to the Company’s current auditor and its network firms which primarily relates to audit fees of RMB 40 (2016: RMB 50, 2015: RMB 29), audit-related fees of RMB 8 (2016: RMB 8, 2015: RMB 6) and tax fees of RMB 3 (2016: RMB 7, 2015 RMB nil), and other service fees of RMB 1 (2016: RMB 1, 2015: RMB 1).

8 EMPLOYEE COMPENSATION COSTS

	2017		2016		2015
	RMB		RMB		RMB
Wages, salaries and allowances		82,639		75,461		75,651
Social security costs		42,745		42,201		42,431
		125,384		117,662		118,082

Social security costs mainly represent contributions to plans for staff welfare organized by the PRC municipal and provincial governments and others including contributions to the retirement benefit plans (Note 32).

9 TAXES OTHER THAN INCOME TAXES

	2017		2016		2015
	RMB		RMB		RMB
Consumption tax		142,708		140,268		149,323
Resource tax		18,000		14,472		18,584
Other		37,314		34,868		37,977
		198,022		189,608		205,884

F-23

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

10 INTEREST EXPENSE

	2017			2016			2015
	RMB			RMB			RMB
Interest on
Bank loans		1,569			891			1,259
Other loans		17,394			19,910			19,892
Accretion expense (Note 31)		5,453			5,126			5,950
Less: Amounts capitalized		(2,008	)		(2,579	)		(2,773	)
	22,408			23,348			24,328

Amounts capitalized are borrowing costs that are attributable to the construction of a qualifying asset. The average interest rate used to capitalize such general borrowing cost was 4.28% per annum for the year ended December 31, 2017 (2016: 4.28% per annum, 2015: 4.28%-5.76 % per annum).

F-24

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

11 EMOLUMENTS OF DIRECTORS AND SUPERVISORS

Details of the emoluments of directors and supervisors for the years ended December 31, 2017, 2016 and 2015 are as follows:

	2017								2016		2015
Name	Fee for directors and supervisors		Salaries, allowances and other benefits		Contribution to retirement benefit scheme		Total		Total		Total
	RMB’000		RMB’000		RMB’000		RMB’000		RMB’000		RMB’000
Chairmen:
Mr. Wang Yilin(i)		—		—		—		—		—		—
Mr. Zhou Jiping(i)		—		—		—		—		—		—
Vice Chairmen:
Mr. Zhang Jianhua(ii)		—		—		—		—		—		—
Mr. Wang Dongjin(iii)		—		696		127		823		774		734
Executive directors:
Mr. Zhao Zhengzhang(iv)		—		118		41		159		759		671
Mr. Hou Qijun(iv)		—		572		76		648		—		—
Non-executive directors:
Mr. Yu Baocai		—		—		—		—		—		—
Mr. Shen Diancheng(vi)		—		—		—		—		—		—
Mr. Liu Yuezhen		—		—		—		—		—		—
Mr. Liu Hongbin(v)		—		—		—		—		679		699
Mr. Duan Liangwei(vi)		—		—		—		—		—		—
Mr. Qin Weizhong(vi)		—		—		—		—		—		—
Mr. Chen Zhiwu(vii)		—		—		—		—		234		220
Mr. Richard H. Matzke(vii)		—		—		—		—		241		230
Mr. Lin Boqiang		250		—		—		250		281		249
Mr. Zhang Biyi		250		—		—		250		278		252
Ms. Elsie Leung Oi-sie(vii)		220		—		—		220		—		—
Mr. Tokuchi Tatsuhito(vii)		226		—		—		226		—		—
Mr. Simon Henry(vii)		213		—		—		213		—		—
		1,159		—		—		1,159		1,713		1,650
Supervisors:
Mr. Xu Wenrong(viii)		—		—		—		—		—		—
Mr. Guo Jinping(viii)		—		—		—		—		—		—
Mr. Zhang Fengshan		—		—		—		—		—		—
Mr. Li Qingyi(viii)		—		—		—		—		—		—
Mr. Jia Yimin(viii)		—		—		—		—		—		—
Mr. Jiang Lifu		—		—		—		—		—		—
Mr. Lu Yaozhong(viii)		—		—		—		—		—		—
Mr. Wang Liang(x)		—		—		—		—		—		—
Mr. Yao Wei(ix)		—		—		—		—		469		796
Mr. Liu Hehe(ix)		—		—		—		—		352		724
Mr. Yang Hua (viii)		—		201		49		250		862		838
Mr. Fu Suotang(viii)		—		525		46		571		—		—
Mr. Li Jiamin		—		745		65		810		707		771
Mr. Liu Xianhua(ix)		—		671		62		733		528		—
Mr. Li Wendong(ix)		—		788		96		884		670		—
		—		2,930		318		3,248		3,588		3,129
		1,159		4,316		562		6,037		6,834		6,184

F-25

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

(i) Mr. Wang Yilin was elected as the chairman from June 23, 2015, and Mr. Zhou Jiping ceased being the chairman from June 23, 2015.

(ii) Mr. Zhang Jianhua was elected as the vice chairman and non-executive director from October 28, 2016.

(iii) Mr. Wang Dongjin also serves as the president and executive director.

(iv) Mr. Hou Qijun was elected as the vice president and executive director. Besides, Mr. Zhao Zhengzhang was elected as an executive director from June 23, 2015 and ceased being the executive director from June 8, 2017.

(v) Mr. Liu Hongbin ceased being the vice chairman and was transferred from the executive director to the non-executive director from October 28, 2016, besides, received no emoluments from the Company since the next day.

(vi) Mr. Shen Diancheng ceased being the non-executive director, and Mr. Duan Liangwei and Mr. Qin Weizhong were elected as the non-executive director from June 8, 2017.

(vii) Ms. Elsie Leung Oi-sie, Mr. Tokuchi Tatsuhito and Mr. Simon Henry were elected as the independent non-executive directors, besides, Mr. Chen Zhiwu and Mr. Richard H. Matzke ceased being the independent non-executive directors from June 8, 2017.

(viii) Mr. Xu Wenrong was elected as an non-executive director from May 25, 2016 and ceased being the non-executive from June 8, 2017. Mr. Xu Wenrong was elected as the Chairman of the Supervisory Committee and Mr. Lu Yaozhong was elected as the supervisor, besides, Mr. Guo Jinping, Mr. Li Qingyi and Mr. Jia Yimin ceased being the supervisors from June 8, 2017. Mr. Fu Suotang were elected as the staff supervisor, besides, Mr. Yang Hua ceased being the staff supervisor from June 8, 2017.

(ix) Mr. Li Wendong and Mr. Liu Xianhua were elected as the staff supervisors, besides, Mr. Yao Wei and Mr. Liu Hehe ceased being the staff supervisors from May 17, 2016.

(x) Mr. Wang Liang was elected as the supervisor from October 26, 2017.

(xi) The emoluments received by the following person are not reflected in the analysis shown above:

Mr. Liao Yongyuan ceased being the non-executive director and vice chairman from March 17, 2015, and emoluments received from the Company during the year 2017, 2016 and 2015 were RMB nil, RMB nil, respectively.

(xii) The deferred performance emoluments of RMB 1.64 which the company paid to the directors attributable to the year of 2013 to 2015 in accordance with the relevant regulations of the Chinese Government are not reflected in the 2016 annual remuneration shown above.

(xiii) The emoluments above are all pre-tax amounts.

None of the directors and supervisors has waived their remuneration during the year ended December 31, 2017. (2016: None of the directors and supervisors has waived their remuneration during the year ended December 31, 2016. 2015: None of the directors and supervisors has waived their remuneration during the year ended December 31, 2015)

The five highest paid individuals in the Company for the year ended December 31, 2017 include two supervisors whose emoluments are reflected in the analysis shown above and the note; and three senior managements whose allowances and other benefits were RMB 0.823, RMB 0.823 and RMB 0.732, respectively, and whose contribution to retirement benefit scheme were RMB 0.127, RMB 0.127 and RMB 0.127 respectively.

The five highest paid individuals in the Company for the year ended December 31, 2016 include two supervisors whose emoluments are reflected in the analysis shown above and the note; and three senior managements whose allowances and other benefits were RMB 0.783, RMB 0.783 and RMB 0.775, respectively, and whose contribution to retirement benefit scheme were RMB 0.122, RMB 0.122 and RMB 0.108, respectively.

F-26

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

The five highest paid individuals in the Company for the year ended December 31, 2015 include three supervisors whose emoluments are reflected in the analysis shown above and the note; and two senior managements whose allowances and other benefits were RMB 0.780 and RMB 0.768, respectively, and whose contribution to retirement benefit scheme were RMB 0.130 and RMB 0.132, respectively.

During 2017, 2016 and 2015, the Company did not incur any severance payment to any director for loss of office or any payment as inducement to any director to join the Company.

12 INCOME TAX EXPENSE

	2017			2016			2015
	RMB			RMB			RMB
Current taxes		23,835			19,762			18,998
Deferred taxes (Note 30)		(7,539	)		(3,994	)		(3,272	)
		16,296			15,768			15,726

In accordance with the relevant PRC income tax rules and regulations, the PRC corporate income tax rate applicable to the Group is principally 25%. Operations of the Group in western regions in China qualified for certain tax incentives in the form of a preferential income tax rate of 15% through the year 2020.

The tax on the Group’s profit before taxation differs from the theoretical amount that would arise using the corporate income tax rate in the PRC applicable to the Group is as follows:

	2017			2016			2015
	RMB			RMB			RMB
Profit before income tax expense		53,089			45,140			57,815
Tax calculated at a tax rate of 25%		13,272			11,285			14,454
Tax return true-up		1,275			1,887			2,008
Effect of income taxes from international operations in excess of taxes at the PRC statutory tax rate		693			1,797			910
Effect of preferential tax rate		(5,058	)		(2,418	)		(5,436	)
Tax effect of income not subject to tax		(3,401	)		(4,935	)		(2,875	)
Tax effect of expenses not deductible for tax purposes		9,515			8,152			6,665
Income tax expense		16,296			15,768			15,726

13 BASIC AND DILUTED EARNINGS PER SHARE

Basic and diluted earnings per share for the years ended December 31, 2017, 2016 and 2015 have been computed by dividing profit for the year attributable to owners of the Company of RMB 22,798, RMB 7,857 and RMB 35,517 respectively by 183,021 million shares issued and outstanding for the year.

There are no potentially dilutive ordinary shares.

F-27

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

14 DIVIDENDS

	2017		2016		2015
	RMB		RMB		RMB
Interim dividends attributable to owners of the Company for 2017(a)		12,676		—		—
Proposed final dividends attributable to owners of the Company for 2017(b)		11,117		—		—
Interim dividends attributable to owners of the Company for 2016(c)		—		3,899		—
Final dividends attributable to owners of the Company for 2016(d)		—		6,957		—
Interim dividends attributable to owners of the Company for 2015(e)		—		—		11,433
Final dividends attributable to owners of the Company for 2015(f)		—		—		4,550
		23,793		10,856		15,983

(a) Interim dividends attributable to owners of the Company in respect of 2017 of RMB 0.06926 yuan per share amounting to a total of RMB 12,676 were paid on September 15, 2017 (A shares) and October 27, 2017 (H shares).

(b) At the 1st meeting of the Board in 2018, the Board of Directors proposed final dividends attributable to owners of the Company in respect of 2017 of RMB 0.06074 yuan per share amounting to a total of RMB 11,117. These consolidated financial statements do not reflect this dividend payable as the final dividends were proposed after the reporting period and will be accounted for in equity as an appropriation of retained earnings for the year ended December 31, 2018 when approved at the forthcoming Annual General Meeting.

(c) Interim dividends attributable to owners of the Company in respect of 2016 of RMB 0.02131 yuan per share amounting to a total of RMB 3,899 were paid on September 21, 2016 (A shares) and October 28, 2016 (H shares).

(d) Final dividends attributable to owners of the Company in respect of 2016 of RMB 0.03801 yuan per share amounting to a total of RMB 6,957 were paid on June 22, 2017 (A shares) and July 27, 2017 (H shares).

(e) Interim dividends attributable to owners of the Company in respect of 2015 of RMB 0.06247 yuan per share amounting to a total of RMB 11,433 were paid on September 18, 2015 (A shares) and October 27, 2015 (H shares).

(f) Final dividends attributable to owners of the Company in respect of 2015 of RMB 0.02486 yuan per share amounting to a total of RMB 4,550 were paid on June 8, 2016 (A shares) and July 14, 2016 (H shares).

F-28

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

15 PROPERTY, PLANT AND EQUIPMENT

Year Ended December 31, 2017	Buildings			Oil and Gas Properties			Equipment and Machinery			Motor Vehicles			Other			Construction in Progress			Total
	RMB			RMB			RMB			RMB			RMB			RMB			RMB
Cost
At beginning of the year		214,710			1,909,213			990,832			29,227			22,268			229,371			3,395,621
Additions		1,042			9,193			3,995			824			528			204,159			219,741
Transfers		13,913			124,257			75,284			—			10,506			(223,960	)		—
Disposals or write offs		(3,280	)		(21,746	)		(11,061	)		(1,032	)		(441	)		(9,455	)		(47,015	)
Currency translation differences		(278	)		(9,588	)		(1,039	)		(29	)		(230	)		(242	)		(11,406	)
At end of the year		226,107			2,011,329			1,058,011			28,990			32,631			199,873			3,556,941
Accumulated depreciation and impairment
At beginning of the year		(85,323	)		(1,063,500	)		(469,475	)		(19,467	)		(11,971	)		(6,340	)		(1,656,076	)
Charge for the year and others		(9,968	)		(150,178	)		(49,509	)		(1,754	)		(1,857	)		—			(213,266	)
Impairment charge		(659	)		(3,961	)		(10,300	)		(3	)		(2,715	)		(309	)		(17,947	)
Disposals or write offs or transfers		2,075			11,426			9,663			921			(1,699	)		3,664			26,050
Currency translation differences		110			6,472			532			7			12			(22	)		7,111
At end of the year		(93,765	)		(1,199,741	)		(519,089	)		(20,296	)		(18,230	)		(3,007	)		(1,854,128	)
Net book value
At end of the year		132,342			811,588			538,922			8,694			14,401			196,866			1,702,813

Year Ended December 31, 2016	Buildings			Oil and Gas Properties			Equipment and Machinery			Motor Vehicles			Other			Construction in Progress			Total
	RMB			RMB			RMB			RMB			RMB			RMB			RMB
Cost
At beginning of the year		205,204			1,799,887			953,331			29,586			21,018			236,804			3,245,830
Additions		979			7,995			3,202			624			416			161,336			174,552
Transfers		10,644			109,171			40,216			—			965			(160,996	)		—
Disposals or write offs		(2,573	)		(23,047	)		(6,781	)		(1,027	)		(267	)		(9,689	)		(43,384	)
Currency translation differences		456			15,207			864			44			136			1,916			18,623
At end of the year		214,710			1,909,213			990,832			29,227			22,268			229,371			3,395,621
Accumulated depreciation and impairment
At beginning of the year		(76,904	)		(929,554	)		(421,315	)		(18,619	)		(10,740	)		(3,793	)		(1,460,925	)
Charge for the year and others		(9,677	)		(141,530	)		(47,750	)		(1,753	)		(1,297	)		—			(202,007	)
Impairment charge		(63	)		(711	)		(5,494	)		(1	)		(15	)		(2,218	)		(8,502	)
Disposals or write offs or transfers		1,469			15,536			5,501			930			219			6			23,661
Currency translation differences		(148	)		(7,241	)		(417	)		(24	)		(138	)		(335	)		(8,303	)
At end of the year		(85,323	)		(1,063,500	)		(469,475	)		(19,467	)		(11,971	)		(6,340	)		(1,656,076	)
Net book value
At end of the year		129,387			845,713			521,357			9,760			10,297			223,031			1,739,545

F-29

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

The impairment charge of the Group for the year ended December 31, 2017 amounted to RMB 17,947 (2016: RMB 8,502 primarily related to certain petrochemical and liquefied natural gas production facilities, 2015: RMB 25,022 primarily related to oil and gas properties) primarily related to certain oil and gas properties and petrochemical production facilities. The impairment of these properties is mainly due to the higher production costs and operating costs and the crude oil price fluctuating at a low level. The carrying amount of these assets has been reduced to the recoverable amount.

When determining whether there are indications of impairment for oil and gas properties, the Group considers factors, mainly including the decline of production and reserve volumes at the late development stage of certain oil blocks and the significant drop in economic benefits of certain oil blocks resulted from the higher production cost. The Group’s subsidiaries or branches under the exploration and production segment will determine whether there are any indications of impairment for their own oil blocks according to the Group’s guidance of indications of impairment for oil and gas properties, and perform the impairment tests on those oil blocks with indications of impairment, and report the results to the Group’s internal professional team (including operation and finance team) for further overall assessment and evaluation. The final results of the impairment tests will be submitted to the Group’s management for review and approval. The Group recorded impairment losses in 2017 related to oil and gas properties and construction in progress under the exploration and production segment due to the significant drop in economic benefits of certain oil blocks resulted from the higher production cost, and recorded impairment loss in 2016 and 2015 related to oil and gas properties and construction in progress under the exploration and production segment due to the fact that the international prices of crude oil significantly dropped as a result of the global economic downturn. In addition, the oil reserves of certain oil blocks decreased and the production costs of some super heavy oil blocks and ultra-low permeability oil blocks were high. The above factors jointly led to lower economic benefits of those oil blocks and the impairment losses for the oil and gas properties. The carrying amount of those impaired oil and gas properties was written down to their respective recoverable amounts, which were determined based on the present values of the expected future cash flows of the assets. The Group referred to the weighted average cost of capital of the oil and gas industry when determining discount rate, and made relevant adjustments according to specific risks in different countries or regions. In 2017, the after-tax discount rates adopted by most oil blocks of the Group ranged from 7.6% to 11.0% (2016: 7.1% to 10.3%, 2015: 7.0% to 10.0%).

The Group performs an impairment review to identify whether there is any indication that an asset may be impaired. When such an indication exists on those oil and gas properties identified, the Group follows the above procedure to estimate the recoverable amount of the assets. If the carrying amount of the oil and gas properties exceeds their recoverable amount, the carrying amount of the oil and gas properties will be written down to its recoverable amount.

The following table indicates the changes to the Group’s exploratory well costs, which are included in construction in progress, for the years ended December 31, 2017, 2016 and 2015.

	2017			2016			2015
	RMB			RMB			RMB
At beginning of the year		21,421			20,177			20,878
Additions to capitalized exploratory well costs pending the determination of proved reserves		25,165			21,847			21,698
Reclassified to wells, facilities, and equipment based on the determination of proved reserves		(14,288	)		(10,914	)		(12,791	)
Capitalized exploratory well costs charged to expense		(9,455	)		(9,689	)		(9,608	)
At end of the year		22,843			21,421			20,177

F-30

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

The following table provides an aging of capitalized exploratory well costs based on the date the drilling was completed.

	December 31, 2017		December 31, 2016
	RMB		RMB
One year or less		15,231		13,202
Over one year		7,612		8,219
Balance at December 31		22,843		21,421

RMB 7,612 at December 31, 2017 (December 31, 2016: RMB 8,219) of capitalized exploratory well costs over one year are principally related to wells that are under further evaluation of drilling results or pending completion of development planning to ascertain economic viability.

16 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

The summarized financial information of the Group’s principal associates and joint ventures, including the aggregated amounts of assets, liabilities, revenue, profit or loss and the interest held by the Group were as follows:

Name	Country of Incorporation		Registered Capital		Principal Activities	Interest Held
						Direct%		Indirect%
Dalian West Pacific Petrochemical Co., Ltd.		PRC		USD 258 million	Production and sale of petroleum and petrochemical products		28.44		—
China Petroleum Finance Co., Ltd.(i)		PRC		8,331	Deposits, loans, settlement, lending, bills acceptance discounting, guarantee and other banking business		32.00		—
CNPC Captive Insurance Co., Ltd.		PRC		5,000	Property loss insurance, liability insurance, credit insurance and deposit insurance; as well as the application of the above insurance reinsurance and insurance capital business		49.00		—
China Marine Bunker (PetroChina) Co., Ltd.		PRC		1,000	Oil import and export trade and transportation, sale and storage		—		50.00
Arrow Energy Holdings Pty Ltd.		Australia		AUD 2	Exploration, development and sale of coal seam gas		—		50.00
Trans-Asia Gas Pipeline Co., Ltd.(ii)		PRC		5,000	Main contractor, investment holding, investment management, investment consulting, enterprise management advisory, technology development, promotion and technology consulting		—		50.00

F-31

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

(i) In August 2016, China National Petroleum Corporation injected RMB 19,471 cash into China Petroleum Finance Co., Ltd. (the “CP Finance”), of which RMB 2,890 and RMB 16,581 were recorded as “Registered Capital” and “Capital Reserve”, respectively. The registered capital of CP Finance was increased from RMB 5,441 to RMB 8,331. The Company’s share was diluted from 49% to 32%, and the Company’s share of net assets was increased RMB 307.

(ii) On November 24, 2015, the board of directors of the Company approved the sale by CNPC Exploration and Development Co., Ltd. (“CNPC E&D”), one of the Company’s subsidiaries, of its 50% equity interest in Trans-Asia Pipeline to CNIC Corporation Limited for a consideration equivalent to RMB 14,671. The transaction closed in the second quarter of 2016.

Dividends received and receivable from associates and joint ventures were RMB 7,034 in 2017 (2016: RMB 10,172, 2015: RMB 9,489).

In 2017, investments in associates and joint ventures of RMB 96 (2016: RMB 101, 2015: RMB 55) were disposed of, resulting in a gain of RMB 6 (2016: a loss of RMB 40, 2015: a gain of RMB 1,258).

In 2017, the share of profit and other comprehensive loss in all individually immaterial associates and joint ventures accounted for using equity method in aggregate was profit of RMB 3,235 (2016: profit of RMB 2,738, 2015: profit of RMB 3,846) and loss of RMB 845 (2016: loss of RMB 204, 2015: income of RMB 1,042), respectively.

Interest in Associates

Summarized financial information in respect of the Group’s principal associates and reconciliation to carrying amount is as follows:

	Dalian West Pacific Petrochemical Co., Ltd.						China Petroleum Finance Co., Ltd.				CNPC Captive Insurance Co., Ltd.
	December 31, 2017			December 31, 2016			December 31, 2017		December 31, 2016		December 31, 2017		December 31, 2016
	RMB			RMB			RMB		RMB		RMB		RMB
Percentage ownership interest (%)		28.44			28.44			32.00		32.00		49.00		49.00
Current assets		5,326			3,597			169,389		148,916		9,386		9,192
Non-current assets		4,141			4,373			309,481		270,507		2,764		2,166
Current liabilities		12,108			8,329			394,064		332,923		6,097		5,594
Non-current liabilities		333			5,217			24,977		29,998		1		1
Net (liabilities) / assets		(2,974	)		(5,576	)		59,829		56,502		6,052		5,763
Group’s share of net assets		—			—			19,145		18,080		2,965		2,824
Goodwill		—			—			349		349		—		—
Carrying amount of interest in associates		—			—			19,494		18,429		2,965		2,824

F-32

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

Summarized statement of comprehensive income is as follows:

	Dalian West Pacific Petrochemical Co., Ltd.							China Petroleum Finance Co., Ltd.							CNPC Captive Insurance Co., Ltd.
	2017		2016		2015			2017			2016		2015		2017		2016		2015
	RMB		RMB		RMB			RMB			RMB		RMB		RMB		RMB		RMB
Revenue		27,716		19,029		18,170			8,520			8,555		10,335		654		563		480
Profit for the year		2,602		1,475		(984	)		7,286			7,524		5,839		364		302		286
Other comprehensive (loss) / income		—		—		—			(1,395	)		655		294		1		2		1
Total comprehensive income / (loss)		2,602		1,475		(984	)		5,891			8,179		6,133		365		304		287
Group’s share of total comprehensive income		—		—		—			1,885			3,628		3,005		179		149		141
Dividends received by the Group		—		—		—			815			7,203		631		27		—		—

Interest in Joint Ventures

Summarized balance sheet in respect of the Group’s principal joint ventures and reconciliation to carrying amount is as follows:

	China Marine Bunker (PetroChina) Co., Ltd.				Arrow Energy Holdings Pty Ltd.						Trans-Asia Gas Pipeline Co., Ltd.
	December 31, 2017		December 31, 2016		December 31, 2017			December 31, 2016			December 31, 2017		December 31, 2016
	RMB		RMB		RMB			RMB			RMB		RMB
Percentage ownership interest (%)		50.00		50.00		50.00			50.00			50.00		50.00
Non-current assets		1,942		1,974		25,429			32,733			31,527		27,009
Current assets		6,449		6,453		540			708			3,957		4,045
Including: cash and cash equivalents		1,277		1,461		91			368			3,955		4,025
Non-current liabilities		232		749		21,569			25,308			2,100		2,100
Including: Non-current financial liabilities excluding trade and other payables and provisions		—		500		17,890			16,304			2,100		2,100
Current liabilities		5,309		4,902		583			690			343		414
Including: Current financial liabilities excluding trade and other payables and provisions		1,894		1,188		192			316			—		—
Net assets		2,850		2,776		3,817			7,443			33,041		28,540
Net assets attributable to owners of the Company		2,630		2,528		3,817			7,443			33,041		28,540
Group’s share of net assets		1,315		1,264		1,909			3,722			16,521		14,270
Elimination of unrealized profit		—		—		—			—			—		—
Elimination of transactions with the Group		—		—		(52	)		(45	)		—		—
Carrying amount of interest in joint ventures		1,315		1,264		1,857			3,677			16,521		14,270

F-33

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

Summarized statement of comprehensive income and dividends received by the Group is as follows:

	China Marine Bunker (PetroChina) Co., Ltd.									Arrow Energy Holdings Pty Ltd.									Trans-Asia Gas Pipeline Co., Ltd.
	2017			2016			2015			2017			2016			2015			2017			From the closing date to Dec 31, 2016
	RMB			RMB			RMB			RMB			RMB			RMB			RMB			RMB
Revenue		31,770			23,336			27,587			1,449			1,135			971			16			84
Depreciation, depletion and amortization		(93	)		(92	)		(88	)		(883	)		(624	)		(484	)		(3	)		(3	)
Interest income		12			9			35			2			5			6			65			55
Interest expense		(39	)		(45	)		(56	)		(1,300	)		(1,307	)		(1,189	)		(43	)		(32	)
Income tax expense		(44	)		(47	)		(33	)		—			—			—			—			(1	)
Net profit / (loss)		116			101			93			(5,518	)		(3,718	)		(10,753	)		5,846			88
Total comprehensive income / (loss)		87			171			176			(3,445	)		(3,402	)		(12,934	)		5,736			194
Total comprehensive income / (loss) by share		43			68			67			(1,723	)		(1,701	)		(6,467	)		2,868			97
Elimination of unrealized profit		—			—			—			—			—			—			(617	)		(354	)
Group’s share of total comprehensive income / (loss)		43			68			67			(1,723	)		(1,701	)		(6,467	)		2,251			(257	)
Dividends received by the Group		—			9			18			—			—			—			—			—

17 AVAILABLE-FOR-SALE FINANCIAL ASSETS

	December 31, 2017			December 31, 2016
	RMB			RMB
Available-for-sale financial assets		2,251			2,348
Less: Impairment losses		(334	)		(337	)
		1,917			2,011

Available-for-sale financial assets comprise principally unlisted equity securities and bonds.

In 2017, available-for-sale financial assets of RMB 12 (2016: RMB 176, 2015: RMB 381) were disposed of, resulting in the realization of a gain of RMB 11 (2016: a gain of RMB 184, 2015: a gain of RMB 177).

F-34

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

18 SUBSIDIARIES

The principal subsidiaries of the Group are:

Company Name	Country of Incorporation	Issued Capital RMB		Type of Legal Entity	Attributable Equity Interest %		Voting Rights%	Principal Activities
Daqing Oilfield Company Limited	PRC		47,500	Limited liability company		100.00	100.00	Exploration, production and sale of crude oil and natural gas
CNPC Exploration and Development Company Limited (i)	PRC		16,100	Limited liability company		50.00	57.14	Exploration, production and sale of crude oil and natural gas in and outside the PRC
PetroChina Hong Kong Limited	Hong Kong		HKD 7,592 million	Limited liability company		100.00	100.00	Investment holding. The principal activities of its subsidiaries, associates and joint ventures are the exploration, production and sale of crude oil in and outside the PRC as well as natural gas sale and transmission in the PRC
PetroChina International Investment Company Limited	PRC		31,314	Limited liability company		100.00	100.00	Investment holding. The principal activities of its subsidiaries and joint ventures are the exploration, development and production of crude oil, natural gas, oil sands and coalbed methane outside the PRC
PetroChina International Company Limited	PRC		18,096	Limited liability company		100.00	100.00	Marketing of refined products and trading of crude oil and petrochemical products, storage, investment in refining, chemical engineering, storage facilities, service station, and transportation facilities and related business in and outside the PRC

F-35

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

Company Name	Country of Incorporation	Issued Capital RMB		Type of Legal Entity	Attributable Equity Interest %		Voting Rights%	Principal Activities
PetroChina Pipelines Co., Ltd.	PRC		80,000	Limited liability company		72.26	72.26	Oil and gas pipeline transportation, investment holding, import and export of goods, agency of import and export, import and export of technology, technology promotion service, professional contractor, main contractor

(i) The Company consolidated the financial statements of the entity because it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

Summarized financial information in respect of the Group’s principal subsidiaries with significant non-controlling interests is as follows:

	CNPC Exploration and Development Company Limited				PetroChina Pipelines Co., Ltd.
	December 31, 2017		December 31, 2016		December 31, 2017		December 31, 2016
	RMB		RMB		RMB		RMB
Percentage ownership interest (%)		50.00		50.00		72.26		72.26
Current assets		24,722		26,489		2,882		19,193
Non-current assets		133,328		134,510		232,842		235,023
Current liabilities		13,273		15,504		6,059		26,186
Non-current liabilities		13,211		11,648		8,408		12,344
Net assets		131,566		133,847		221,257		215,686

Summarized statement of comprehensive income is as follows:

	CNPC Exploration and Development Company Limited								PetroChina Pipelines Co., Ltd. (note)
	2017			2016		2015			2017		2016		2015
	RMB			RMB		RMB			RMB		RMB		RMB
Revenue		37,304			28,196		33,541			43,627		41,794		2,796
Profit from continuing operations		3,696			24,153		2,448			17,891		20,420		1,015
Total comprehensive (loss) / income		(1,050	)		30,391		(7,889	)		17,891		20,420		1,015
Profit attributable to non-controlling interests		2,390			12,414		1,292			4,963		5,664		282
Dividends paid to non-controlling interests		1,420			444		775			3,569		—		720

Note: PetroChina Pipelines Co., Ltd. was established in November 2015.

F-36

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

Summarized statement of cash flows is as follows:

	CNPC Exploration and Development Company Limited									PetroChina Pipelines Co., Ltd. (note)
	2017			2016			2015			2017			2016			2015
	RMB			RMB			RMB			RMB			RMB			RMB
Net cash inflow from operating activities		18,545			9,053			8,293			31,160			30,270			2,554
Net cash (outflow) / inflow from investing activities		(12,304	)		(18,036	)		(2,762	)		2,869			14,799			(19,434	)
Net cash (outflow) / inflow from financing activities		(4,296	)		(2,248	)		(4,284	)		(36,190	)		(47,624	)		21,744
Effect of foreign exchange rate changes on cash and cash equivalents		(2,183	)		748			586			—			—			—
Net (decrease) / increase in cash and cash equivalents		(238	)		(10,483	)		1,833			(2,161	)		(2,555	)		4,864
Cash and cash equivalents at the beginning of the year		18,220			28,703			26,870			2,309			4,864			—
Cash and cash equivalents at the end of the year		17,982			18,220			28,703			148			2,309			4,864

Note: PetroChina Pipelines Co., Ltd. was established in November 2015.

19 ADVANCE OPERATING LEASE PAYMENTS

	December 31, 2017		December 31, 2016
	RMB		RMB
Land use rights		55,095		53,653
Advance lease payments		18,801		17,700
		73,896		71,353

Advance operating lease payments are amortized over the related lease terms using the straight-line method.

20 INTANGIBLE AND OTHER NON-CURRENT ASSETS

	December 31, 2017							December 31, 2016
	Cost		Accumulated amortization			Net		Cost		Accumulated amortization			Net
	RMB		RMB			RMB		RMB		RMB			RMB
Patents and technical know-how		7,476		(5,620	)		1,856		7,237		(5,219	)		2,018
Computer software		10,638		(7,749	)		2,889		9,614		(6,790	)		2,824
Goodwill (i)		45,643		(3,709	)		41,934		46,097		—			46,097
Other		20,128		(7,207	)		12,921		19,134		(6,294	)		12,840
Intangible assets		83,885		(24,285	)		59,600		82,082		(18,303	)		63,779
Other assets							33,341							38,971
							92,941							102,750

(i) Goodwill primarily relates to the acquisition of Singapore Petroleum Company, Petroineos Trading Limited and PetroChina United Pipelines Co., Ltd., completed in 2009, 2011 and 2015, respectively. The

F-37

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

recoverable amount of all cash-generating units has been determined based on value-in-use calculations. These calculations use post-tax cash flow projections based on financial budgets approved by management. The post-tax discount rates range from 8.9% to 10.5%, and reflect specific risks relating to the cash-generating unit. Based on the estimated recoverable amount, the impairment charge of the Group for the year ended December 31, 2017 amounted to RMB 3,709(2016: RMB Nil) primarily related to goodwill of PetroChina United Pipelines Co., Ltd..

21 INVENTORIES

	December 31, 2017			December 31, 2016
	RMB			RMB
Crude oil and other raw materials		48,936			55,371
Work in progress		12,811			10,336
Finished goods		83,908			84,473
Spare parts and consumables		170			51
		145,825			150,231
Less: Write down in inventories		(1,156	)		(3,366	)
		144,669			146,865

22 ACCOUNTS RECEIVABLE

	December 31, 2017			December 31, 2016
	RMB			RMB
Accounts receivable		57,914			49,338
Less: Provision for impairment of receivables		(4,771	)		(2,023	)
		53,143			47,315

The aging analysis of accounts receivable (net of impairment of accounts receivable) based on the invoice date (or date of revenue recognition, if earlier), at December 31, 2017 and 2016 is as follows:

	December 31, 2017		December 31, 2016
	RMB		RMB
Within 1 year		51,051		43,686
Between 1 and 2 years		1,203		2,744
Between 2 and 3 years		379		437
Over 3 years		510		448
		53,143		47,315

The Group offers its customers credit terms up to 180 days.

F-38

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

Movements in the provision for impairment of accounts receivable are as follows:

	2017			2016			2015
	RMB			RMB			RMB
At beginning of the year		2,023			523			516
Provision for impairment of accounts receivable		2,813			1,633			32
Receivables written off as uncollectible		(58	)		(97	)		(12	)
Reversal of provision for impairment of accounts receivable		(7	)		(36	)		(13	)
At end of the year		4,771			2,023			523

23 PREPAYMENTS AND OTHER CURRENT ASSETS

	December 31, 2017			December 31, 2016
	RMB			RMB
Other receivables		16,535			13,206
Advances to suppliers		10,384			16,505
		26,919			29,711
Less: Provision for impairment		(2,824	)		(2,386	)
		24,095			27,325
Value-added tax to be deducted		39,203			36,010
Prepaid expenses		951			954
Prepaid income taxes		—			5,406
Other current assets		7,765			7,888
		72,014			77,583

24 NOTES RECEIVABLE

Notes receivable represent mainly bills of acceptance issued by banks for the sale of goods and performance of services. All notes receivable are due within one year.

25 CASH AND CASH EQUIVALENTS

The weighted average effective interest rate on bank deposits was 2.18% per annum for the year ended December 31, 2017 (2016: 1.36% per annum, 2015: 1.31% per annum).

F-39

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

26 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

	December 31, 2017		December 31, 2016
	RMB		RMB
Trade payables		103,201		80,606
Advances from customers		67,176		60,590
Salaries and welfare payable		6,955		5,396
Accrued expenses		213		123
Dividends payable by subsidiaries to non-controlling shareholders		139		2,356
Interest payable		3,910		4,536
Construction fee and equipment cost payables		121,313		118,011
Loans borrowed from related parties		—		1,432
Other		40,912		37,630
		343,819		310,680

Other consists primarily of customer deposits.

The aging analysis of trade payables at December 31, 2017 and 2016 is as follows:

	December 31, 2017		December 31, 2016
	RMB		RMB
Within 1 year		94,996		74,450
Between 1 and 2 years		4,241		3,293
Between 2 and 3 years		1,894		944
Over 3 years		2,070		1,919
		103,201		80,606

27 BORROWINGS

	December 31, 2017		December 31, 2016
	RMB		RMB
Short-term borrowings excluding current portion of long-term borrowings		93,881		71,969
Current portion of long-term borrowings		81,536		71,415
		175,417		143,384
Long-term borrowings		289,858		372,887
		465,275		516,271

Borrowings of the Group of RMB 45,463 were guaranteed by CNPC, its fellow subsidiaries and a third party at December 31, 2017 (December 31, 2016: RMB 65,692).

F-40

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

The Group’s borrowings include secured liabilities totaling RMB 2,829 at December 31, 2017 (December 31, 2016: RMB 251).

	December 31, 2017			December 31, 2016
	RMB			RMB
Total borrowings:
— interest free		130			145
— at fixed rates		253,369			282,822
— at floating rates		211,776			233,304
		465,275			516,271
Weighted average effective interest rates:
— bank loans		2.42	%		1.86	%
— corporate debentures		3.62	%		3.81	%
— medium-term notes		3.81	%		3.86	%
— other loans		3.87	%		3.77	%

The borrowings by major currency at December 31, 2017 and December 31, 2016 are as follows:

	December 31, 2017		December 31, 2016
	RMB		RMB
RMB		332,383		372,111
US Dollar		124,312		136,829
Other currency		8,580		7,331
		465,275		516,271

The fair values of the Group’s long-term borrowings including the current portion of long-term borrowings are RMB 343,707 (December 31, 2016: RMB 438,805) at December 31, 2017. The carrying amounts of short-term borrowings approximate their fair values.

The fair values are based on discounted cash flows using applicable discount rates based upon the prevailing market rates of interest available to the Group for financial instruments with substantially the same terms and characteristics at the dates of the statement of financial position. Such discount rates ranged from -0.24% to 6.04% per annum as of December 31, 2017 (December 31, 2016: -0.09% to 4.90% per annum) depending on the type of the borrowings.

The following table sets out the borrowings’ remaining contractual maturities at the date of the statement of financial position, which are based on contractual undiscounted cash flows including principal and interest, and the earliest contractual maturity date:

	December 31, 2017		December 31, 2016
	RMB		RMB
Within 1 year		189,050		160,572
Between 1 and 2 years		69,159		102,096
Between 2 and 5 years		191,879		209,653
After 5 years		70,179		106,879
		520,267		579,200

F-41

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

Reconciliation of movements of borrowings to cash flows arising from financing activities:

	Borrowings
	RMB
At 1 January 2017		516,271
Changes from financing cash flows:
Increase in borrowings		730,252
Repayments of borrowings		(773,940	)
Other borrowing costs paid		(173	)
Total changes from financing cash flows		(43,861	)
Exchange adjustments		(7,135	)
At 31 December 2017		465,275

28 SHARE CAPITAL

	December 31, 2017		December 31, 2016
	RMB		RMB
Registered, issued and fully paid:
A shares		161,922		161,922
H shares		21,099		21,099
		183,021		183,021

In accordance with the Restructuring Agreement between CNPC and the Company effective as of November 5, 1999, the Company issued 160 billion state-owned shares in exchange for the assets and liabilities transferred to the Company by CNPC. The 160 billion state-owned shares were the initial registered capital of the Company with a par value of RMB 1.00 yuan per share.

On April 7, 2000, the Company issued 17,582,418,000 shares, represented by 13,447,897,000 H shares and 41,345,210 ADSs (each representing 100 H shares) in a global initial public offering (“Global Offering”) and the trading of the H shares and the ADSs on the Stock Exchange of Hong Kong Limited and the New York Stock Exchange commenced on April 7, 2000 and April 6, 2000, respectively. The H shares and ADSs were issued at prices of HK$ 1.28 per H share and US$ 16.44 per ADS respectively for which the net proceeds to the Company were approximately RMB 20 billion. The shares issued pursuant to the Global Offering rank equally with existing shares.

Pursuant to the approval of the China Securities Regulatory Commission, 1,758,242,000 state-owned shares of the Company owned by CNPC were converted into H shares for sale in the Global Offering.

On September 1, 2005, the Company issued an additional 3,196,801,818 new H shares at HK$ 6.00 per share and net proceeds to the Company amounted to approximately RMB 19,692. CNPC also sold 319,680,182 state-owned shares it held concurrently with PetroChina’s sale of new H shares in September 2005.

On October 31, 2007, the Company issued 4,000,000,000 new A shares at RMB 16.70 yuan per share and net proceeds to the Company amounted to approximately RMB 66,243 and the listing and trading of the A shares on the Shanghai Stock Exchange commenced on November 5, 2007.

F-42

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

Following the issuance of the A shares, all the existing state-owned shares issued before November 5, 2007 held by CNPC have been registered with the China Securities Depository and Clearing Corporation Limited as A shares.

Shareholders’ rights are governed by the Company Law of the PRC that requires an increase in registered capital to be approved by the shareholders in shareholders’ general meetings and the relevant PRC regulatory authorities.

29 RESERVES

	2017			2016
	RMB			RMB
Capital Reserve
Beginning balance		133,308			133,308
Ending balance		133,308			133,308
Statutory Common Reserve Fund (a)
Beginning balance		186,840			186,840
Transfer from retained earnings		1,929			—
Ending balance		188,769			186,840
Special Reserve-Safety Fund Reserve
Beginning balance		13,188			11,648
Safety fund reserve		178			1,540
Ending balance		13,366			13,188
Currency Translation Differences
Beginning balance		(29,294	)		(37,066	)
Currency translation differences		1,249			7,772
Ending balance		(28,045	)		(29,294	)
Other Reserves
Beginning balance		(9,236	)		(9,790	)
Equity transaction with non-controlling interests		289			224
Acquisition of subsidiaries		(1	)		(259	)
Fair value loss on available-for-sale financial assets		(36	)		(128	)
Share of the other comprehensive (loss) / income of associates and joint ventures accounted for using the equity method		(326	)		313
Other		(26	)		404
Ending balance		(9,336	)		(9,236	)
		298,062			294,806

(a) Pursuant to the PRC regulations and the Company’s Articles of Association, the Company is required to transfer 10% of its net profit, as determined under the PRC accounting regulations, to a Statutory Common Reserve Fund (“Reserve Fund”). Appropriation to the Reserve Fund may cease when the fund aggregates to 50% of the Company’s registered capital. The transfer to this reserve must be made before distribution of dividends to shareholders.

F-43

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

The Reserve Fund shall only be used to make good previous years’ losses, to expand the Company’s production operations, or to increase the capital of the Company. Upon approval of a resolution of shareholders’ in a general meeting, the Company may convert its Reserve Fund into share capital and issue bonus shares to existing shareholders in proportion to their original shareholdings or to increase the nominal value of each share currently held by them, provided that the balance of the Reserve Fund after such issuance is not less than 25% of the Company’s registered capital.

(b) According to the relevant PRC regulations, the distributable reserve is the lower of the retained earnings computed under PRC accounting regulations and IFRS. As of December 31, 2017, the Company’s distributable reserve amounted to RMB 572,252 (December 31, 2016: RMB 574,536).

30 DEFERRED TAXATION

Deferred taxation is calculated on temporary differences under the liability method using a principal tax rate of 25%.

The movements in the deferred taxation account are as follows:

	Year Ended December 31,
	2017			2016			2015
	RMB			RMB			RMB
At beginning of the year		(6,720	)		(3,807	)		905
Transfer to profit and loss (Note 12)		(7,539	)		(3,994	)		(3,272	)
Credit to other comprehensive income		195			1,081			(1,449	)
Acquisition of subsidiaries		—			—			9
At end of the year		(14,064	)		(6,720	)		(3,807	)

Deferred tax balances before offset are attributable to the following items:

	December 31, 2017		December 31, 2016
	RMB		RMB
Deferred tax assets:
Receivables and inventories		10,387		7,786
Tax losses		27,911		30,438
Impairment of long-term assets		9,712		7,551
Other		7,613		7,184
Total deferred tax assets		55,623		52,959
Deferred tax liabilities:
Accelerated tax depreciation		27,539		32,639
Other		14,020		13,600
Total deferred tax liabilities		41,559		46,239
Net deferred tax assets		14,064		6,720

Tax losses that can be carried forward to future years include deferred tax assets arising from the losses of the branches in the eastern region. The tax expenses of its branches in the eastern and western regions were paid in aggregate according to the requirements of the competent tax authority.

F-44

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

Deferred tax balances after offset are listed as follows:

	December 31, 2017		December 31, 2016
	RMB		RMB
Deferred tax assets		26,724		20,360
Deferred tax liabilities		12,660		13,640

31 ASSET RETIREMENT OBLIGATIONS

	2017			2016			2015
	RMB			RMB			RMB
At beginning of the year		125,392			117,996			109,154
Liabilities incurred		2,981			2,942			4,266
Liabilities settled		(2,012	)		(843	)		(677	)
Accretion expense (Note 10)		5,453			5,126			5,950
Currency translation differences		(268	)		171			(697	)
At end of the year		131,546			125,392			117,996

Asset retirement obligations relate to oil and gas properties (Note 15).

32 PENSIONS

The Group participates in various employee retirement benefit plans (Note 3(t)). Expenses incurred by the Group in connection with the retirement benefit plans for the year ended December 31, 2017 amounted to RMB 16,010 (2016: RMB 16,184, 2015: RMB 16,357).

33 CONTINGENT LIABILITIES

(a) Bank and other guarantees

At December 31, 2017 and 2016, the Group did not guarantee related parties or third parties any significant borrowings or others.

(b) Environmental liabilities

China has adopted extensive environmental laws and regulations that affect the operation of the oil and gas industry. Under existing legislation, however, management believes that there are no probable liabilities, except for the amounts which have already been reflected in the consolidated financial statements, which may have a material adverse effect on the financial position of the Group.

(c) Legal contingencies

During the reporting period, the Group has complied with domestic and overseas significant laws and regulatory requirements. Notwithstanding certain insignificant lawsuits as well as other proceedings outstanding, management believes that any resulting liabilities will not have a material adverse effect on the financial position of the Group.

F-45

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

(d) Group insurance

The Group has insurance coverage for vehicles and certain assets that are subject to significant operating risks, third-party liability insurance against claims relating to personal injury, property and environmental damages that result from accidents and also employer liabilities insurance. The potential effect on the financial position of the Group of any liabilities resulting from future uninsured incidents cannot be estimated by the Group at present.

34 COMMITMENTS

(a) Operating lease commitments

Operating lease commitments of the Group are mainly for leasing of land, buildings and equipment. Leases range from 1 to 50 years and usually do not contain renewal options. Future minimum lease payments as of December 31, 2017 and 2016 under non-cancellable operating leases are as follows:

	December 31, 2017		December 31, 2016
	RMB		RMB
No later than 1 year		11,519		10,108
Later than 1 year and no later than 5 years		37,033		30,757
Later than 5 years		180,833		148,961
		229,385		189,826

(b) Capital commitments

At December 31, 2017, the Group’s capital commitments contracted but not provided for mainly relating to property, plant and equipment were RMB 70,563 (December 31, 2016: RMB 59,664).

The operating lease and capital commitments above are transactions mainly with CNPC and its fellow subsidiaries.

(c) Exploration and production licenses

The Company is obligated to make annual payments with respect to its exploration and production licenses to the Department of Natural Resources. Payments incurred were RMB 609 for the year ended December 31, 2017 (2016: RMB 639, 2015: RMB 643).

According to the current policy, estimated annual payments for the next five years are as follows:

	December 31, 2017		December 31, 2016
	RMB		RMB
Within one year		800		800
Between one and two years		800		800
Between two and three years		800		800
Between three and four years		800		800
Between four and five years		800		800

F-46

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

35 MAJOR CUSTOMERS

The Group’s major customers are as follows:

	2017				2016				2015
	Revenue		Percentage of Total revenue		Revenue		Percentage of Total revenue		Revenue		Percentage of Total revenue
	RMB		%		RMB		%		RMB		%
China Petroleum & Chemical Corporation		65,767		3		39,481		2		33,482		2
CNPC and its fellow subsidiaries		92,173		5		91,094		6		80,045		5
		157,940		8		130,575		8		113,527		7

36 RELATED PARTY TRANSACTIONS

CNPC, the controlling shareholder of the Company, is a limited liability company directly controlled by the PRC government.

Related parties include CNPC and its fellow subsidiaries, their associates and joint ventures, other state-owned enterprises and their subsidiaries which the PRC government has control, joint control or significant influence over and enterprises which the Group is able to control, jointly control or exercise significant influence over, key management personnel of the Company and CNPC and their close family members.

(a) Transactions with CNPC and its fellow subsidiaries, associates and joint ventures of the Group

The Group has extensive transactions with other companies in CNPC and its fellow subsidiaries. Due to these relationships, it is possible that the terms of the transactions between the Group and other members of CNPC and its fellow subsidiaries are not the same as those that would result from transactions with other related parties or wholly unrelated parties.

The principal related party transactions with CNPC and its fellow subsidiaries, associates and joint ventures of the Group which were carried out in the ordinary course of business, are as follows:

On August 25, 2011, based on the terms of the Comprehensive Products and Services Agreement amended in 2008, the Company and CNPC entered into a new Comprehensive Products and Services Agreement (“the Comprehensive Products and Services Agreement”) for a period of three years which took effect on January 1, 2012. The Comprehensive Products and Services Agreement provides for a range of products and services which may be required and requested by either party. The products and services to be provided by CNPC and its fellow subsidiaries to the Group under the Comprehensive Products and Services Agreement include construction and technical services, production services, supply of material services, social services, ancillary services and financial services. The products and services required and requested by either party are provided in accordance with (1) government-prescribed prices; or (2) where there is no government-prescribed price, with reference to relevant market prices; or (3) where neither (1) nor (2) is applicable, the actual cost incurred or the agreed contractual price. On the basis of the existing Comprehensive Products and Services Agreement, the Company and CNPC entered into a new Comprehensive Products and Services Agreement on August 28, 2014 for a period of three years which took effect on January 1, 2015. The new Comprehensive Products and Services Agreement

F-47

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

has already incorporated the terms of the current Comprehensive Products and Services Agreement which was amended in 2011. On the basis of the existing Comprehensive Products and Services Agreement, the Company and CNPC entered into a new Comprehensive Products and Services Agreement on August 24, 2017 for a period of three years which took effect on January 1, 2018. The new Comprehensive Products and Services Agreement has already incorporated the terms of the current Comprehensive Products and Services Agreement which was amended in 2014.

• Sales of goods represent the sale of crude oil, refined products, chemical products and natural gas, etc. The total amount of these transactions amounted to RMB 113,306 for the year ended December 31, 2017 (2016: RMB 104,034, 2015: RMB 106,304).

• Sales of services principally represent the provision of services in connection with the transportation of crude oil and natural gas, etc. The total amount of these transactions amounted to RMB 6,160 for the year ended December 31, 2017 (2016: RMB 5,053, 2015: RMB 6,919).

• Purchases of goods and services principally represent construction and technical services, production services, social services, ancillary services and material supply services, etc. The total amount of these transactions amounted to RMB 338,178 for the year ended December 31, 2017 (2016: RMB 292,168, 2015: RMB 322,028).

• Purchases of assets principally represent the purchases of manufacturing equipment, office equipment and transportation equipment, etc. The total amount of these transactions amounted to RMB 1,643 for the year ended December 31, 2017 (2016: RMB 1,058, 2015: RMB 1,141).

• Amounts due from and to CNPC and its fellow subsidiaries, associates and joint ventures of the Group included in the following accounts captions are summarized as follows:

	December 31, 2017		December 31, 2016
	RMB		RMB
Accounts receivable		10,219		6,657
Prepayments and other receivables		8,987		9,123
Other current assets		5,794		4,486
Other non-current assets		14,848		11,084
Accounts payable and accrued liabilities		66,001		64,772
Other non-current liabilities		3,053		3,755

• Interest income represents interest from deposits placed with CNPC and its fellow subsidiaries. The total interest income amounted to RMB 424 for the year ended December 31, 2017 (2016: RMB 224, 2015: RMB 304). The balance of deposits at December 31, 2017 was RMB 25,903 (December 31, 2016: RMB 32,626).

• Purchases of financial service principally represents interest charged on the loans from CNPC and its fellow subsidiaries, insurance fee, etc. The total amount of these transactions amounted to RMB 11,021 for the year ended December 31, 2017 (2016: RMB 12,139, 2015: RMB 14,739).

• The borrowings from CNPC and its fellow subsidiaries at December 31, 2017 were RMB 208,395 (December 31, 2016: RMB 255,285).

• Rents and other payments made under financial leasing represent the payable by the Group (including all rents, leasing service fees and prices for exercising purchase options) for the period according to the financial leasing agreements entered into by the Group and CNPC and its fellow subsidiaries. The total

F-48

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

rents and other payments made under financial leasing amounted to RMB 835 for the year ended December 31, 2017 (2016: RMB 819, 2015: RMB 238).

On August 25, 2011, based on the Land Use Rights Leasing Contract signed in 2000, the Company and CNPC entered into a Supplemental Land Use Rights Leasing Contract which took effect on January 1, 2012. The Supplemental Land Use Rights Leasing Contract provides for the lease of land covering an aggregate area of approximately 1,783 million square meters located throughout the PRC at a maximal annual fee (exclusive of tax and government charges) of RMB 3,892. The Supplemental Land Use Rights Leasing Contract will expire at the same time as the Land Use Rights Leasing Contract. The area and total fee payable for the lease of all such property may be adjusted with the Company’s operating needs and by reference to market price every three years. The Company and CNPC each issued a confirmation letter to the Land Use Rights Leasing Contract on August 28, 2014, which adjusted the rental payable and the area for the leased land parcels. The Company agreed to rent from CNPC parcels of land with an aggregate area of approximately 1,777 million square meters with rental payable (exclusive of tax and government charges) adjusted to no more than RMB 4,831 in accordance with the area of leased land parcels and the current situation of the property market. The Land Use Rights Leasing Contract shall remain unchanged, apart from the rental payable and the leased area. The confirmation letter shall be effective from January 1, 2015. The Company and CNPC each issued a confirmation letter to the Land Use Rights Leasing Contract on August 24, 2017, which adjusted the rental payable and the area for the leased land parcels. The Company agreed to rent from CNPC parcels of land with an aggregate area of approximately 1,773 million square meters with annual rental payable (exclusive of tax and government charges) adjusted to no more than RMB 5,783 in accordance with the area of leased land parcels and the current situation of the property market. The Land Use Rights Leasing Contract shall remain unchanged, apart from the rental payable and the leased area. The confirmation letter shall be effective from January 1, 2018.

On August 25, 2011, based on the Buildings Leasing Contract and Supplemental Building Leasing Agreement, the Company and CNPC entered into a Revised Buildings Leasing Contract which took effect thereafter. Under this contract, buildings covering an aggregate area of 734,316 square meters were leased at an average annual fee of RMB 1,049 yuan per square meter. The Revised Building Leasing Contract will expire at the same time as the Building Leasing Agreement. The area and total fee payable for the lease of all such property may, every three years, be adjusted with the Company’s operating needs and by reference to market price which the adjusted prices will not exceed. The Company and CNPC each issued a confirmation letter to the Building Leasing Contract on August 28, 2014, which adjusted the rental payable and the gross floor area for the buildings leased. The Company agreed to lease from CNPC buildings with an aggregate gross floor area of approximately 1,179,586 square meters with rental payable adjusted to approximately RMB 708 in accordance with the gross floor area leased and the current situation of the market. The Building Leasing Contract shall remain unchanged apart from the rental payable and the gross floor area leased. The confirmation letter shall be effective from January 1, 2015. On August 24, 2017, based on the Buildings Leasing Contract and Supplemental Building Leasing Agreement, the Company and CNPC entered into a Revised Buildings Leasing Contract which took effect on January 1, 2018. Under this contract, buildings covering an aggregate area of 1,152,968 square meters were leased at annual rental payable approximately RMB 730. The Revised Building Leasing Contract will expire at Dec 31, 2037. The area and total fee payable for the lease of all such property may, every three years, be adjusted with the Company’s operating needs and by reference to market price which the adjusted prices will not exceed.

F-49

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

(b) Key management compensation

	Year End December 31,
	2017		2016		2015
	RMB’000		RMB’000		RMB’000
Emoluments and other benefits		11,779		12,549		11,256
Contribution to retirement benefit scheme		1,645		1,712		1,915
		13,424		14,261		13,171

Note: Emoluments set out above for the year ended December 31, 2017 exclude RMB nil paid to key management of the Company of the deferred merit pay in accordance with relevant requirements by the PRC government (2016: RMB 1.64, 2015: RMB nil) .

(c) Transactions with other state-controlled entities in the PRC

Apart from transactions with CNPC and its fellow subsidiaries, associates and joint ventures of the Group, the Group’s transactions with other state-controlled entities include but is not limited to the following:

• Sales and purchases of goods and services,

• Purchases of assets,

• Lease of assets; and

• Bank deposits and borrowings

These transactions are conducted in the ordinary course of the Group’s business.

37 SEGMENT INFORMATION

The Group is principally engaged in a broad range of petroleum related products, services and activities. The Group’s operating segments comprise: Exploration and Production, Refining and Chemicals, Marketing, and Natural Gas and Pipeline. On the basis of these operating segments, the management of the Company assesses the segmental operating results and allocates resources. Sales between operating segments are conducted principally at market prices. Additionally, the Group presents geographical information based on entities located in regions with a similar risk profile.

The Exploration and Production segment is engaged in the exploration, development, production and marketing of crude oil and natural gas.

The Refining and Chemicals segment is engaged in the refining of crude oil and petroleum products, production and marketing of primary petrochemical products, derivative petrochemical products and other chemical products.

The Marketing segment is engaged in the marketing of refined products and the trading business.

The Natural Gas and Pipeline segment is engaged in the transmission of natural gas, crude oil and refined products and the sale of natural gas.

F-50

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

The Head Office and Other segment relates to cash management and financing activities, the corporate center, research and development, and other business services supporting the operating business segments of the Group.

The accounting policies of the operating segments are the same as those described in Note 3 — “Summary of Principal Accounting Policies”.

The segment information for the operating segments for the years ended December 31, 2017, 2016 and 2015 are as follows:

	Year Ended December 31, 2017
	Exploration and Production			Refining and Chemicals			Marketing			Natural Gas and Pipeline			Head Office and Other			Total
	RMB			RMB			RMB			RMB			RMB			RMB
Revenue		505,430			707,804			1,660,456			295,786			2,057			3,171,533
Less: intersegment sales		(409,303	)		(535,515	)		(179,692	)		(30,476	)		(657	)		(1,155,643	)
Revenue from external customers		96,127			172,289			1,480,764			265,310			1,400			2,015,890
Depreciation, depletion and amortization		(169,484	)		(32,319	)		(12,734	)		(21,146	)		(1,692	)		(237,375	)
Including: Impairment losses of property, plant and equipment		(6,565	)		(10,223	)		(7	)		(1,150	)		(2	)		(17,947	)
Profit / (loss) from operations		15,475			39,961			8,279			15,688			(11,681	)		67,722
Finance costs:
Exchange gain																	8,217
Exchange loss																	(9,311	)
Interest income																	2,901
Interest expense																	(22,408	)
Total net finance costs																	(20,601	)
Share of profit / (loss) of associates and joint ventures		1,716			(89	)		1,501			279			2,561			5,968
Profit before income tax expense																	53,089
Income tax expense																	(16,296	)
Profit for the year																	36,793
Segment assets		1,211,912			318,299			397,813			519,249			1,357,803			3,805,076
Other assets																	26,724
Investments in associates and joint ventures		39,517			1,375			11,938			5,534			22,795			81,159
Elimination of intersegment balances (a)																	(1,508,347	)
Total assets																	2,404,612
Capital expenditures		161,997			17,705			10,982			24,529			1,014			216,227
Segment liabilities		525,085			79,989			199,340			120,244			589,460			1,514,118
Other liabilities																	70,091
Elimination of intersegment balances (a)																	(560,916	)
Total liabilities																	1,023,293

F-51

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

	Year Ended December 31, 2016
	Exploration and Production			Refining and Chemicals			Marketing			Natural Gas and Pipeline			Head Office and Other			Total
	RMB			RMB			RMB			RMB			RMB			RMB
Revenue		412,484			582,510			1,301,616			247,477			2,197			2,546,284
Less: intersegment sales		(335,716	)		(438,853	)		(126,344	)		(27,784	)		(684	)		(929,381	)
Revenue from external customers		76,768			143,657			1,175,272			219,693			1,513			1,616,903
Depreciation, depletion and amortization		(155,192	)		(25,475	)		(12,891	)		(22,743	)		(1,846	)		(218,147	)
Including: Impairment losses of property, plant and equipment		(882	)		(3,413	)		(2	)		(4,205	)		—			(8,502	)
Profit / (loss) from operations		3,148			39,026			11,048			17,885			(10,472	)		60,635
Finance costs:
Exchange gain																	12,828
Exchange loss																	(11,571	)
Interest income																	2,491
Interest expense																	(23,348	)
Total net finance costs																	(19,600	)
Share of (loss) / profit of associates and joint ventures		(158	)		13			552			204			3,494			4,105
Profit before income tax expense																	45,140
Income tax expense																	(15,768	)
Profit for the year																	29,372
Segment assets		1,260,009			324,357			384,123			546,485			1,434,141			3,949,115
Other assets																	25,766
Investments in associates and joint ventures		42,398			1,262			10,455			3,305			21,547			78,967
Elimination of intersegment balances(a)																	(1,657,197	)
Total assets																	2,396,651
Capital expenditures		130,248			12,847			7,983			20,340			968			172,386
Segment liabilities		536,284			124,076			183,159			150,855			668,353			1,662,727
Other liabilities																	58,839
Elimination of intersegment balances(a)																	(697,650	)
Total liabilities																	1,023,916

F-52

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

	Year Ended December 31, 2015
	Exploration and Production			Refining and Chemicals			Marketing			Natural Gas and Pipeline			Head Office and Other			Total
	RMB			RMB			RMB			RMB			RMB			RMB
Revenue		475,412			642,428			1,383,426			281,778			2,507			2,785,551
Less: intersegment sales		(384,423	)		(502,007	)		(146,719	)		(26,259	)		(715	)		(1,060,123	)
Revenue from external customers		90,989			140,421			1,236,707			255,519			1,792			1,725,428
Depreciation, depletion and amortization		(148,958	)		(24,400	)		(12,974	)		(14,489	)		(2,054	)		(202,875	)
Including: Impairment losses of property, plant and equipment		(22,922	)		(1,843	)		(191	)		(66	)		—			(25,022	)
Profit/ (loss) from operations		33,961			4,883			(500	)		51,231			(10,323	)		79,252
Finance costs:
Exchange gain																	9,536
Exchange loss																	(10,168	)
Interest income																	2,019
Interest expense																	(24,328	)
Total net finance costs																	(22,941	)
Share of (loss) / profit of associates and joint ventures		(5,599	)		66			(156	)		4,206			2,987			1,504
Profit before income tax expense																	57,815
Income tax expense																	(15,726	)
Profit for the year																	42,089
Segment assets		1,221,942			311,149			343,721			597,240			1,518,486			3,992,538
Other assets																	28,043
Investments in associates and joint ventures		32,413			1,249			9,517			3,424			24,373			70,976
Elimination of intersegment balances (a)																	(1,697,713	)
Total assets																	2,393,844
Capital expenditures		157,822			15,725			7,061			20,360			1,270			202,238
Segment liabilities		511,098			114,888			148,556			206,920			727,579			1,709,041
Other liabilities																	47,261
Elimination of intersegment balances (a)																	(706,492	)
Total liabilities																	1,049,810

F-53

PETROCHINA COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

Geographical information

	Revenue						Non-current assets (b)
Year Ended December 31,	2017		2016		2015		2017		2016		2015
	RMB		RMB		RMB		RMB		RMB		RMB
Mainland China		1,294,516		1,101,055		1,185,189		1,711,605		1,739,351		1,796,288
Other		721,374		515,848		540,239		239,204		253,264		228,416
		2,015,890		1,616,903		1,725,428		1,950,809		1,992,615		2,024,704

(a) Elimination of intersegment balances represents elimination of intersegment accounts and investments.

(b) Non-current assets mainly include non-current assets other than financial instruments and deferred tax assets.

38 APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the Board of Directors on April 27, 2018.

F-54

PETROCHINA COMPANY LIMITED

SUPPLEMENTARY INFORMATION ON OIL AND GAS EXPLORATION

AND PRODUCTION ACTIVITIES (UNAUDITED)

(All amounts in millions, except for the per share data and otherwise stated)

In accordance with the Accounting Standards Update 2010-03 Extractive Activities – Oil and Gas (Topic 932): Oil and Gas Reserve Estimation and Disclosures (an update of Accounting Standards Codification Topic 932 Extractive Activities – Oil and Gas or “ASC 932”) issued by the Financial Accounting Standards Board and corresponding disclosure requirements of the U.S. Securities and Exchange Commission, this section provides supplemental information on oil and gas exploration and development; and results of operation related to oil and gas producing activities of the Company and its subsidiaries (the “Group”) and also the Group’s investments that are accounted for using the equity method of accounting.

The supplemental information presented below covers the Group’s proved oil and gas reserves estimates, historical cost information pertaining to capitalized costs, costs incurred for property acquisitions, exploration and development activities, result of operations for oil and gas producing activities, standardized measure of estimated discounted future net cash flows and changes in estimated discounted future net cash flows.

The “Other” geographic area includes oil and gas producing activities principally in countries such as Kazakhstan, Venezuela and Indonesia. As the Group does not have significant reserves held through its investments accounted for using the equity method, information presented in relation to these equity method investments is presented in the aggregate.

Proved Oil and Gas Reserve Estimates

Proved oil and gas reserves cannot be measured exactly. Reserve estimates are based on many factors related to reservoir performance that require evaluation by the engineers interpreting the available data, as well as price and other economic factors. The reliability of these estimates at any point in time depends on both the quality and quantity of the technical and economic data, and the production performance of the reservoirs as well as engineering judgment. Consequently, reserve estimates are subject to revision as additional data become available during the producing life of a reservoir. When a commercial reservoir is discovered, proved reserves are initially determined based on limited data from the first well or wells. Subsequent data may better define the extent of the reservoir and additional production performance, well tests and engineering studies will likely improve the reliability of the reserve estimate. The evolution of technology may also result in the application of improved recovery techniques such as supplemental or enhanced recovery projects, or both, which have the potential to increase reserves.

Proved oil and gas reserves are the estimated quantities of crude oil and natural gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulation before the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether the estimate is a deterministic estimate or probabilistic estimate.

Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average price during the 12-month period before the ending date of the period covered by this report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions. The costs shall be that prevailing at the end of the period.

F-55

PETROCHINA COMPANY LIMITED

SUPPLEMENTARY INFORMATION ON OIL AND GAS EXPLORATION

AND PRODUCTION ACTIVITIES (UNAUDITED) — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

Proved developed oil and gas reserves are proved reserves that can be expected to be recovered:

a. Through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared with the cost of a new well.

b. Through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well.

Proved undeveloped oil and gas reserves are proved reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion.

The taxes, fees and royalty in China are domestic tax schemes and are paid in cash to PRC authorities. The proved reserves includes quantities that are ultimately produced and sold to pay these taxes, fees and royalty.

Proved reserve estimates as of December 31, 2017, 2016 and 2015 were based on reports prepared by DeGolyer and MacNaughton, McDaniel & Associates, Ryder Scott and GLJ independent engineering consultants.

Estimated quantities of net proved crude oil and condensate and natural gas reserves and of changes in net quantities of proved developed and undeveloped reserves for each of the periods indicated are as follows:

	Crude Oil and Condensate			Natural Gas			Total — All products
	(million barrels)			(billion cubic feet)			(million barrels of oil equivalent)
Proved developed and undeveloped reserves
The Group
Reserves at December 31, 2014		10,593			71,098			22,443
Changes resulting from:
Revisions of previous estimates		(1,663	)		(206	)		(1,697	)
Improved recovery		106			—			106
Extensions and discoveries		457			9,764			2,084
Production		(972	)		(3,131	)		(1,494	)
Reserves at December 31, 2015		8,521			77,525			21,442
Changes resulting from:
Revisions of previous estimates		(747	)		(308	)		(799	)
Improved recovery		93			—			93
Extensions and discoveries		492			4,770			1,287
Production		(921	)		(3,275	)		(1,467	)
Reserves at December 31, 2016		7,438			78,712			20,556
Changes resulting from:
Revisions of previous estimates		486			(1,751	)		195
Improved recovery		98			—			98
Extensions and discoveries		346			3,350			905
Production		(887	)		(3,423	)		(1,458	)
Reserves at December 31, 2017		7,481			76,888			20,296

F-56

PETROCHINA COMPANY LIMITED

SUPPLEMENTARY INFORMATION ON OIL AND GAS EXPLORATION

AND PRODUCTION ACTIVITIES (UNAUDITED) — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

	Crude Oil and Condensate		Natural Gas		Total — All products
	(million barrels)		(billion cubic feet)		(million barrels of oil equivalent)
Proved developed reserves at:
December 31, 2015		6,196		40,406		12,930
December 31, 2016		5,176		40,664		11,953
December 31, 2017		5,593		39,243		12,133
Proved undeveloped reserves at:
December 31, 2015		2,325		37,119		8,512
December 31, 2016		2,262		38,048		8,603
December 31, 2017		1,888		37,645		8,163
Equity method investments
Share of proved developed and undeveloped reserves of associates and joint ventures
December 31, 2015		504		354		563
December 31, 2016		504		348		562
December 31, 2017		395		372		457

At December 31, 2017, total proved developed and undeveloped reserves of the Group and equity method investments is 20,753 million barrels of oil equivalent (December 31, 2016: 21,118 million barrels of oil equivalent, December 31, 2015: 22,005 million barrels of oil equivalent), comprising 7,876 million barrels of crude oil and condensate (December 31, 2016: 7,942 million barrels, December 31, 2015: 9,025 million barrels) and 77,260 billion cubic feet of natural gas (December 31, 2016: 79,060 billion cubic feet, December 31, 2015: 77,879 billion cubic feet).

At December 31, 2017, 6,622 million barrels (December 31, 2016: 6,341 million barrels, December 31, 2015: 7,650 million barrels) of crude oil and condensate and 74,702 billion cubic feet (December 31, 2016: 76,245 billion cubic feet, December 31, 2015: 75,858 billion cubic feet) of natural gas proved developed and undeveloped reserves of the Group are located within Mainland China, and 859 million barrels (December 31, 2016: 1,097 million barrels, December 31, 2015: 871 million barrels) of crude oil and condensate and 2,186 billion cubic feet (December 31, 2016: 2,467 billion cubic feet, December 31, 2015: 1,667 billion cubic feet) of natural gas proved developed and undeveloped reserves of the Group are located overseas.

F-57

PETROCHINA COMPANY LIMITED

SUPPLEMENTARY INFORMATION ON OIL AND GAS EXPLORATION

AND PRODUCTION ACTIVITIES (UNAUDITED) — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

Capitalized Costs

	December 31, 2017			December 31, 2016
	RMB			RMB
The Group
Property costs and producing assets		1,604,141			1,519,124
Support facilities		407,188			390,089
Construction-in-progress		101,067			100,114
Total capitalized costs		2,112,396			2,009,327
Accumulated depreciation, depletion and amortization		(1,199,741	)		(1,063,500	)
Net capitalized costs		912,655			945,827
Equity method investments
Share of net capitalized costs of associates and joint ventures		25,837			28,999

Costs Incurred for Property Acquisitions, Exploration and Development Activities

	2017
	Mainland China		Other		Total
	RMB		RMB		RMB
The Group
Exploration costs		31,585		984		32,569
Development costs		110,104		18,596		128,700
Total		141,689		19,580		161,269
Equity method investments
Share of costs of property acquisition, exploration and development of associates and joint ventures		—		2,503		2,503
	2016
	Mainland China		Other		Total
	RMB		RMB		RMB
The Group
Exploration costs		28,413		685		29,098
Development costs		83,785		13,870		97,655
Total		112,198		14,555		126,753
Equity method investments
Share of costs of property acquisition, exploration and development of associates and joint ventures		—		1,990		1,990

F-58

PETROCHINA COMPANY LIMITED

SUPPLEMENTARY INFORMATION ON OIL AND GAS EXPLORATION

AND PRODUCTION ACTIVITIES (UNAUDITED) — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

	2015
	Mainland China		Other		Total
	RMB		RMB		RMB
The Group
Property acquisition costs		—		456		456
Exploration costs		28,542		1,011		29,553
Development costs		100,328		18,611		118,939
Total		128,870		20,078		148,948
Equity method investments
Share of costs of property acquisition, exploration and development of associates and joint ventures		—		2,798		2,798

Results of Operations for Oil and Gas Producing Activities

The results of operations for oil and gas producing activities for the years ended December 31, 2017, 2016 and 2015 are presented below. “Revenue” includes sales to third parties and inter-segment sales (at arm’s-length prices), net of value-added taxes. Resource tax, crude oil special gain levy and other taxes are included in “taxes other than income taxes”. Income taxes are computed using the applicable statutory tax rate, reflecting tax deductions and tax credits for the respective years ended.

	2017
	Mainland China			Other			Total
	RMB			RMB			RMB
The Group
Revenue
Sales to third parties		39,588			39,330			78,918
Inter-segment sales		305,336			5,082			310,418
		344,924			44,412			389,336
Production costs excluding taxes		(112,182	)		(7,830	)		(120,012	)
Exploration expenses		(16,732	)		(7,152	)		(23,884	)
Depreciation, depletion and amortization		(135,703	)		(18,436	)		(154,139	)
Taxes other than income taxes		(20,624	)		(3,534	)		(24,158	)
Accretion expense		(5,212	)		(241	)		(5,453	)
Income taxes		(12,098	)		(3,667	)		(15,765	)
Results of operations from producing activities		42,373			3,552			45,925
Equity method investments
Share of profit for producing activities of associates and joint ventures		—			2,050			2,050
Total of the Group and equity method investments results of operations for producing activities		42,373			5,602			47,975

F-59

PETROCHINA COMPANY LIMITED

SUPPLEMENTARY INFORMATION ON OIL AND GAS EXPLORATION

AND PRODUCTION ACTIVITIES (UNAUDITED) — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

	2016
	Mainland China			Other			Total
	RMB			RMB			RMB
The Group
Revenue
Sales to third parties		32,674			33,033			65,707
Inter-segment sales		245,091			2,898			247,989
		277,765			35,931			313,696
Production costs excluding taxes		(110,977	)		(7,233	)		(118,210	)
Exploration expenses		(17,952	)		(624	)		(18,576	)
Depreciation, depletion and amortization		(123,268	)		(18,973	)		(142,241	)
Taxes other than income taxes		(16,056	)		(3,133	)		(19,189	)
Accretion expense		(4,930	)		(196	)		(5,126	)
Income taxes		(2,150	)		(1,161	)		(3,311	)
Results of operations from producing activities		2,432			4,611			7,043
Equity method investments
Share of profit for producing activities of associates and joint ventures		—			649			649
Total of the Group and equity method investments results of operations for producing activities		2,432			5,260			7,692

	2015
	Mainland China			Other			Total
	RMB			RMB			RMB
The Group
Revenue
Sales to third parties		41,980			35,983			77,963
Inter-segment sales		292,656			4,696			297,352
		334,636			40,679			375,315
Production costs excluding taxes		(114,848	)		(9,177	)		(124,025	)
Exploration expenses		(17,045	)		(1,335	)		(18,380	)
Depreciation, depletion and amortization		(112,566	)		(22,753	)		(135,319	)
Taxes other than income taxes		(23,727	)		(5,050	)		(28,777	)
Accretion expense		(5,720	)		(230	)		(5,950	)
Income taxes		(15,629	)		(1,290	)		(16,919	)
Results of operations from producing activities		45,101			844			45,945
Equity method investments
Share of profit for producing activities of associates and joint ventures		—			(4,188	)		(4,188	)
Total of the Group and equity method investments results of operations for producing activities		45,101			(3,344	)		41,757

Standardized Measure of Discounted Future Net Cash Flows

The standardized measure of discounted future net cash flows related to proved oil and gas reserves at December 31, 2017, 2016 and 2015 is based on the prices used in estimating the Group’s proved oil and gas reserves, year-end costs, currently enacted tax rates related to existing proved oil and gas reserves and a 10% annual discount factor. “Future cash inflows” are net of value-added taxes. Corporate income taxes are included in “future income tax expense”. Other taxes are included in “future production costs” as production taxes.

F-60

PETROCHINA COMPANY LIMITED

SUPPLEMENTARY INFORMATION ON OIL AND GAS EXPLORATION

AND PRODUCTION ACTIVITIES (UNAUDITED) — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

The standardized measure of discounted future net cash flows related to proved oil and gas reserves at December 31, 2017, 2016 and 2015 is as follows:

	RMB
The Group
At December 31, 2017
Future cash inflows		5,287,272
Future production costs		(1,909,890	)
Future development costs		(571,125	)
Future income tax expense		(594,085	)
Future net cash flows		2,212,172
Discount at 10% for estimated timing of cash flows		(1,187,646	)
Standardized measure of discounted future net cash flows		1,024,526

	RMB
The Group
At December 31, 2016
Future cash inflows		4,585,822
Future production costs		(1,896,044	)
Future development costs		(553,558	)
Future income tax expense		(447,997	)
Future net cash flows		1,688,223
Discount at 10% for estimated timing of cash flows		(931,412	)
Standardized measure of discounted future net cash flows		756,811

	RMB
The Group
At December 31, 2015
Future cash inflows		5,443,534
Future production costs		(2,181,423	)
Future development costs		(444,553	)
Future income tax expense		(567,946	)
Future net cash flows		2,249,612
Discount at 10% for estimated timing of cash flows		(1,188,237	)
Standardized measure of discounted future net cash flows		1,061,375

At December 31, 2017, RMB 979,330 (December 31, 2016: RMB 731,206, December 31, 2015: RMB 1,023,933) of standardized measure of discounted future net cash flows related to proved oil and gas reserves located within mainland China and RMB 45,196 (December 31, 2016: RMB 25,605, December 31, 2015: RMB 37,442) of standardized measure of discounted future net cash flows related to proved oil and gas reserves located overseas.

F-61

PETROCHINA COMPANY LIMITED

SUPPLEMENTARY INFORMATION ON OIL AND GAS EXPLORATION

AND PRODUCTION ACTIVITIES (UNAUDITED) — (Continued)

(All amounts in millions, except for the per share data and otherwise stated)

Share of standardized measure of discounted future net cash flows of associates and joint ventures:

December 31, 2017	17,345
December 31, 2016	13,550
December 31, 2015	19,712

Changes in Standardized Measure of Discounted Future Net Cash Flows

Changes in the standardized measure of discounted net cash flows for the Group for each of the years ended December 31, 2017, 2016 and 2015 are as follows:

	Year Ended December 31,
	2017			2016			2015
	RMB			RMB			RMB
The Group
Beginning of the year		756,811			1,061,375			1,595,704
Sales and transfers of oil and gas produced, net of production costs		(232,387	)		(167,108	)		(209,600	)
Net changes in prices and production costs and other		367,132			(370,257	)		(716,150	)
Extensions, discoveries and improved recovery		77,249			81,248			157,220
Development costs incurred		38,613			32,918			49,064
Revisions of previous quantity estimates		14,555			(61,816	)		(121,809	)
Accretion of discount		76,860			113,324			172,090
Net change in income taxes		(74,307	)		67,127			134,856
End of the year		1,024,526			756,811			1,061,375

F-62

EX-4.8

Exhibit 4.8

English Translation of Chinese Original

CHINA NATIONAL PETROLEUM CORPORATION

AND

PETROCHINA COMPANY LIMITED

COMPREHENSIVE PRODUCTS AND SERVICES AGREEMENT

THIS AGREEMENT is entered into on this 24^th day of August, 2017 in Beijing by and between:

CHINA NATIONAL PETROLEUM CORPORATION (“Party A”), a state-owned enterprise duly organized and validly existing under the laws of the People’s Republic of China (the “PRC”), with its Uniform Social Credit Code being 91110000100010433L and its registered address being at Liupukang, Xicheng District, Beijing, PRC; and

PETROCHINA COMPANY LIMITED (“Party B”), a joint stock limited company duly organized and validly existing under the laws of the PRC, with its Uniform Social Credit Code being 91110000710925462X and its registered address being at 16 Andelu, Dongcheng District, Beijing.

1. Background

Upon approval by the State Council, Party A implemented a restructuring (the “Restructuring”) and in its capacity as the sole promoter, incorporated Party B on November 5, 1999 in accordance with the laws of the PRC and owned 100% equity interest in Party B. Party B issued overseas shares through public offering, including “overseas-listed foreign shares” (“H shares”) listed on the Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”), and American Depositary Shares listed on the New York Stock Exchange of the USA (the “ADS”).

Party A transferred into Party B the businesses which, prior to the Restructuring, constituted the principal businesses of Party A and its affiliated enterprises or units, including the exploration and exploitation of crude oil and natural gas, crude oil refining, chemical business, pipeline transmission, marketing, relevant research institutes and the related assets, liabilities and interests. After the Restructuring, Party A retained the businesses of construction and technical services, production services, supply of materials services, ancillary services, social services, etc., and the relevant assets, liabilities and interests.

Upon completion of the combined offering (including the issue of H Shares and ADS) in April, 2000, Party A continued to be the controlling shareholder of Party B. Following the issuance of domestic common shares dominated in Renminbi (“A shares”) by Party B in October, 2007 and the listing of the same on the Shanghai Stock Exchange, Party A has remained the controlling shareholder of Party B.

Party A owns the construction and technical services, production services, supply of materials services, ancillary services, social services, financial services etc. in relation to the production and operation of oil and natural gas. Such business can provide necessary services for the production and operation and the life of employees of Party B and its affiliates. Party A and its affiliates have the advantage of talents, technology and region, and have experience of long-term cooperation with each unit of Party B prior to the Restructuring. Therefore, Party B is willing to receive the aforesaid products and services from Party A pursuant to this Agreement.

Party B owns crude oil, natural gas, refining and chemical products and the relevant by-products and semi-finished products, and is in the position to provide the services including supply of water, electricity, gas, heating, measurement, quality inspection and entrusted operations and management. Party B and its affiliates had experience in long-term cooperation with Party A and its affiliates prior to the Restructuring. Therefore, Party A is willing to receive the aforesaid products and services from Party B pursuant to this Agreement.

On such basis, Party A and Party B are willing to sign this Agreement and provide each other with the relevant products and services pursuant to this Agreement. Therefore, both parties agree and guarantee to procure their respective entities, including their respective subsidiaries, branches and other relevant units, to provide the products and services hereof in accordance with the terms and principles of this Agreement.

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NOW, THEREFORE, Party A and Party B hereby agree as follows:

2. Agreement

Article 1 Scope of Products and Services

The Products and services provided by Party A and Party B to each other under this Agreement are as follows:

1.1 The products and services provided by Party B to Party A include: crude oil, natural gas, refining oil products, chemical products, supply of water, electricity, gas and heating; measurement, quality inspection, entrusted operations and management and other relevant or similar products and services.

1.2 The products and services provided by Party A to Party B include:

(a) Construction and technical services: geological surveying, drilling, well cementing, logging, mud logging, well testing, downhole operation, oilfield construction (including construction and installation), oil refinery construction (including construction and installation), engineering and design, project monitoring and management, equipment repairing and maintenance, equipment antiseptic testing and technology research (including the service of patent, know-how and computer software provided for the aforesaid service), information service, public construction (the road of oilfields and factories, municipal construction, civil buildings and public facilities), risk operation services and other relevant or similar products or services.

(b) Production services: supply of water, electricity, gas, heating; communications, fire fighting, security, library information and filing services, asset leasing, environmental protection and sanitation in the factory and mining areas, repair of machinery, manufacture of machinery, transportation, maintenance of roads and other relevant or similar products or services.

(c) Supply of materials services: purchase of materials, quality inspection, storage of materials, delivery of materials and other relevant or similar products or services.

(d) Ancillary services: property management, training centers, guesthouses, canteens, management of shower rooms and other relevant or similar services.

(e) Social services: regional security services, education (including affiliated schools, technician training schools, educational qualification schools), hospitals, kindergartens, daycare centers, cultural propaganda (including TV station, radio, newspaper publishing house), public transportation, municipal facilities (including greening of road, city and mining area), retirement administration, re-employment services centers, miscellaneous social services, and other relevant or similar services.

(f) Financial services: making loan and accepting deposits in Renminbi and foreign currencies, payment and receipt of interests, providing guarantee and clearance and settlement services, entrusted management of production safety guarantee fund related to refining and chemical, and other financial services engaged in by Party A through financial institutions such as its affiliate, China National Petroleum Company Finance Co., Ltd., subject to the applicable regulations.

1.3 Party A and Party B agree to enter into separate agreements in connection with the supervision of the sales business of certain oil companies, the lease of buildings and the lease and use of use rights, the licensing of intellectual property (including patents, trademarks, know-now, computer software, but excluding those mentioned in 12(a)), the transfer of the rights and obligations of those cooperation agreements with foreign entities regarding oil explorations and exploration, the guarantee of part of Party B’s debts, which are in relation to relevant oil companies.

1.4 Party B shall provide financial assistance to those companies jointly owned by Party A and Party B in which Party A and its subordinate companies and entities (including subsidiaries, branches and other entities) hold

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10% or more of the voting securities, whether individually or in the aggregate, (hereinafter referred to as “Jointly-owned Companies”), including (a) the provision of entrusted loans to the Jointly-owned Companies through China National Petroleum Company Finance Co., Ltd. or other financial institutions, and (b) the provision of guarantee for the Jointly-owned Companies.

1.5 The Jointly-owned Companies shall provide financial assistance to Party B, including (a) the provision of entrusted loans to Party B through China National Petroleum Company Finance Co., Ltd. or other financial institutions, and (b) the provision of guarantee for Party B.

1.6 Products provided by Jointly-owned Companies include: crude oil, oil products, chemical products, and natural gas etc. Pricing standards for the foregoing products shall refer to the pricing standards of the same services as listed in Appendix 1 hereto.

Article 2 General Principles

Party A and Party B agree that the products and services hereof shall be provided under the following general principles:

2.1 The quality of products and services to be provided shall be excellent, the prices at which such products and services are to be provided shall be fair and reasonable, and the terms and conditions on which such products and services are to be provided shall be no less favorable than those offered by any third parties if such third parties provide the same products or services, or participate in the similar trade.

2.2 The products and services hereof shall be provided and standardized by contracting and in compliance with the provisions of the relevant regulations of the places where Party B are listed (including but not limited to listing rules).

2.3 The products and services shall be provided in accordance with the requirement of the reform and opening and establishment of socialist market economy and in compliance with the relevant laws and regulations in accordance with the principle of orderly competition by comparison of quality and price, equality and priority.

2.4 Subject to the compliance with the interests of Party B and the relevant regulations of the local places where its shares are listed (including but not limited to the listing rules), and with the continuing development of the production and operation of both parties, Party A and Party B will determine the terms and conditions of transactions according to the general principles and pricing principles hereof after negotiations if both parties are willing to provide to each other the products and services other than those covered in this Agreement.

Article 3 Pricing Principles

The products and services hereof shall be provided in accordance with the principles of this article.

3.1 The price of any product and service provided pursuant to this Agreement shall be determined in accordance with the general principles and order of this article: (a) if there is Government-Set-Price, the price for any product and service hereof shall be determined by reference to such Government-Set-Price; (b) if there is no Government-Set-Price but there is Market Price, the price for any product and service hereof shall be determined by reference to such Market Price; (c) if there is neither Government-Set-Price nor Market Price, the price for any product and service hereof shall be determined on the basis of the actual cost or the Agreed Contractual Price.

3.2 Specific pricing principles:

The prices for the products and services of 3.2(a), (b), (c) and (d) shall be determined according to the specific principles as follows and mentioned in the Appendixes. Where such specific principles are not

4

applicable, then the prices for the relevant products and services shall be re-determined according to the general principles of 3.1 hereof.

(a) Production services

Oil and gas providing services (including the supply of water, electricity, gas and heating) shall be priced according to the Government-Set-Price plus costs of sub-supply (if applicable).

(b) Construction and technical services

The service of carrying out construction shall be provided in accordance with the lump-sum budgetary estimates and budgets. The lump-sum price or fee rate of the construction services for special purposes shall be determined in accordance with the following principles: before the State issues the uniform standard of lump-sum price or fee rate, the price for special-purpose construction shall be determined by reference to the Agreed Contractual Price, but shall be more favorable than the price standard of the similar construction in the international market. After the State issues such uniform standard, the price for the same shall be determined according to such uniform standard.

The lump-sum price or fee rate for the public construction services (refer to the services in connection with roads, municipal facility, civil building and public facility in oil field areas and factory areas) are that where there is a uniform standard of lump-sum price or fee rate set by the State, the price for such services shall be determined by reference to such standard; where there is no such standard, prior to January 1, 2000, the price for such services shall be determined according to Market Price. From and after January 1, 2000, by public bidding according to the provisions of the Law of the People’s Republic of China on Invitation and Submission of Bids which came into effect on January 1, 2000.

(c) Social services

Please refer to Appendix II hereto for specific pricing principles. For the actual cost and the Agreed Contractual Price, the following provisions shall be complied with:

(i) The prices of security services shall not be higher than the actual expenditures in respect of security services incurred by Party B in 1998.

(ii) The prices of education, medical, cultural publicity services shall be shared reasonably according to the actual expenditures incurred by Party A’s enterprises in 1998 and the ratio of interests enjoyed by both parties (that is, the units now comprising Party A and Party B and their affiliates) in 1998. The prices of such services thereafter shall not be higher than the expenditures shared by Party B and calculated in the aforesaid way, and be reduced annually as such services are transferred to the relevant governmental authorities.

(iii) The prices for retirement administration and reemployment service center shall be shared reasonably by the Parties after negotiation by both Parties according to the actual Cost Price and the extent of benefits enjoyed by Party A and Party B as well as their affiliates, and be reduced on an annual basis as the national social security system is gradually improved.

(d) Financial services provided by financial institutions

The fees for financial services provided by financial institutions such as China National Petroleum Company Finance Co., Ltd. shall be determined by reference to the interest rate of the same period and relevant fee standard announced by People’s Bank of China (“PBOC”) or other competent financial regulatory authorities, and shall be no less favorable than the interest of the same period and the standard of fees and other conditions for the money and services obtained by Party B from any independent third party.

5

Apart from the provisions in (a), (b), (c) and (d) above, prices for other products and services shall be determined in accordance with the general principle stipulated in Article 3.1 herein.

3.3 (a) Pricing standards of the various financial assistance provided by Party B to Jointly-owned Companies shall refer to the pricing standards of the same services as listed in the financial service category of Appendix II hereto;

(b) Pricing standards of the various financial assistance provided by Jointly-owned Companies to Party B shall refer to the pricing standards of the same services as listed in the financial service category of Appendix II hereto.

Article 4 Operation

4.1 Both parties are required to submit to each other an annual plan detailing the demand for products or services provided by the other party for the forthcoming year before 31 October every year, and prepare an annual plan detailing the provision of products or services to the other party and submit plan to the other party before 30 November of that year.

4.2 Both parties shall guarantee their branches, subsidiaries and other controlled units to enter into specific product or service implementation agreements according to the corresponding annual plans for supply and demand of products or services.

4.3 Unless both parties terminate this Agreement in advance according to 6.1(b) hereof, the annual plan of supply and demand of products or services of both parties can be adjusted. However, Party A or Party B or its branches, subsidiaries and other controlled units shall, prior to the annual supply plan in respect of such products or services is ascertained by the counterparty, put forward and submit the adjustment to Party A or Party B with which they are affiliated. Both parties shall make the corresponding adjustment of the annual plan for products or services respectively with consensus. The plan for supply and demand of products or services can be adjusted during the course of implementation as required and agreed by both parties, failing which, Party A shall, subject to the conditions of 6.1(b) hereof, provide with the relevant products or services to Party B according to the demand plan submitted by Party B to Party A.

4.4 The term of product or service implementation agreements entered into according to this Agreement shall normally be one year. The product or service implementation agreements with a term of more or less than one year shall be reached by parties through mutual consultation. The terms for financial services can be negotiated by both parties according to the different requirements of various specific projects.

Article 5 Rights and Obligations of Both Parties

5.1 The rights and obligations of Party A

(a) Party A has the right to:

(i) Party A has the right to obtain the products and services provided by Party B in accordance with this Agreement;

(ii) Party A has the right to receive, including through its entities (including its subsidiaries, branches and other relevant units) fees pursuant to the provisions of this Agreement;

(iii) prepare the plan for the supply of products and services according to the plan of Party B for demand of products or services; and

(iv) choose to provide the services listed in Appendix II to third parties, provided Party A shall guarantee the provision of products and services to Party B according to the provisions of this Agreement.

6

(b) The obligations of Party A include:

(i) to procure and guarantee its entities, including its subsidiaries, branches and other relevant units, to enter into the relevant product or service implementation agreements with Party B and its entities, including its subsidiaries, branches and other relevant units, pursuant to the provisions of this Agreement and the annual product or service supply and demand plans;

(ii) to supervise its affiliated companies to provide specialized services such as the supply of water, electricity and gas, communications, and fire fighting, and ensure good quality of services is delivered pursuant to the provisions of this Agreement and as required by Party B;

(iii) to supervise its affiliated companies and units to provide services according to the pricing standards provided under Appendix 2 of this Agreement.

(iv) to coordinate the relevant matters relating to such product or service implementation agreements upon the request of the parties to such agreements;

(v) to designate or establish special organizations responsible for liaison in relation to, preparation of documents for, making plans and arrangements for, balancing supply and demand for, supervision and coordination of the performance of all relevant contracts in respect of, and other matters relating to products and services to be rendered under this Agreement;

(vi) to procure its entities, including its subsidiaries, branches and other relevant units, to provide relevant services to Party B and its entities, including its subsidiaries, branches and other relevant units, and guarantee to indemnify Party B or the corresponding parties against any loss suffered by the same arising from any breach of any provision of this Agreement or the relevant product and service implementation agreements; and

(vii) to provide to the auditors of Party B with the accounting records of Party A and its associates in respect of the connected transactions.

5.2 the rights and obligations of Party B

(a) Party B has the right:

(i) Party B has the right to obtain, including through its entities (including its subsidiaries, branches and other relevant units), the products and services provided by Party A;

(ii) to choose to receive products or services, including the services set forth in Appendix II, from any third party subject to the provisions of this Agreement and provided that quality of products or services of the same type offered by such third parties shall be superior to those offered by Party A given the same terms and conditions. But either of parties shall continue to perform its obligations according to the agreements entered into by both parties before this Agreement came into force in respect of one or more of the products or services herein;

(iii) to prepare the annual plan for supply and demand and make the corresponding adjustments thereof in its discretion;

(iv) to receive, including through its entities (including its subsidiaries, branches and other relevant units), the fees for services pursuant to this Agreement;

(v) to provide with the services listed in Appendix I to any third parties without prejudicing Party A and in compliance with the provisions of this Agreement; and

(vi) to audit the accounting records of Party A and its associates in respect of connected transactions.

(b) The obligations of Party B include:

(i) to procure and guarantee its entities, including its subsidiaries, branches and other relevant units, to enter into the relevant product and service implementation agreements with Party A and its

7

entities, including its subsidiaries, branches and other relevant units thereof, pursuant to the provisions of this Agreement and the supply and demand plan;

(ii) to supervise its subsidiary companies and units providing services of good quality in accordance with the pricing standards set forth in Appendix I hereto;

(iii) to coordinate the relevant matters relating to product and services implementation agreements upon the request of the parties to such agreements;

(iv) to designate or establish special organizations responsible for liaison in relation to, preparation of documents for, making plans and arrangements for, balancing supply and demand for, supervision and coordination of the performance of all relevant contracts in respect of, and other matters relating to products and services to be rendered under this Agreement;

(v) to pay the relevant service fees according to the provisions of this Agreement and each product and service implementation agreement; and

(vi) to ensure the indemnification against any loss suffered by Party A or the corresponding parties arising from any breach of any provision of this Agreement or the relevant product and service implementation agreements, unless the breach is committed by any of Party A’s subsidiaries in which Party B has any interests.

5.3 Party A and Party B have the obligation to take further necessary actions including the execution of other relevant agreements or contracts or documents so as to ensure the realization of the purpose and contents provided in this Agreement.

Article 6 Term and Termination of Specific Contracts

6.1 Termination of supply.

(a) In the event Party B is unable to obtain conveniently certain services provided by Party A from any third party (including but not limited to any third party affiliated to Party A) and Party B notifies Party A of such situation from time to time, unless permitted by Party B in writing, Party A shall not terminate the supply of such services (other than for any breach of the provisions of this Agreement by Party B).

(b) Any party to the product and service implementation agreements (this Agreement excluded) entered into according to this Agreement may issue, in compliance with the Article 6.1(a) and 6.1(c), a written notice to the other to terminate the provision of products or services not less than six months in advance. Such notice shall stipulate what products or services will cease to be supplied and when such termination will take effect. If the supply of certain products or services is terminated according to this article, such termination shall neither affect other rights or obligations of Party A or Party B under this Agreement, nor affect other rights or obligations of any party to the product and service implementation agreements entered into according to this Agreement.

(c) If either party has issued a notice terminating the supply of certain services according to 6.1(b) hereof, unless otherwise agreed by both parties, such notice shall not terminate or affect the supply of such services agreed by both parties at the time of or prior to issuing such notice.

6.2 This Agreement shall come into effect as of January 1, 2018 after it is chopped with the common seals of the parties hereto and approved at Party B’s general meeting of shareholders, and shall remain valid for a period of three (3) years. The term of this Agreement may be extended subject to the mutual consent between the parties to this Agreement and the approval of the stock exchanges of the places where Party B is listed, and/or the ratification of Party B’s general meeting of shareholders (as required by the stock exchanges and the competent regulatory authorities of the places of listing).

6.3 If one party breaches any provision of this Agreement (the “Defaulting Party”) and the other party(the “Non-defaulting Party”) issues a written notice notifying the Defaulting Party of its breach and requires the Defaulting Party to remedy within the reasonable period determined by the Non-defaulting Party, the Non-defaulting Party may immediately terminate this Agreement if the Defaulting Party fails to remedy such

8

breach within the aforesaid period. The Non-defaulting Party reserves the rights of recourse and compensation and other rights and claims against the Defaulting Party permitted by any law. If the Non-defaulting Party fails to issue such notice to the Defaulting Party According to the provisions of this article, such failure shall not be construed as a waiver of any right provided in this Agreement and permitted by laws.

6.4 The termination of this Agreement shall not affect the rights or obligations of either party hereto accrued under this Agreement prior to the termination.

Article 7 Representations and Warranties

7.1 The Party A represents and warrants as follows:

(a) Party A is an enterprise established in accordance with law with independent legal-person status and holds a valid business license;

(b) Party A has carried out its businesses in accordance with law and has never engaged in any activities beyond the business scope prescribed by law;

(c) Party A has obtained all governmental approvals (if necessary) and has obtained or completed all internal authorizations necessary for the execution of this Agreement; the signor of this Agreement on its behalf is a duly authorized representative of Party A; and this Agreement, when executed, shall constitute binding obligations of Party A; and

(d) The execution of this Agreement and the performance of its obligations hereunder by Party A will not violate any other agreements to which Party A is a party, the Party A’s articles of association or any laws, regulations and rules and will not legally or commercially conflict with any other agreement to which Party A is a party or the Party A’s articles of association. Party A has not been in breach of any agreement to which it is a party.

7.2 Party B represents and warrants as follows:

(a) Party B is a joint stock company with limited liability which was established in accordance with law with independent legal-person status and holds a valid business license;

(b) Party B has carried out its business in accordance with law and has never engaged in any activities beyond the business scope prescribed by law;

(c) Party B has obtained or completed all the internal authorizations necessary for the execution of this Agreement; the signor of this Agreement on its behalf is a duly authorized representative of Party B; and this Agreement, when executed, shall constitute binding obligations of Party B; and

(d) The execution of this Agreement and the performance of the obligations hereunder by Party B will not violate any other agreements to which Party B is a party, Party B’s articles of association or any laws, regulations and rules, and will not legally or commercially conflict with any other agreements to which Party B is a party, or Party B’s articles of association. Party B has not been in breach of any agreement to which it is a party.

Article 8 Force Majeure

8.1 If a party hereto fails to perform all or part of its obligations under this Agreement due to an Event of Force Majeure (an Event of Force Majeure means an event beyond the reasonable control of the affected party and is unforeseeable, or unavoidable and insurmountable if foreseeable, and which happens after the execution of this Agreement and renders the full or partial performance of this Agreement impossible or impracticable in effect. An Event of Force Majeure includes but not limited to flood, fire, draught, typhoon, earthquake, and other natural disaster, traffic accident, strike, insurrection, turmoil and war (whether declared or not ) and any action or inaction of any governmental authorities), the performance of such obligations shall be suspended during the period being affected by the Event of Force Majeure.

9

8.2 The party claiming being affected by an Event of Force Majeure shall notify the other in writing of the occurrence of such an event as soon as possible, and shall, within 15 days after the occurrence of such an event, provide the other party by courier or registered air mail with appropriate evidence proving the occurrence of the Event of Force Majeure and the period of time it lasts. The party claiming that its performance of this Agreement has become impossible or impracticable due to an Event of Force Majeure shall take all the reasonable measures to eliminate or minimize the effects of the Event of Force Majeure.

8.3 In case of the occurrence of an Event of Force Majeure, both parties shall immediately consult with each other in respect of the performance of this Agreement and shall immediately resume their respective obligations under this Agreement after the cease of the Event of Force Majeure or the elimination of the effects of the same.

Article 9 Public Announcement

Without the prior written consent of the other party, no party may issue any public announcements on matters relating to this Agreement, other than public announcements issued in accordance with the provisions of the China Securities Regulatory Commission, the Shanghai Stock Exchange, the Hong Kong Stock Exchange, the Hong Kong Securities and Futures Commission, the New York Stock Exchange, the U.S. Securities and Exchange Commission or any other governmental or securities regulatory body.

Article 10 Miscellaneous

10.1 Unless otherwise provided for in this Agreement, without the written consent from the other party, no party shall transfer all or part of its rights or obligations under this Agreement.

10.2 This Agreement and the appendices hereto constitute the entire agreement between the parties, and supersede all previous oral and written agreements, contracts, understandings and communications between the parties in respect of the subject matter of this Agreement.

10.3 The illegality, invalidity or unenforceability of any article of this Agreement shall not affect the validity and enforceability of any other provisions of this Agreement.

10.4 Both parties agree to bear their respective fees and expenses incurred for execution of this Agreement in accordance with applicable PRC laws. Where no law addresses the matter, both parties shall share the fees and expenses equally.

10.5 Any amendments to this Agreement or its appendices may be made only by a written agreement executed by authorized representatives of both parties and shall be approved by both parties through appropriate corporate actions. In the event that such amendments constitute material and significant amendments to this Agreement and /or its appendices, the amendment shall not come into effect until it is notified to or approved by the Stock Exchange of Hong Kong Limited or (if applicable) the shareholders meeting of Party B (as then required by the Stock Exchange of Hong Kong Limited).

10.6 The delay or failure on the part of either party hereto to exercise any right, power or privilege under this Agreement shall not operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege preclude exercise of any other right, power or privilege.

10.7 The appendices hereto shall constitute an integral part of this Agreement and have the same binding effect on the parties hereto as if the appendices were incorporated into this Agreement.

Article 11 Communications

11.1 Notices and other communications required to be given by any party pursuant to this Agreement shall be written in Chinese and may be delivered personally, or by registered mail to the address of the other party or

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sent by facsimile transmission to the number of the other party set forth below. The dates on which notices shall be deemed to have been effectively delivered shall be determined as follows:

(a) Notices given by personal delivery shall be deemed effectively delivered on the date of personal delivery;

(b) Notices given by registered mail shall be deemed effectively delivered on the 7^th day ( if the last day falls on a Sunday or a public holiday, than such date shall be postponed to the next working day ) after the date on which they were mailed (as indicated by the postmark);

(c) Notices given by facsimile transmission shall be deemed effectively delivered at the time when the transmission is completed, provided that the sender shall produce the transmission report evidencing the successful transmission of relevant documents;

The addresses and facsimile numbers of the parties are as follows:

If to Party A:

China National Petroleum Corporation

Mailing Address: 9 Dongzhimen North Street, Dongcheng District, Beijing, the PRC

Facsimile Number: 010-6209 9428

Post Code: 100007

If to Party B:

PetroChina Company Limited

Mailing Address: 9 Dongzhimen North Street, Dongcheng District, Beijing, the PRC

Facsimile Number: 010-6209 9436

Post Code: 100007

A party shall, in accordance with the provisions in this Article and as soon as possible, notify the other party in writing of any change to its address or facsimile number set forth above.

Article 12 Governing Law and Dispute Settlement

12.1 This Agreement shall be governed by and interpreted in accordance with the PRC law. Any dispute arising from or in connection with this Agreement shall be resolved through friendly consultation between the parties. If the dispute cannot be settled in the aforesaid manner, either party shall be entitled to submit the dispute to Beijing Arbitration Commission for arbitration to be conducted in accordance with the Commission’s arbitration rules in effect at the time of the arbitration. The arbitral award shall be final and binding upon both parties.

12.2 The provisions in each of the specific contracts in respect of dispute settlement shall be made with reference to the dispute settlement clauses set forth herein.

Article 13 Definition and Interpretation

13.1 Unless the context otherwise requires, the following terms shall have the following meanings in this Agreement:

“Financial Year”	the calendar year from 1 January to 31 December.
“Services”	the transactional activities in which the parties hereto provide each other with the services within the service scope stipulated in this Agreement.

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“Government-Set-Price”	the price for such type of services as determined in any laws, regulations, decisions, orders or guidelines enacted by any government of the relevant country/region (including but not limited to any central government, federal government, local government, state/league government and any other instrumentality that rules a certain territory by controlling domestic issues and foreign affairs thereof, in whatever name, structure and form), and any other regulatory authority.
“Market Price”	the price determined according to the following order of priority: (1) the price determined by reference to the prices then charged by at least two independent third parties for services of comparable size provided on an arm’s length basis in the place where the subject services are provided or in the vicinity thereof; (2) the price determined by reference to the prices then charged by at least two independent third parties for services of comparable size provided on an arm’s length basis in the neighboring region/country of the place where the subject services are provided.
“Cost Price”	the price determined by the actual cost incurred by Party A, but not more than the actual cost at which the relevant services were provided by Party A in 1998.
“Agreed Contractual Price”	as for the geological surveying, drilling, well cementing, logging, mud logging, well testing, downhole operation, and oilfield construction, the Agreed Contractual Price shall be the actual cost for the provision of such product or services plus an additional margin of not more than 15%, provided that, such Agreed Contractual Price shall not be higher than the prices available for the provision of such products and services in the international market. As for other products and services priced in accordance with the Agreed Contractual Price, the Agreed Contractual Price shall be the actual cost for the provision of such product or service plus an additional margin of not more than 3%.
	For the avoidance of doubt, the aggregate value of all products and services provided at Cost Price and at Agreed Contractual Price and at the ratio of benefits received by Party A and Party B pursuant to this Agreement during the financial year ended 31 December 1998 was RMB 36.9 billion, calculated on a pro-forma adjusted basis (the “1998 Amount”). The aggregate value of, in each future financial year, of products and services provided by Party A to Party B at Cost Price, or at Agreed Contractual Price pursuant to this Agreement shall not exceed the 1998 Amount. But in the event the cost of certain products or services changes due to inflation, the aggregate value of products or services purchased by Party B from Party A may exceed the 1998 Amount, but the margin shall not be higher than the extra amount calculated on the basis of the national average inflation promulgated by the State. If, due to the development of new projects or natural disasters or other special events, Party B is required to purchase additional products or services such that the aggregate value of all such products or services to be priced at cost or at Agreed Contractual Prices exceeds the 1998 Amount, the decision for such purchase shall be made by the board of directors and the management of Party B on the basis of the comprehensive analysis of Party B’s business plan and financial situation, to ensure that such purchases allow for the reasonable returns to Party B’s shareholders.
“Pricing Standards”	Government-Set-Prices, Market Prices, Agreed Contractual Prices or Cost Prices.

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“Supply”	The activities of providing products and services by Party A and Party B to each other according to the provisions of this Agreement.
“Risk Operation Services”	Within certain conventional reserve blocks with exploitation difficulties and certain unconventional reserve blocks specified by Party B, Party A provides comprehensive risk operation services to Party B for its exploitation and production within these reserve blocks by supplying capital and bear the risks. Party B is responsible to pay a service fee to Party A only when there are crude oil and natural gas outputs in these reserve blocks. Such services are contractual services. The mineral interests and ownership of reserves of such reserve blocks remain unchanged. The outputs of crude oil and natural gas shall be recorded to Party B, who is responsible for the centralized sales of such outputs. Taking into consideration the quality level and the difficulties of exploitation of the reserve blocks where Party A provides risk operation services and the investment made by Party A thereinto, the service fee payable by Party B shall be calculated based on a certain percentage of the then prevailing Market Price of the crude oil and natural gas outputs under the risk operation services Party A provided, and shall be paid in cash. For conventional oil and gas and unconventional oil and gas respectively, different rates of service fee shall apply.
	The term “conventional oil and gas” refers to the oil and gas resources that can be extracted by using technologies already mastered and are economically viable. For conventional oil and gas, the service fee for the risk operation services during the investment payback period shall be 60% — 70% of the then prevailing Market Price of crude oil and gas, and shall be 50% of the then prevailing Market Price of crude oil and gas after the investment payback period expires.
	The term “unconventional oil and gas” refers to the oil and gas resources from which an economically viable output cannot be obtained unless by using large-sized enhanced production measures or special extraction processes. For unconventional oil and gas, the service fee for the risk operation services during the investment payback period shall be equal to the then prevailing Market Price of the crude oil and gas plus the price subsidy granted by the State (if any), and after the investment payback period expires shall be determined subject to further negotiations between the parties based on the then prevailing market conditions and corresponding approval procedures.
“Entrusted Operation and Management”	In view of the close linking between Party A and Party B in terms of certain units and many business processes and with a view to realizing the optimal allocation of internal resources, reducing operation costs, improving management efficiency and giving better play to the synergy of various business segments, Party B will selectively accept the demands raised by Party A from time to time for the provision of management services in connection with its related businesses so as to give full play to the advantages of Party B in terms of business management and realize the coordinated and sustainable development of the company’s business operations.
“Appendices”	Appendix I or Appendix II, or both of them, unless otherwise stated in this Agreement.

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13.2 In this Agreement, unless the context otherwise requires:

(a) A party shall include its successors;

(b) Articles or appendices refer to the articles or appendices of this Agreement;

(c) Unless this Agreement otherwise requires, this Agreement may be extended, amended, altered or supplemented through negotiations between both parties;

(d) Headings are inserted for reference only and shall not affect the interpretation of this Agreement.

Article 14    Others

14.1 This Agreement is written in Chinese.

14.2 This Agreement is made in six (6) originals. This Agreement shall come into effect as of January 1, 2018 after it is affixed with the signature of the authorized representative and the appropriate seal of each party hereto and approved at Party B’s general meeting of shareholders. Each original shall have the same legal effect.

14.3 In witness whereof, each of the parties hereto has caused this Agreement to be executed on the day as stated on the first page of this Agreement.

Party A:		Party B:
China National Petroleum Corporation (affixed with Party A’s seal specifically for contracting purpose)		PetroChina Company Limited (affixed with Party B’s seal specifically for contracting purpose)
Authorized Representative:	/s/	Authorized Representative:	/s/
	LIU Yuezhen		CHAI Shouping

Appendix I Services provided by Party B and it subsidiary entities to Party A and its subsidiary entities

Services	No.	Service items	Pricing principles
Supply of oil and natural gas etc.	1	Crude oil	Market Price
	2	Refined products	Government-Set-Price. Pursuant to the Notice of the National Development and Reform Commission on Further Improvement of Refined Oil Pricing Mechanism promulgated by the National Development and Reform Commission (Fa Gai Jia Ge [2013] No. 624) on March 26, 2013, the retail price and wholesale price of gasoline and diesel as well as the supply price of the gasoline and diesel to be supplied to special customers such as public wholesale operators, railway operators and transportation operators shall be goverment guided, while the supply price of the gasoline and the diesel for the use for national reserve purpose and for the use by Xinjiang Production and Constrution Corps as well as the ex-factory price of the aviation gasoline shall be government set. The price of gasoline and diesel shall be adjusted every 10 business days in line with the change of crude oil price on international market. The National Development and Reform Commission (the “NDRC”)

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Services	No.	Service items	Pricing principles
			shall set the retail price ceilings of gasoline and diesel for all the provinces (automomous regions and centrally administered municipalities) and core cities, and the supply price of the gasoline and diesel for national reserve purpose and for the use by Xinjiang Production and Construction Corps as well as the ex-factory price of the aviation gasoline.
	3	Chemical products	Market Price
	4	Natural gas	Government-Set-Price. Pursuant to the Circular of NDRC regarding Adjustment of Natural Gas Price promulgated by NDRC on June 28, 2013 (Fa Gai Jia Ge [2013] No. 1246), the pricing mechanism of natural gas shall be changed from ex-factory-price-controlled to citygate-price-controlled, of which, the citygate price shall be government set. The pricing of natural gas shall be under a price ceiling management regime, whereby, gas suppliers and users may negotiate specific prices between themselves below the price ceiling set by the government.
	5	Supply of water	Government-Set-Price plus cost (if applicable). Pursuant to the Measures for Administration of Urban Water Supply Price (Ji Jia Ge [1998] No. 1810) enacted by the original Planning Commission and the Ministry of Housing and Urban-Rural Development (“MHURD”), as amended by NDRC and MHURD on November 29, 2004, the urban water supply price shall be set by the competent governmental authorities in accordance with the authority as set forth in the applicable List of Pricing Regulation Authority Allocation.
	6	Supply of electricity	Government-Set-Price plus cost (if applicable). Pursuant to the Electric Power Law of the PRC enacted on December 28, 1995 and amended on August 27, 2009, by the Standing Committee of the National People’s Congress, the on-grid tariffs of the electric power distributed through the grids crossing different provinces, autonomous regions and centrally administered municipalities, or provincial-level grids or independent grids shall be proposed by the power production enterprises in consultation with the grid operators and then submitted to the pricing regulatory department under the State Council or competent pricing regulatory authorities for approval. The electric power generated by any local invested power producer, if distributed through independent grids running within the local province or for self-use by the power producer itself, may be administered by the local provincial (autonomous region or centrally administered municipality) people’s government.

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Services	No.	Service items	Pricing principles
	7	Supply of gas	Government-Set-Price plus cost (if applicable). Pursuant to the Regulations on Administration of Urban Gas promulgated by the State Council on October 19, 2010 under State Council Decree No. 583, the pricing regulatory authority under the people’s government above the county level shall determine and adjust the selling price of the pipeline delivered gas.
	8	Supply of heating	Government-Set-Price plus cost (if applicable). Since there are currently no documents addressing uniform standard of lump-sum price or fee rate for heating supply published by the State, the price of heating supply is set by the local government.
	9	Quantifying and Measuring	Market Price
	10	Quality Inspection	Market Price
	11	Entrusted Operation and Management	Market Price
	12	Materials Supply	Market Price
Financial Services	1	Entrusted lending	The price shall be determined on the basis of the lending interest rate of the same period and the relevant fee standard published by PBOC and with reference to the Market Price.
	2	Guarantee	Market Price
	3	Others	The applicable prices set by and the fee rates published by PBOC, China Banking Regulatory Commission, China Insurance Regulatory Commission and other similar governmental authorities, and applicable Market Prices.

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Appendix II Services provided by Party B and it subsidiary entities to Party A and its subsidiary entities.

Services	No.	Services items	Pricing principles
Engineering And Technical Services	1	Geological surveying	Before the State publishes any uniform standard of lump-sum price or fee rate, the price of each item of services shall be determined by reference to the Agreed Contractual Price. After the State publishes such uniform standard of lump-sum price or fee rate, the price of each item of services shall be determined on the basis of the same. The State has not yet published any document addressing such uniform standard of lump-sum price or fee rate.
	2	Drilling
	3	Well cementing
	4	Logging
	5	Mud logging
	6	Well testing
	7	Downhole operation
	8	Oilfield construction (including buildings and installation)
	9	Oil refinery construction (including buildings and installation)	Government-Set-Price. For the construction part, the lump-sum price set by the people’s government of the relevant province, autonomous region or centrally administered municipality shall be adopted, and for the installation part, the prevailing industrial lump-sum price shall be adopted.
	10	Engineering and design	Government-Set-Price or Market Price. Pursuant to the Regulations on Administration of Fee Charging for Survey and Design of Construction Projects promulgated by the original Planning Commission and the MHURD (Ji Jia Ge [2002] No. 10) on January 7, 2002, either the government- guided price or the market-driven price shall be adopted for the fee to be charged for project exploration and project design of a construction project based on the amount of investment of such project as follows: For those construction projects with an estimated total investment equal to or more than RMB 5 million, the fee for project exploration and project design shall be charged at the government-guided price; and for those construction projects with an estimated total investment below RMB 5 million, the fee for project exploration and project design shall be charged at the market-driven price.
	11	Project monitoring and management	Government-Set-Price or Market Price. Pursuant to the Regulations on Administration of Fee Charging for Project Monitoring and Management and Related Services to Construction Projects (Fa Gai Jia Ge [2007] No. 670) promulgated by NDRC

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Services	No.	Services items	Pricing principles
			and MHURD on March 30, 2007, the fee for project monitoring and management services provided to a construction project during its construction phase for which such services are mandatory shall be charged at the government-guided price; and the fee for such services provided to any other construction project during the construction phase, or the fee for such services provided to any construction project during any other phase, or the fee for any related services, shall be charged at the market-driven price.
	12	Equipment repairing and maintenance	Agreed Contractual Price
	13	Equipment antiseptic testing and research	Agreed Contractual Price
	14	Process and Technology services	Agreed Contractual Price
	15	Public construction (roads of oilfields and factories, municipal construction, civil buildings and public facilities)	Where there is a uniform standard of lump-sum price or fee rate set by the State, the prices shall be determined by reference to such standard. Where there is no such standard, prior to January 1, 2000, the prices shall be determined on the basis of the Market Price, and from and after January 1, 2000, the price shall be determined by public bidding in accordance with the provisions of the Law of the People’s Republic of China on Invitation and Submission of Bids coming into effect on January 1, 2000.
	16	Risk Operation Services	Market Price
	17	Other services (including information services)	Market Price
Production Services	1	Supply of water	Government-Set-Price plus cost (if applicable). Pursuant to the Measures for Administration of Urban Water Supply Price (Ji Jia Ge [1998] No. 1810) enacted by the original Planning Commission and MHURD, as amended by NDRC and MHURD on November 29, 2004, the urban water supply price shall be set by the competent governmental authorities in accordance with the authority as set forth in the applicable List of Pricing Regulation Authority Allocation.
	2	Supply of electricity	Government-Set-Price plus cost (if applicable). Pursuant to the Electric Power Law of the PRC enacted on December 28, 1995 and amended on August 27, 2009, by the Standing Committee of the National People’s Congress, the on-grid tariffs of the

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Services	No.	Services items	Pricing principles
			electric power distributed through the grids crossing different provinces, autonomous regions and centrally administered municipalities, or provincial-level grids or independent grids shall be proposed by the power production enterprises in consultation with the grid operators and then submitted to the pricing regulatory department under the State Council or competent pricing regulatory authorities for approval. The electric power generated by any local invested power producer, if distributed through independent grids running within the local province or for self-use by the power producer itself, may be administered by the local provincial (autonomous region or centrally administered municipality) people’s government.
	3	Supply of gas	Government-Set-Price plus cost (if applicable). Pursuant to the Regulations on Administration of Urban Gas promulgated by the State Council on October 19, 2010 under State Council Decree No. 583, the pricing regulatory authority under the people’s government above the county level shall determine and adjust the selling price of the pipeline delivered gas.
	4	Supply of heating	Government-Set-Price plus cost (if applicable). Since there are currently no documents addressing uniform standard of lump-sum price or fee rate for heating supply published by the State, the price of heating supply is set by the local government.
	5	Communications	Agreed Contractual Price
	6	Fire fighting	Agreed Contractual Price
	7	Library information and filing services	Cost Price
	8	Maintenance of roads	Cost Price
	9	Security	Market Price
	10	Asset leasing	Market Price
	11	Environment and sanitation	Market Price
	12	Repair of machinery	Market Price
	13	Manufacture of machinery	Market Price
	14	Transportation	Market Price
	15	Others	Market Price

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Services	No.	Services items	Pricing principles
Supply of Materials	1	Purchase of materials	Market Price
	2	Quality inspection, Storage, delivery	Agreed Contractual Price
Ancillary Services	1	Property management	Market Price
	2	Training centers	Agreed Contractual Price
	3	Guesthouses	Market Price
	4	Canteens	Market Price
	5	Public shower rooms	Market Price
	6	Others	Market Price
Social Service	1	Security	The actual cost incurred by Party B in 1998.
	2	Education	The actual cost shared by Party B in 1998, reduced gradually.
	3	Hospitals
	4	Cultural and publicity
Social Services	5	Kindergarten	Market Price
	6	Daycare
	7	Public transportation
	8	Municipal facilities
	9	Comprehensive services
	10	Retirement Administration	To be shared by the parties based on the Cost Price and the extent of benefits enjoyed.
	11	Reemployment service Centers
	12	Others	Market Price
Financial Services	1	Loan, deposits, and payment of interest	Based on the interest rate of the same period and relevant fee standard promulgated by PBOC, and no less favorable than those offered by independent third parties.
	2	Interest income
	3	Guarantee	Not higher than the guarantee provision fees charged by PRC non-commercial banks for provision of guarantees.
	4	Others	The applicable prices set by and the fee rates published by PBOC, China Banking Regulatory Commission, China Insurance Regulatory Commission and other similar governmental authorities, and applicable Market Prices.

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EX-4.9

Exhibit 4.9

English Translation of Chinese Original

PetroChina Company Limited

Confirmation Letter

This letter refers to the Land Use Rights Leasing Contract (the “Land Lease Contract”) dated March 10, 2000 by and between PetroChina Company Limited (as lessee) (the “Company”, “we”, “us” or “our”) and China National Petroleum Corporation (as lessor) (“CNPC”) on March 10, 2000, and the Supplemental Agreement to Land Use Rights Leasing Contract (the “Supplemental Agreement”) dated August 25, 2011 by and between the Company and CNPC in respect of the parcels of land with an aggregate area of 1,782,970,000 square meters owned by CNPC and its subsidiary or controlled companies, enterprises or units (the “Leased Land”). In accordance with Article 5 of the Supplemental Agreement, adjustments to the area of the Leased Land or the rent may be made by confirmation letter agreed by both parties.

We hereby confirm as follows in respect of the adjustments to the area of and the rent for the Leased Land under the Land Leasing Contract and the Supplemental Agreement:

Starting from January 1, 2018, the area of and the rent for the Leased Land shall be adjusted in accordance with the “Schedule of Leased Land” attached hereto as Appendix 1. Other than those adjustments to the area of and the rent for the Leased Land under the Land Lease Contract and the Supplemental Agreement, the provisions of the Land Lease Contract and Supplemental Agreement shall remain unchanged.

You are hereby notified of our confirmation as set forth above.

PetroChina Company Limited (affixed with the company seal of PetroChina)

Authorized Representative:	/s/
	CHAI Shouping

August 24, 2017

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Appendix 1: Schedule of Leased Land

No.	Business Segments	Area of Plots		Estimated Annual Rent for 2018
		(in 10,000 m2)		(in RMB10,000) (The actual rent shall be the amount agreed in the executed Land Lease Contract)
I.	Oil & Gasfield Enterprises		167,826		508,745
1	Daqing Oilfield Co., Ltd.		60,945		314,435
2	PetroChina Liaohe Oilfield Company		5,190		12,225
3	PetroChina Changqing Oilfield Company		3,250		12,347
4	PetroChina Tarim Oilfield Company		5,693		17,643
5	PetroChina Xinjiang Oilfield Company		71,625		54,841
6	PetroChina Southwest Oil & Gasfield Company		1,462		5,152
7	PetroChina Jilin Oilfield Company		4,434		27,000
8	PetroChina Dagang Oilfield Company		2,372		19,919
9	PetroChina Qinghai Oilfield Company		930		2,493
10	PetroChina North China Oilfield Company		1,768		7,265
11	PetroChina Tuha Oilfield Company		7,771		23,406
12	PetroChina Jidong Oilfield Company		1,280		6,530
13	PetroChina Yumen Oilfield Company		1,107		5,488
II.	Refineries		7,693		59,817
1	PetroChina Daqing Petrochemical Company		1,246		6,029
2	PetroChina Jilin Petrochemical Company		245		2,939
3	PetroChina Fushun Petrochemical Company		778		6,607
4	PetroChina Liaoyang Petrochemical Company		648		6,181
5	PetroChina Lanzhou Petrochemical Company		497		6,878
6	PetroChina Dushanzi Petrochemical Company		1,157		4,972
7	PetroChina Urumqi Petrochemical Company		977		5,194
8	PetroChina Ningxia Petrochemical Company		160		1,234
9	PetroChina Dalian Petrochemical Company		223		4,065
10	Dalian Petrochemical-Kunlun Energy		0.24		4
11	PetroChina Jinzhou Petrochemical Company		312		4,871
12	PetroChina Jinxi Petrochemical Company		374		3,962
13	PetroChina Daqing Refinery Company		216		1,123
14	PetroChina Harbin Petrochemical Company		94		1,408
15	PetroChina Kelamayi Petrochemical Company		354		2,153
16	PetroChina Liaohe Petrochemical Company		146		1,381
17	PetroChina Changqing Petrochemical Company		4		30
18	PetroChina Huhhot Petrochemical Company		264		782
III.	Natural Gas and Pipeline Storage and Transportation Enterprises		972		5,584
1	PetroChina Pipeline Company		508		3,537
2	PetroChina West Pipeline Co., Ltd.		463		2,317
IV.	Marketing Companies		772		3,830
1	PetroChina Heilongjiang Marketing Company		684		3422
2	PetroChina Qinghai Marketing Company		85		346
3	PetroChina Sichuan Marketing Company		3		61
V.	Scientific Research and Social Institutions		2		55
1	PetroChina Exploration & Development Research Institute		2		55
Total			177,265		578,300

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EX-4.10

Exhibit 4.10

English Translation of Chinese Original

Buildings Leasing Contract

By and between

China National Petroleum Corporation

(as lessor)

And

PetroChina Company Limited

(as lessee)

Buildings Leasing Contract

This Building Leasing Contract (the “Contract”) is entered into on this 24^th day of August 2017 in Beijing, by and between China National Petroleum Corporation (as lessor) (“Party A”), a state-owned enterprise incorporated and legally existing under the laws of the People’s Republic of China (the “PRC” or “China”), with its Uniform Social Credit Code being 91110000100010433L, and its registered address being at Liupukang, Xicheng District, Beijing; and PetroChina Company Limited (as lessee) (“Party B”), a company limited by shares incorporated and legally existing under the laws of the PRC, with its Uniform Social Credit Code being 91110000710925462X and its registered address being at 16 Andelu, Dongcheng District, Beijing.

Whereas:

(A) Party A and Party B entered into a Building Leasing Contract (the “Original Contract”) on March 10, 2000, under which, Party B starting from November 5, 1999, leased certain buildings with a total construction area of 279,770 square meters owned by Party A (including both Party A and its subsidiary or controlled companies, enterprises or units);

(B) Party A and Party B further entered into a Supplemental Buildings Leasing Agreement (the “Supplemental Agreement”) on September 26, 2002 under which, Party B starting from January 1, 2003, leased from Party A additional buildings with a total construction area of 442,730 square meters for the purpose of the operation and business of Party B;

(C) Party A and Party B entered into an Amended Building Leasing Contract (the “Amended Contract”) on August 25, 2011, under which, the parties agreed to make corresponding amendments and supplements to the lease of the relevant buildings on the basis of the provisions in the Original Contract and the Supplemental Agreement, and Party B starting from August 25, 2011, leased from Party A additional buildings with a total construction area of 734,316 square meters;

(D) In accordance with Section 12.4 of the Amended Contract, relevant adjustments to the area and the rent of the Buildings as contemplated under the Amended Contract may be made by confirmation letter agreed by both parties, pursuant to which, each of Party A and Party B issued a Confirmation Letter on August 28, 2014. Under the Confirmation Letters, the area and the rent of the buildings leased by Party B from Party A were adjusted, and Party B starting from January 1, 2015, shall lease from Party A buildings with a total construction area of 1,179, 585.57 square meters in aggregate at an estimated annual rent of RMB707,713,100 in aggregate; and

(E) Party A and Party B hereby agree to prematurely terminate the Amended Contract and enter into a new Building Lease Contract to extend the lease term of the Buildings,

NOW, THEREFORE, pursuant to the Law of the People’s Republic of China on Urban Real Estate Administration and the Contract Law of the People’s Republic of China and other applicable laws and regulations, Party A and Party B hereby reach agreement as follows in respect of Party B’s lease of the relevant buildings from Party A:

Article 1 Preconditions

1. Considering the fact that the buildings subject to this Contract are owned by Party A or its owned or controlled companies, enterprises or units, and Party A’s owned or controlled companies, enterprises and other entities have entrusted Party A to exercise the right to lease such buildings, Party A agrees to lease to Party B (including both Party B and its owned companies or units; meaning the same below), and Party B agrees to lease from Party A, such buildings under this Contract.

Article 2 Scope, Use and Disposal of Buildings

2.1 The buildings leased under this Contract refer to the buildings owned by Party A or its owned or controlled companies, enterprises or units, with a total construction area of 1,152,968.01 square meters (the “Buildings” or “Building” as the context requires), as set forth in detail in the Buildings Schedule attached hereto as Appendix 1.

2.2 Party A and Party B have agreed that the area of the Buildings may be adjusted accordingly at an interval of approximately three years in response to the actual development of the business operation of Party B.

2.3 Each of Party A’s owned or controlled enterprises that possess any Buildings shall, strictly in accordance with the terms and conditions in this Contract, enter into a specific building leasing contract (the “Specific Contract”) with Party B in respect of any one or more Buildings owned by it. In case of any conflict between any Specific Contract and this Contract, this Contract shall prevail.

2.4 Party B shall use the Buildings in accordance with the provisions in the relevant Specific Contracts and subject itself to the supervision of Party A. If Party B intends to change the use of any Buildings, it shall obtain Party A’s prior consent thereto.

2.5 Party B shall not alter the main structures of any Building without Party A’s consent.

2.6 If the lease term of any Building is not extended upon expiration, Party B shall promptly and fully return such Building to Party A.

2.7 During the term of this Contract, if any owner of any Building transfers the ownership of such Building to a third party, this Contract shall also be binding upon such third party.

Article 3 Term

3.1 The lease term (the “Term”) of the Buildings under this Contract shall be up to 20 years and shall expire on December 31, 2037; provided, however, that during the Term, the parties hereto may negotiate for the extension of the lease term of any specific Building in light of the actual needs and circumstances.

3.2 If Party B intends to extend the Term, it shall give a written notice to Party A at least six months prior to the expiration of the Term.

3.3 Following its receipt of Party B’s notice delivered under Article 3.2 above, Party A shall, before the expiration of the Term, give its consent to the proposed extension and conclude a new lease contract with Party B, and shall complete all the necessary approval formalities relating to the extension of the Term with relevant governmental authorities. The rate of the rent for the renewed lease shall be determined in accordance with the relevant standards prescribed by the relevant governmental authorities or (when there are no such standards) the then prevailing market price.

3.4 The parties hereto agree that, Party B shall have the right to terminate the lease for all or any part of the Buildings at any time before the expiration of the Term; provided, that Party B shall give a written notice to Party A six months prior to the proposed termination date.

Article 4 Rent and Taxes

4.1 Party B shall pay the annual rent to Party A in light of the actual situation and based on the need of business development in an amount to be determined with reference to the estimated amounts set forth in the Buildings Schedule attached hereto as Appendix 1.

4.2 The parties hereto agree that the rate of rent may be adjusted appropriately at an interval of approximately three years in response to the actual operational status of Party B and changes in market price; provided, however, that the rate of rent so adjusted may not exceed the comparable fair market price.

4.3 Party A shall, during the Term, be obligated to complete the formalities for the payment of property tax and other statutory taxes and fees relating to the Buildings. The aforesaid taxes and fees shall be actually borne by Party B; provided, however, that subject to relevant tax laws and regulations, Party B may pay such taxes and fees by itself or through Party A as its agent.

4.4 During the Term, Party B shall be responsible for the charges of water, electricity, heating, and repairs and other relevant expenses incurred in the use of the Buildings, which shall be in addition to rent.

Article 5 Rights and Obligations of the Parties

5.1 Rights of Party A:

(a) Party A shall have the right to collect the rent payment in accordance with this Contract;

(b) Party A shall have the right to supervise Party B’s use of the Buildings;

(c) Party A shall be entitled to claim compensation against Party B for any damage to the Buildings caused by Party B during the Term; and

(d) Any other rights available to Party A under this Contract.

5.2 Obligations of Party A:

(a) Party A shall ensure the legality of the title owners of the Buildings and the legality of the lease of the Buildings under this Contract. Party A shall also ensure that none of the Buildings is subject to any mortgage or any other third party right. Party A shall take all necessary actions to maintain the compliance of all the Buildings leased hereunder with relevant laws and regulations governing the lease of such Buildings throughout the Term. Party A shall indemnify Party B against any damages or losses suffered by Party B as a result of Party A’s failure to do so;

(b) Party A shall promptly provide necessary assistance to Party B at Party B’s reasonable request in respect of the Buildings;

(c) Party A shall ensure that Party B’s normal use of the Buildings will not be affected by Party A’s actions or non-actions;

(d) Party A shall register this Contract with relevant governmental authorities; and

(e) Party A shall not take back the Buildings before the expiration of the Term, unless otherwise provided for in this Contract.

5.3 Rights of Party B:

(a) Party B shall have the right to use the Buildings in accordance with the principles set forth in each Specific Contract and this Contract;

(b) In response to the needs of its business operation and with consent of Party A, Party B may make alteration and addition to the Buildings, which shall be owned by Party B;

(c) Party B may sublease the Buildings subject to Party A’s consent; and

(d) Party B may terminate the lease of any Building subject to an at least 6-month prior written notice to Party A.

5.4 Obligations of Party B:

(a) Party B shall use the Buildings in accordance with relevant laws and regulations; and

(b) Party B shall pay the rent in accordance with this Contract.

Article 6 Further Assurance

6. The parties hereto have the obligation to take any further action, including executing other relevant agreements, contracts or documents, necessary to ensure the effectuation of the objectives of and the provisions in this Contract.

Article 7 Amendment and Termination of the Contract

7.1 Any amendment to this Contract shall not become effective unless it is agreed to by the parties and made in writing. For the avoidance of doubt, if Party B requests in accordance with this Contract an extension or premature termination of the lease of any Building, the terms and provisions herein shall apply.

7.2 This Contract may be terminated upon occurrence of any of the following events:

(a) The Term of this Contract expires; or

(b) The parties hereto reach agreement on the termination of this Contract before the expiration of the Term; or

(c) As a result of an event of force majeure, such as earthquake, windstorm, fire, flood and war, either party hereto is rendered unable to continue to perform its obligations under this Contract; or

(d) Any applicable law or regulation requires the termination of this Contract, or a competent court or arbitral body adjudicated, ruled or ordered the termination of this Contract.

Article 8 Liabilities for Breach of Contract and Damages

8. In the event of any breach of this Contract by either party hereto, the non-breaching party may request or take remedial measures permitted hereunder or under applicable laws, including without limitation, actual performance and compensation for economic losses resulting from such breach.

Article 9 Representations and Warranties

9.1 Party A represents and warrants as follows:

(a) Party A is a duly established enterprise with the status of an independent legal person and holds a valid business license;

(b) Party A has carried out its business in accordance with law and has never engaged in any activities beyond the business scope prescribed by law;

(c) Party A has obtained all governmental approvals (if necessary) and has obtained or completed all internal authorizations necessary for the execution of this Contract; the person signing this Contract on its behalf is a duly authorized representative of Party A; and this Contract, when executed, shall constitute binding obligations of Party A; and

(d) The execution of this Contract and the performance of its obligations hereunder by Party A will not violate any other agreements to which the Party A is a party, Party A’s Articles of Association or any laws, regulations and rules.

9.2 Party B represents and warrants as follows:

(a) Party B is a duly established company limited by shares with the status of an independent legal person and holds a valid business license;

(b) Party B has carried out its business in accordance with law and has never engaged in any activities beyond the business scope prescribed by law;

(c) Party B has obtained or completed all the internal authorizations necessary for the execution of this Contract; the person signing this Contract on behalf of Party B is a duly authorized representative of Party B and this Contract, when executed, shall constitute the binding obligations of Party B; and

(d) The execution of this Contract and the performance of the obligations hereunder by Party B do not and will not violate any other agreements to which Party B is a party, Party B’s articles of association or any laws, regulations and rules.

Article 10 Force Majeure

10.1 If a party hereto fails to perform all or part of its obligations under this Contract due to an Event of Force Majeure (an “Event of Force Majeure” means an event beyond reasonable control of the affected party which is unforeseeable, or unavoidable and insurmountable if foreseen, and which happens after the execution of this Contract and renders the full or partial performance of this Contract impossible or impracticable in effect. An Event of Force Majeure includes but not limited to flood, fire, draught, typhoon, earthquake, and other natural disasters, traffic accident, strike, insurrection, turmoil and war (whether declared or not) and any action or inaction of any governmental authorities), the performance of such obligations shall be suspended during the period in which the performance is prevented by the Event of Force Majeure.

10.2 The party claiming the effect of an Event of Force Majeure shall notify the other party in writing of the occurrence of such event as soon as possible, and shall, within 15 days after the occurrence of such event, provide the other party in person or by registered mail with appropriate evidence in support of the occurrence of the Event of Force Majeure and the period of time it lasts. The party claiming that its performance of this Contract has become impossible or impracticable due to an Event of Force Majeure shall take all reasonable efforts to eliminate or minimize the effect of the Event of Force Majeure.

10.3 In case of an Event of Force Majeure, the parties shall immediately consult with each other in respect of the performance of this Contract and shall immediately resume their respective obligations under this Contract upon the ending or elimination of the Event of Force Majeure. In the event that either party to this Contract becomes unable to continue the performance of its obligations herein due to an Event of Force Majeure, Article 7.2(c) in respect of the termination of this Contract shall apply.

Article 11 Miscellaneous

11.1 Unless otherwise provided for in this Contract, without the written consent of the other party, neither party may transfer all or part of its rights and obligations under this Contract.

11.2 This Contract and the appendices hereto constitute the entire agreement between the parties, and supersede all previous oral and written agreements, contracts, understandings and communications of the parties in respect of the subject matter of this Contract.

11.3 Any provision hereof that becomes illegal, invalid or unenforceable shall not affect the validity and enforceability of any other provisions of this Contract.

11.4 Any amendments to this Contract or its appendices may be made only by a written agreement executed by authorized representatives of each of the parties and shall be approved by both parties through appropriate corporate actions; provided however that, relevant adjustments to the area and the rent of the Buildings as contemplated hereunder may be made by confirmation letter agreed by both parties.

11.5 Unless otherwise agreed by the parties hereto, any delay or failure on the part of either party hereto to exercise any right, power or privilege under this Contract shall not operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege preclude the exercise of any other right, power or privilege.

11.6 The appendices attached hereto shall constitute an integral part of this Contract and have the same binding effect on the parties hereto as if the appendixes were incorporated into this Contract.

Article 12 Notice

12.1 Notices and other communications required to be given by either party pursuant to this Contract shall be written in Chinese and may be sent in person, or by registered mail to the address of the other party or sent by facsimile transmission to the number of the other party set forth below. The date on which a notice shall be deemed to have been effectively given shall be determined as follows:

(a) A notice sent in person shall be deemed duly given on the date of personal delivery;

(b) A notice sent by registered mail shall be deemed duly given on the seventh day (if the last day falls on a Sunday or a public holiday, then such date shall be postponed to the next business day) following the delivery of such notice to the postal service (as indicated by the postmark);

(c) A notice sent by facsimile shall be deemed duly given upon the completion of transmission; provided, however, that the party sending the notice shall produce the transmission report printed out by the facsimile machine on which such notice is transmitted in order to prove the successful transmission of such notice to the other party.

The telephone numbers and facsimile numbers of the parties are as follows:

China National Petroleum Corporation

Telephone Number: 010-5998 4815

Facsimile Number: 010-6209 9252

PetroChina Company Limited

Telephone Number: 010-5998 6135

Facsimile Number: 010-6209 9428

A party shall notify the other party in accordance with the terms hereof of any changes to its address or facsimile number set forth above as soon as possible.

Article 13 Governing Law and Dispute Resolution

13.1 This Contract shall be governed by and construed in accordance with the laws of the PRC.

13.2 Any dispute arising from or in connection with this Contract shall be settled through friendly consultations between the parties. Where any dispute fails to be settled through such consultations, either Party A or Party B may refer such dispute to the Beijing Arbitration Commission for resolution through arbitration in accordance with the then effective rules of arbitration of the Beijing Arbitration Commission. An arbitral award shall be final and binding upon both Parties.

Article 14 Miscellaneous

14.1 This Contract shall be written in Chinese.

14.2 This Contract shall be executed in six originals, with equal force and effect. This Contract shall be signed and chopped by the authorized representatives of both parties and take effect as of January 1, 2018.

14.3 The Original Contract, the Supplemental Agreement and the Amended Contract shall cease to be effective as from the date of this Contract.

Party A		Party B
China National Petroleum Corporation (affixed with the seal of Party A specifically for contracting purpose)		PetroChina Company Limited (affixed with the seal of Party B specifically for contracting purpose)
Authorized Representative:	/s/	Authorized Representative:	/s/
	LIU Yuezhen		CHAI Shouping

Appendix 1

Buildings Schedule

No.	Business Segments	Building Area (m2)		Estimated Annual Rent for 2018 (in RMB10,000) (The actual rent shall be the amount agreed in the executed Buildings Leasing Contract)
1	Oil & Gasfield Companies		418,467.83		17,000.00
	Daqing Oilfield Co., Ltd.		108,498.60		2,800.00
	PetroChina Changqing Oilfield Company		164,101.82		9,100.00
	PetroChina Xinjiang Oilfield Company		21,573.98		500.00
	PetroChina Southwest Oil & Gasfield Company		77,255.87		1,800.00
	PetroChina Coalbed Methane Co., Ltd.		6,319.00		2,000.00
	PetroChina Dagang Oilfield Company		40,718.56		800.00
2	Refineries		384,856.07		17,800.00
	PetroChina Daqing Petrochemical Company		26,482.00		1,249.00
	PetroChina Daqing Refinery Company		20,368.84		800.00
	PetroChina Dushanzi Petrochemical Company		35,804.60		600.00
	PetroChina Guangdong Petrochemical Company		23,392.95		1,000.00
	PetroChina North China Petrochemical Company		2,696.00		32.00
	PetroChina Jilin Petrochemical Company		1,128.12		19.00
	PetroChina Lanzhou Petrochemical Company		53,662.11		2,900.00
	PetroChina Urumqi Petrochemical Company		54,968.88		2,500.00
	PetroChina Kelamayi Petrochemical Company		7,279.56		200.00
	PetroChina Dalian Petrochemical Company		32,503.54		1,300.00
	PetroChina Jinxi Petrochemical Company		25,164.67		2,300.00
	PetroChina Fushun Petrochemical Company		85,291.38		3,600.00
	PetroChina South China Chemicals & Marketing Company		4,133.72		400.00
	PetroChina East China Chemicals & Marketing Company		264.40		100.00
	PetroChina Northwest Chemicals & Marketing Company		11,715.30		800.00
3	Marketing Companies		137,235.20		16,500.00
	PetroChina Hubei Marketing Company		3,480.90		100.00
	PetroChina Yunnan Marketing Company		8,782.53		1,000.00
	PetroChina Northwest Marketing Company		12,703.00		900.00
	PetroChina Guangxi Marketing Company		8,542.96		600.00
	PetroChina Shandong Marketing Company		51,257.27		6,900.00
	PertroChina Sichuan Marketing Company		2,766.20		100.00
	PetroChina Guangdong Marketing Company		7,500.00		700.00
	PetroChina Lubricant Company		24,309.34		3,800.00
	PetroChina Northeast Marketing Company		17,893.00		2,400.00

No.	Business Segments	Building Area (m2)		Estimated Annual Rent for 2018 (in RMB10,000) (The actual rent shall be the amount agreed in the executed Buildings Leasing Contract)
4	Pipeline Companies		148,205.05		8,400.00
	PetroChina Southwest Pipeline Company		130,514.97		6,800.00
	PetroChina Pipelines Co., Ltd.		17,690.08		1,600.00
5	International Business Units		3,250.91		500.00
	PetroChina International Co., Ltd.		3,250.91		500.00
6	Overseas Enterprises		19,038.08		2,100.00
	CNPC Exploration and Development Co., Ltd.		19,038.08		2,100.00
7	Other Entities		41,914.87		10,700.00
	PetroChina Company Limited		23,233.50		9,100.00
	Kunlun Energy Co., Ltd.		15,381.37		500.00
	PetroChina Fuel Oil Co., Ltd.		3,300.00		1,100.00
Total			1,152,968.01		73,000.00

EX-4.11

Exhibit 4.11

English Translation of Chinese Original

Crude Oil Mutual Supply

Framework Agreement for Year 2018

between

PetroChina Company Limited

and

China Petroleum & Chemical Corporation

January 2018

Crude Oil Mutual Supply Framework Agreement for Year 2018

PetroChina Company Limited (“PetroChina”) and China Petroleum & Chemical Corporation (“Sinopec”), following friendly consultations, have reached consensus on mutual supply of crude oil in the year of 2018 and hereby enter into this Agreement (this “Agreement”).

I. Mutual Supply and Cross Supply of Crude Oil

1. Mutual supply of crude oil: In 2018, PetroChina shall supply Sinopec with 1.09 million tons of domestic onshore crude oil, including 0.63 million tons of crude oil produced at the Changqing Oil Region, 0.30 million tons of crude oil produced at the Jizhong Oil Region, 0.13 million tons of crude oil produced at the Erlian Oil Region and Tamtsag Oil Region, and 30,000 tons of crude oil produced at PetroChina Zhejiang Exploration Company.

In 2018, Sinopec shall supply PetroChina with 1.574 million tons of domestic onshore crude oil, including 0.40 million tons of crude oil produced at the Chunguang Oil Region, 0.24 million tons of crude oil produced at the Chunfeng Oil Region, 0.89 million tons of oil produced at the Tahe Oil Region, 34,000 tons of crude oil produced at the Yanqi Oil Region, and 10,000 tons of crude oil produced at the condensate unit of Sinopec Southwest Company.

2. The parties hereto shall, in principle, make available crude oil of the above supply and take delivery thereof on an evenly distributed basis. The quarterly mutual supply of crude oil may be adjusted as necessary by mutual agreement thereon and in light of the availability of crude oil resources, price and the State’s macro-economic planning requirements.

II. Quality of Crude Oil

Matters with respect to the quality of the crude oil to be supplied hereunder shall be handled pursuant to applicable provisions of SY7513-88 Technical Conditions of Crude Oil at Wellhead.

III. Quarterly Supply Agreements; Sales and Purchase Contracts on an Enterprise-by-Enterprise Basis

The parties hereto agree that quarterly supply agreements shall be entered into by and between the Production Management Department of PetroChina and the Production Management Department of Sinopec in accordance with this Agreement. After the quarterly plans have been issued to the respective subsidiaries, PetroChina’s relevant regional companies (including its oil fields, refineries and pipeline companies) and Sinopec’s relevant subsidiaries (including its oil fields and refineries) will enter into specific sales and purchase contracts with each other. The total quantities and varieties of crude oil to be supplied under such contracts shall be consistent with those specified under the above quarterly supply agreements.

IV. Price of Crude Oil

The price of crude oil to be supplied hereunder shall be settled on the basis of the benchmark crude oil price and the crude oil premium mutually agreed between the parties.

V. Payment Guarantee

Payment of the price of crude oil to be supplied hereunder shall be made on a timely basis and pursuant to the principles agreed upon by the parties hereto. PetroChina and Sinopec agree to be guarantors, and to assume joint and several guarantee liabilities for the failure of timely payment of the price of crude oil and other amounts payable by their respective oil refineries. The payer shall make timely payments to the payee upon receipt of and pursuant to the payment notice.

1

VI. Miscellaneous

1. Both parties undertake that their subsidiaries will perform this Agreement strictly in accordance with the terms hereof while maintaining the free flow of the downstream operations of their respective oil field enterprises. Any issues not covered hereunder shall be resolved through consultations between the parties hereto.

2. This Agreement shall be executed in four counterparts, with each of PetroChina and Sinopec to hold two. This Agreement shall remain effective from January 1, 2018 to December 31, 2018.

Production Management Department, PetroChina Company Limited (chopped)	Production Management Department, China Petroleum & Chemical Corporation (chopped)
By:	By:

2

EX-8.1

Exhibit 8.1

LIST OF SUBSIDIARIES

A list of PetroChina Company Limited’s principal subsidiaries is provided in Note 18 to the consolidated financial statements included in this annual report following Item 19.

EX-12.1

Exhibit 12.1

CERTIFICATION

I, WANG Yilin, certify that:

1. I have reviewed this annual report on Form 20-F of PetroChina Company Limited (the “Company”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

/s/ WANG Yilin
Name:	WANG Yilin
Title:	Chairman (performing the functions of Chief Executive Officer)

Date: April 27, 2018

EX-12.2

Exhibit 12.2

CERTIFICATION

I, CHAI Shouping, certify that:

1. I have reviewed this annual report on Form 20-F of PetroChina Company Limited (the “Company”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

/s/ CHAI Shouping
Name:	CHAI Shouping
Title:	Chief Financial Officer

Date: April 27, 2018

EX-13.1

EXHIBIT 13.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of PetroChina Company Limited (the “Company”) on Form 20-F for the period ending December 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, WANG Yilin, hereby certify that to the best of my knowledge:

1. The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ WANG Yilin

Name:	Wang Yilin
Title:	Chairman
	(performing the functions of Chief Executive Officer)

Date: April 27, 2018

EX-13.2

EXHIBIT 13.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of PetroChina Company Limited (the “Company”) on Form 20-F for the period ending December 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, CHAI Shouping, hereby certify that to the best of my knowledge:

1. The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ CHAI Shouping

Name:	CHAI Shouping
Title:	Chief Financial Officer

Date: April 27, 2018

EX-15.1

Exhibit 15.1

DEGOLYER AND MACNAUGHTON

5001 SPRING VALLEY ROAD

SUITE 800 EAST

DALLAS, TEXAS 75244

This is a digital representation of a DeGolyer and MacNaughton report.

Each file contained herein is intended to be a manifestation of certain data in the subject report and as such is subject to the definitions, qualifications, explanations, conclusions, and other conditions thereof. The information and data contained in each file may be subject to misinterpretation; therefore, the signed and bound copy of this report should be considered the only authoritative source of such information.

DEGOLYER AND MACNAUGHTON

5001 SPRING VALLEY ROAD

SUITE 800 EAST

DALLAS, TEXAS 75244

March 9, 2018

PetroChina Company Limited

9 Dongzhimen North Street, Dongcheng District

Beijing 100007

P.R. China

Ladies and Gentlemen:

Pursuant to your request, DeGolyer and MacNaughton has conducted an independent reserves evaluation of the extent and value of the net proved oil, condensate, liquefied petroleum gas (LPG), and gas reserves, as of December 31, 2017, of certain properties in which PetroChina Company Limited (PetroChina) has represented that it owns an interest. This evaluation was completed on March 9, 2018. The properties evaluated herein are located in China as well as in Azerbaijan, Indonesia, Iraq, Kazakhstan, Mongolia, and Oman (collectively referred to herein as Other Countries). PetroChina has represented that these properties account for 98.1 percent on a net equivalent barrel basis of PetroChina’s net proved reserves as of December 31, 2017. The net proved reserves estimates have been prepared in accordance with the reserves definitions of Rules 4-10(a) (l)-(32) of Regulation S-X of the Securities and Exchange Commission (SEC) of the United States. This report was prepared in accordance with guidelines specified in Item 1202 (a)(8) of Regulation S-K and is to be used for inclusion in certain SEC filings by PetroChina.

Reserves estimates included herein are expressed as net reserves. Gross reserves are defined as the total estimated petroleum to be produced from these properties after December 31, 2017. Net reserves are defined as that portion of the gross reserves attributable to the interests owned or controlled by PetroChina after deducting all interests owned by others.

Certain properties in which PetroChina has an interest are subject to the terms of various production sharing agreements. The terms of these agreements generally allow for working interest participants to be reimbursed for portions of capital costs and operating expenses and to share in the profits. The reimbursements and profit proceeds are converted to a barrel of oil equivalent or standard cubic foot of gas equivalent by dividing by product prices to estimate the “entitlement reserves.” These entitlement reserves are equivalent in principle to net reserves and are used to calculate an equivalent net share, termed an “entitlement interest.” In this report, PetroChina’s net reserves or interest for certain properties subject to these agreements is the entitlement based on PetroChina’s working interest.

Values included herein are expressed in terms of future net revenue and present worth. Future net revenue is calculated by deducting estimated operating expenses, capital costs, abandonment costs, and taxes from the revenue which will accrue to PetroChina from the production and sale of the estimated net reserves. Present worth is defined as future net revenue discounted at a specified arbitrary rate compounded monthly over the expected period of realization. Present worth values using a discount rate of 10 percent are reported herein. Present worth should not be construed as fair market value because no consideration was given to additional factors that influence the prices at which properties are bought and sold.

Estimates of oil, condensate, LPG, and gas reserves and future net revenue should be regarded only as estimates that may change as further production history and additional information become available. Not only are estimates of reserves and revenue based on that information which is currently available, but such estimates are also subject to the uncertainties inherent in the application of judgmental factors in interpreting such information.

DEGOLYER AND MACNAUGHTON 2

Data used in this evaluation were obtained from reviews with PetroChina personnel, from PetroChina files, from records on file with the appropriate regulatory agencies, and from public sources. In the preparation of this report we have relied, without independent verification, upon such information furnished by PetroChina with respect to property interests, production from such properties, current costs of operation and development, current prices for production, agreements relating to current and future operations and sale of production, and various other information and data that were accepted as represented.

Methodology and Procedures

Estimates of reserves were prepared by the use of appropriate geologic, petroleum engineering, and evaluation principles and techniques that are in accordance with practices generally recognized by the petroleum industry as presented in the publication of the Society of Petroleum Engineers entitled “Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information (Revision as of February 19, 2007).” The method or combination of methods used in the analysis of each reservoir was tempered by experience with similar reservoirs, stage of development, quality and completeness of basic data, and production history.

Based on the current stage of field development, production performance, the development plans provided by PetroChina, and the analyses of areas offsetting existing wells with test or production data, reserves were classified as proved.

PetroChina has represented that its senior management is committed to the development plan provided by PetroChina and that PetroChina has the financial capability to drill the locations as scheduled in its development plan.

When applicable, the volumetric method was used to estimate the original oil in place (OOIP) and the original gas in place (OGIP). Structure and isopach maps were constructed to estimate reservoir volume. Electrical logs, radioactivity logs, core analyses, and other available data were used to prepare these maps as well as to estimate representative values for porosity and water saturation.

Estimates of ultimate recovery were obtained after applying recovery factors to OOIP or OGIP. These recovery factors were based on consideration of the type of energy inherent in the reservoirs, analyses of the petroleum, the structural positions of the properties, and the production histories.

Where adequate data were available and where circumstances justified, material-balance and other engineering methods were used to estimate recovery factors. In these instances, reservoir performance parameters such as cumulative production, producing rate, reservoir pressure, and water production were considered in estimating recovery efficiencies used in estimating gross ultimate recovery.

For depletion-type reservoirs or those whose performance disclosed a reliable decline in producing-rate trends or other diagnostic characteristics, reserves were estimated by the application of appropriate decline curves or other performance relationships.

In certain cases, when the previously named methods could not be used, reserves were estimated by analogy with similar wells, reservoirs, or fields for which more complete data were available.

Reserves were estimated only to the limits of economic production based on existing economic conditions or to the limit of the production licenses, whichever occurs first.

Gas reserves reported herein are fuel gas, sales gas, and marketable gas. Fuel gas is that portion of the total quantity of gas to be produced from the reservoirs used in the operation of the field. Sales gas is defined as the total quantity of gas to be produced from the reservoirs, measured at the point of delivery, available for sales, after deductions for various losses and usage. Marketable gas is defined as the sum of fuel gas and sales gas.

DEGOLYER AND MACNAUGHTON 3

The oil, condensate, and LPG reserves estimated in this report are expressed in terms of 42 United States gallons per barrel. Oil reserves are to be recovered by conventional field operations. Condensate reserves are to be recovered both by normal field separation and by low-temperature separation from gas processing. For reporting purposes, oil and condensate reserves have been estimated separately and are presented herein as a summed quantity. LPG reserves are to be recovered from gas processing.

Definition of Reserves

Petroleum reserves included in this report are classified as proved. Only proved reserves have been evaluated for this report. Reserves classifications used in this report are in accordance with the reserves definitions of Rules 4-10(a) (1)-(32) of Regulation S-X of the SEC. Reserves are judged to be economically producible in future years from known reservoirs under existing economic and operating conditions and assuming continuation of current regulatory practices using conventional production methods and equipment. In the analyses of production-decline curves, reserves were estimated only to the limit of economic rates of production under existing economic and operating conditions using prices and costs consistent with the effective date of this report, including consideration of changes in existing prices provided only by contractual arrangements but not including escalations based upon future conditions. The petroleum reserves are classified as follows:

Proved oil and gas reserves – Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.

(i) The area of the reservoir considered as proved includes:

(A) The area identified by drilling and limited by fluid contacts, if any, and (B) Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible oil or gas on the basis of available geoscience and engineering data.

(ii) In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons (LKH) as seen in a well penetration unless geoscience, engineering, or performance data and reliable technology establishes a lower contact with reasonable certainty.

(iii) Where direct observation from well penetrations has defined a highest known oil (HKO) elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering, or performance data and reliable technology establish the higher contact with reasonable certainty.

(iv) Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when:

(A) Successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and (B) The project has been approved for development by all necessary parties and entities, including governmental entities.

(v) Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.

DEGOLYER AND MACNAUGHTON 4

Developed oil and gas reserves – Developed oil and gas reserves are reserves of any category that can be expected to be recovered:

(i) Through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and

(ii) Through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well.

Undeveloped oil and gas reserves – Undeveloped oil and gas reserves are reserves of any category that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion.

(i) Reserves on undrilled acreage shall be limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances.

(ii) Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances justify a longer time.

(iii) Under no circumstances shall estimates for undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, as defined in [section 210.4-10 (a) Definitions], or by other evidence using reliable technology establishing reasonable certainty.

Primary Economic Assumptions

Revenue values in this report were estimated using the prices and costs specified by PetroChina. Future prices were estimated using guidelines established by the SEC and the Financial Accounting Standards Board (FASB). The prices used in this report were based on SEC guidelines and are expressed in United States dollars (U.S.$). The assumptions used for estimating future prices and expenses are as follows:

Oil and Condensate Prices

PetroChina has represented that the oil and condensate prices were based on reference prices. Each reference price was calculated as the unweighted arithmetic average of the first-day-of-the-month price for each month within the 12-month period prior to the end of the reporting period. PetroChina has also represented that it has supplied the appropriate differentials to the reference prices.

PetroChina has represented that the 12-month average oil and condensate prices for the fields in China are based on a 12-month average reference price of U.S.$53.16 per barrel for Dubai oil with appropriate differentials applied to this reference price. The volume-weighted average oil and condensate price in China attributable to estimated proved reserves was U.S.$49.58 per barrel. The oil and condensate prices in China were held constant for the lives of the properties.

PetroChina has also represented that the 12-month average oil and condensate prices for the fields in Other Countries are based on 12-month average reference prices of U.S.$54.22 per barrel for Brent oil, U.S.$53.16 per barrel for Dubai oil, and U.S.$51.28 per barrel for DME Oman oil, with appropriate differentials applied to these reference prices. The volume-weighted average oil and condensate price in Other Countries attributable to estimated proved reserves was U.S.$40.14 per barrel. The oil and condensate prices in Other Countries were held constant for the lives of the properties.

LPG Prices

PetroChina has represented that the LPG prices were based on a 12-month average price, calculated as the unweighted arithmetic average of the first-day-of-the-month price for each month within the

DEGOLYER AND MACNAUGHTON 5

12-month period prior to the end of the reporting period, unless prices are defined by contractual arrangements. These prices were held constant over the lives of the properties. The volume-weighted average LPG price for the fields evaluated was U.S.$17.82 per barrel.

Gas Prices

PetroChina has represented that the gas prices in China are defined by contractual arrangements. The volume-weighted average gas price in China attributable to estimated proved reserves was U.S.$6.13 per thousand cubic feet. The gas prices in China were held constant for the lives of the properties.

PetroChina has also represented that all of the gas reserves in Other Countries will be sold through contractual arrangements and the gas prices are defined by these contracts. The volume-weighted average gas price in Other Countries attributable to estimated proved reserves was U.S.$1.29 per thousand cubic feet. The gas prices in Other Countries were held constant for the lives of the properties, except for certain properties where escalations are contractually allowed under the terms of the gas sales agreements.

Operating Expenses, Capital Costs, and Abandonment Costs

Operating expenses and capital costs were provided by PetroChina and were used in estimating future expenses and capital costs required to operate the properties. In certain cases, forecasts of future operating expenses and capital costs, either higher or lower than existing expenses and capital costs, may have been used to correspond to the production profiles included herein. Abandonment costs were also provided by PetroChina. Estimates of operating expenses, capital costs, and abandonment costs were considered in determining the economic viability of the undeveloped reserves estimated herein. Operating expenses, capital costs, and abandonment costs were not escalated for inflation.

Taxes

For PetroChina’s properties in China, local taxes and value-added taxes were applied in addition to the consideration of the national Chinese income tax. A 25-percent income tax rate was applied to taxable income to estimate the applicable tax. The tax provisions provided by PetroChina were assumed to remain unchanged from current legislation.

For PetroChina’s properties in Other Countries, local taxes were applied where appropriate. The future net revenue values presented in this report reflect the consideration of the host country income taxes. The tax provisions provided by PetroChina were assumed to remain unchanged from current legislation. Chinese income taxes, however, were not considered in estimating revenue values from the properties in Other Countries.

Royalties

In properties where royalties are paid in kind, the petroleum quantities associated with these royalties are excluded from the net proved reserves estimates. For properties where royalties are paid in cash, these royalties are considered production taxes and associated quantities have not been excluded from the net proved reserves estimates. PetroChina has represented that it has no royalty obligations for the properties in China that were evaluated for this report.

DEGOLYER AND MACNAUGHTON 6

DeGolyer and MacNaughton’s estimates of PetroChina’s net proved reserves attributable to the reviewed properties were based on the definition of proved reserves of the SEC and are summarized as follows, expressed in thousands of barrels (Mbbl), millions of cubic feet (MMcf), and thousands of barrels of oil equivalent (Mboe):

	Estimated by DeGolyer and MacNaughton
	Net Proved Reserves as of December 31, 2017
	Proved Developed		Proved Undeveloped		Total Proved
China
Oil and Condensate, Mbbl		5,037,034		1,584,899		6,621,933
LPG, Mbbl		0		0		0
Marketable Gas, MMcf		37,325,507		37,376,720		74,702,227
Sales Gas, MMcf		33,520,623		34,236,055		67,756,678
Fuel Gas, MMcf		3,804,884		3,140,665		6,945,549
Oil Equivalent, Mboe		11,257,953		7,814,352		19,072,305
Other Countries
Oil and Condensate, Mbbl		336,830		160,306		497,136
LPG, Mbbl		62,233		2,330		64,563
Marketable Gas, MMcf		1,400,220		45,397		1,445,617
Sales Gas, MMcf		1,399,414		43,139		1,442,553
Fuel Gas, MMcf		806		2,258		3,064
Oil Equivalent, Mboe		632,433		170,202		802,635
China and Other Countries
Oil and Condensate, Mbbl		5,373,864		1,745,205		7,119,069
LPG, Mbbl		62,233		2,330		64,563
Marketable Gas, MMcf		38,725,727		37,422,117		76,147,844
Sales Gas, MMcf		34,920,037		34,279,194		69,199,231
Fuel Gas, MMcf		3,805,690		3,142,923		6,948,613
Oil Equivalent, Mboe		11,890,386		7,984,554		19,874,940

Notes:

1. Our estimates of PetroChina’s net proved reserves in China include 4,068 Mbbl of oil and condensate reserves and zero MMcf of gas reserves that are attributable to minority interests owned by others.

2. Our estimates of PetroChina’s net proved reserves in Other Countries include 149,271 Mbbl of oil and condensate reserves, 34,653 Mbbl of LPG reserves, and 780,593 MMcf of sales gas reserves that are attributable to minority interests owned by others.

3. Marketable gas is converted to oil equivalent using a factor of 6,000 cubic feet of gas per 1 barrel of oil equivalent.

PetroChina has represented that it has estimated net proved reserves attributable to the reviewed properties in China based on the definition of proved reserves of the SEC. PetroChina has represented that its estimate of the net proved reserves attributable to these properties is 19,086,298 Mboe. In comparing the detailed net proved reserves estimates in China prepared by DeGolyer and MacNaughton and by PetroChina, differences have been found, both positive and negative, resulting in an aggregate difference of 0.1 percent when compared on the basis of net equivalent barrels.

DEGOLYER AND MACNAUGHTON 7

DeGolyer and MacNaughton’s estimates of PetroChina’s future net revenue to be derived from the proved reserves of PetroChina’s petroleum interests in China and Other Countries, as of December 31, 2017, and the present worth of that revenue discounted at 10 percent are summarized as follows, expressed in millions of United States dollars (MM U.S.$):

	Estimated by DeGolyer and MacNaughton
	Proved Developed		Proved Undeveloped		Total Proved
China
Future Net Revenue, MM U.S.$		215,344		101,325		316,669
Present Worth at 10 Percent, MM U.S.$		126,979		17,572		144,551
Other Countries
Future Net Revenue, MM U.S.$		4,735		1,125		5,860
Present Worth at 10 Percent, MM U.S.$		3,386		518		3,904
Total China and Other Countries
Future Net Revenue, MM U.S.$		220,079		102,450		322,529
Present Worth at 10 Percent, MM U.S.$		130,365		18,090		148,455

Notes:

1. Future net revenue and present worth for China are after Chinese income tax.

2. Future net revenue and present worth for Other Countries are before Chinese income tax.

While the oil and gas industry may be subject to regulatory changes from time to time that could affect an industry participant’s ability to recover its reserves, we are not aware of any such governmental actions which would restrict the recovery of the December 31, 2017, estimated reserves.

In our opinion, the information relating to estimated proved reserves, estimated future net revenue from proved reserves, and present worth of estimated future net revenue from proved reserves of oil, condensate, LPG, and gas contained in this report has been prepared in accordance with Paragraphs 932-235-50-4, 932-235-50-6 through 932-235-50-9, 932-235-50-30, and 932-235-50-31 of the Accounting Standards Update 932-235-50, Extractive Industries-Oil and Gas

To the extent the above-enumerated rules, regulations, and statements require determinations of an accounting or legal nature, we, as engineers, are necessarily unable to express an opinion as to whether the above-described information is in accordance therewith or sufficient therefor.

DEGOLYER AND MACNAUGHTON 8

DeGolyer and MacNaughton is an independent petroleum engineering consulting firm that has been providing petroleum consulting services throughout the world since 1936. DeGolyer and MacNaughton does not have any financial interest, including stock ownership, in PetroChina. Our fees were not contingent on the results of our evaluation. This letter report has been prepared at the request of PetroChina. DeGolyer and MacNaughton has used all assumptions, data, procedures, and methods that it considers necessary and appropriate to prepare this report.

Submitted,

DeGOLYER and MacNAUGHTON

Texas Registered Engineering Firm F-716

	Thomas C. Pence, P.E.
	Senior Vice President
	DeGolyer and MacNaughton

DEGOLYER AND MACNAUGHTON 9

CERTIFICATE of QUALIFICATION

I, Thomas C. Pence, Petroleum Engineer with DeGolyer and MacNaughton, 5001 Spring Valley Road, Suite 800 East, Dallas, Texas, 75244 U.S.A., hereby certify:

1. That I am a Senior Vice President with DeGolyer and MacNaughton, which company did prepare the letter report addressed to PetroChina dated March 9, 2018, and that I, as Senior Vice President, was responsible for the preparation of this letter report.

2. That I attended Texas A&M University, and that I graduated with a degree in Petroleum Engineering in the year 1982; that I am a Registered Professional Engineer in the State of Texas; that I am a member of the Society of Petroleum Engineers; and that I have in excess of 35 years of experience in the oil and gas reservoir studies and reserves evaluations.

	Thomas C. Pence, P.E.
	Senior Vice President
	DeGolyer and MacNaughton

EX-15.2

Exhibit 15.2

THIRD PARTY REPORT

RESERVES ESTIMATION AND EVALUATION OF

CHAD, WEST QURNA AND PERU (PEP) ASSETS

AS OF DECEMBER 31, 2017

Prepared for

PETROCHINA COMPANY LIMITED

MARCH 14, 2018

CONFIDENTIAL

This document is confidential and has been prepared for the exclusive use of CNODCI/PetroChina or parties named herein. It may not be distributed or made available, in whole or in part, to any other company or person without the prior knowledge and written consent of Ryder Scott. No person or company other than those for whom it is intended may directly or indirectly rely upon its contents. Ryder Scott is acting in an advisory capacity only and, to the fullest extent permitted by law, disclaims all liability for actions or losses derived from any actual or purported reliance on this document (or any other statements or opinions of Ryder Scott) by CNODCI/PetroChina or by any other person or entity.

D. John MacDonald, P.Eng. APEGA License No. 32634 Vice President
Timour Baichev, P.Eng. APEGA License No. 87454 Vice President
RYDER SCOTT COMPANY, L.P. TBPE Firm Registration No. F-1580

RYDER SCOTT COMPANY    PETROLEUM CONSULTANTS

TBPE REGISTERED ENGINEERING FIRM F-1580		FAX (713) 651-0849
1100 LOUISIANA                 SUITE 4600	HOUSTON, TEXAS 77002-5294	TELEPHONE (713) 651-9191

March 14, 2018

PetroChina Company Limited

9 Dongzhimen North Street

Dongcheng District

Beijing 100007

China

THIRD PARTY REPORT

RESERVES ESTIMATION AND VALUATION OF

CHAD, WEST QURNA AND PERU (PEP) ASSETS

AS OF DECEMBER 31, 2017

Ladies and Gentlemen,

Ryder Scott Company, L.P. (Ryder Scott) was requested by China National Oil and Gas Exploration and Development Corporation International Holding Ltd. (“CNODCI”), to conduct reserves estimations and evaluations (as of December 31, 2017) for selected petroleum assets in Chad, West Qurna and Peru (PEP), in which CNODCI has current interests. These reserves were prepared in accordance with U.S. Securities and Exchange Commission (SEC) regulations and the reserve reports have been delivered to CNODCI. Those reports are the definitive documents concerning the reserves and related net present values estimated by Ryder Scott.

Recently, CNODCI requested that Ryder Scott prepare this Third Party Report concerning the above reserve work, which is intended to be submitted to PetroChina Company Limited (“PetroChina”). This report is to summarize the results of the reserves estimations and evaluations as of December 31, 2017 for the selected petroleum assets. This summary report is subject to, and includes by reference, all of the discussion elements contained in the Ryder Scott report letters contained in aforementioned reserve reports as of December 31, 2017.

METHODOLOGY

In carrying out the review, Ryder Scott relied upon information and data provided by CNODCI, which comprised basic engineering data; geosciences information and engineering interpretation associated with such data; other technical reports; costs and commercial data; and development plans. The available data and interpretations were reviewed for reasonableness and the latter adjusted where appropriate.

The results presented in this report are based upon information and data made available to Ryder Scott in December 2017. The reserve estimates, future production and Net Present Value (NPV) computations as presented herein are based upon these data and represent Ryder Scott’s opinion as of December 31, 2017, as presented in the individual Ryder Scott reports for those assets.

Economic models were constructed based on terms of the applicable petroleum contracts as provided by CNODCI, in order to calculate CNODCI’s net revenue interest in the proved reserves. As of December 31, 2017, all proved SEC reserves were allocated up to the end of the license contract period only.

SUITE 800, 350 7TH STREET, S.W.	CALGARY, ALBERTA T2P 3N9	TEL (403) 262-2799	FAX (403) 262-2790
621 17TH STREET, SUITE 1550	DENVER, COLORADO 80293-1501	TEL (303) 623-9147	FAX (303) 623-4258

PetroChina Company Limited

March 14, 2018

Page 2

As per SEC guidelines, the oil prices which were used in the evaluation are the un-weighted 12-month arithmetic averages of the first-day-of-the month price for each month within the 12-month period prior to the end of reporting period, unless prescribed by contract. Those prices were held constant throughout the evaluation period except where alternate prices are prescribed by contract. The historical 12-month oil prices or contract prices, with supporting differentials, were supplied by CNODCI.

Future capital costs were derived from development program forecasts prepared by CNODCI for each production unit and corresponding recent historical unit cost data. The recent historical cost data for each relevant production unit were utilized to determine current operating cost conditions. These costs were not escalated throughout the evaluation period.

CNODCI’s net reserve volumes are derived by converting calculated net revenues accruing to CNODCI under the terms of the relevant petroleum contract into equivalent barrels of oil utilizing the average 2017 oil pricing explained above. The CNODCI net revenue interest volumes reported in this document represent those amounts that are determined to be attributable to CNODCI’s net economic interest after the deduction of amounts attributable to third parties (government and other working interest partners).

The NPV computations were also undertaken and derived using cost and production profiles input to the various economic models established for the selected assets in each country. These NPVs represent future net revenue, after taxes, attributable to the interests of CNODCI, discounted over the economic life of the project at the SEC specified discount rate of ten percent to a present value as of December 31, 2017. Unless otherwise stated, no opening tax positions were considered.

1. RESULTS SUMMARY

1.1 Net Reserves

The following table presents the net entitlement for Total Proved reserves attributable to CNODCI’s working interests (Wl) estimated in accordance with SEC guidelines. They were prepared using the methodology described above.

NET ENTITLEMENT PROVED RESERVES

AS OF DECEMBER 31, 2017

Country	Total Proved
	Oil		Sales Gas		NGL
	(Mstb)		(Bcf)		(Mstb)
Chad		95,546		0		0
Iraq – West Qurna		85,021		0		0
Peru – Block X		24,934		27.012		0
Peru – Block 57		0		371.824		24,968
TOTAL CNODCI		205,501		398.836		24,968

Notes:

1. CNODCI holds a 90% Wl in Chad, a 34.413 % Wl plus Carry in West Qurna, a 100% Wl in Block X (Peru) and a 46.16% Wl in Block 57 (Peru) assets. A royalty of 12 ¹⁄₂% in Permit H (Chad) is paid in kind; therefore, it is deducted from the Gross Reserves volumes. Net reserves are Wl volumes less royalty volumes. Royalty volumes are zero for both Peru Block X and Block 57 due to the fact that government takes a production tax instead. This leads to the fact that net and gross sales gas volumes are equal once adjusted for Wl.

2. Both Chad and West Qurna assets produce oil only. Block X produces oil and solution gas. Block 57 produces gas and NGL. Gas has been discovered in some structures in Chad, but at this time there is no market available for the gas.

RYDER SCOTT COMPANY    PETROLEUM CONSULTANTS

PetroChina Company Limited

March 14, 2018

Page 3

1.2 Gross Volumes

Gross production volumes are presented for reference information only. Gross volumes include volumes attributable to third parties, government and other working interest partners.

GROSS PROVED RESERVES

AS OF DECEMBER 31, 2017

Country	Total Proved
	Oil (Mstb)		Sales Gas (Bcf)		NGL (Mstb)
Chad		123,563		0		0
Iraq – West Qurna		1,343,631		0		0
Peru – Block X		24,934		27.012		0
Peru – Block 57		0		870.062		54,089
TOTAL CNODC		1,492,128		897.074		54,089

1.3 Net Present Values

The NPVs as of December 31, 2017 of estimated before tax cash flows discounted at 10 percent, attributable to CNODCI’s working interest in the projects identified above (excluding any balance sheet adjustments or financing costs), are summarized below.

NET PRESENT VALUES ATTRIBUTABLE TO CNODCI

AS OF DECEMBER 31, 2017

DISCOUNT RATE 10%

Country	Total Proved (US$M)
Chad		2,757,995
Iraq – West Qurna		378,536
Block X		505,423
Block 57		330,980
TOTAL CNODCI		3,972,934

Notes:

1. NPVs in Chad, West Qurna, Block X and Block 57 assets represent CNODCI’s 90%, 34.413%, 100% and 46.16% Wl, respectively.

Reserves are those quantities of petroleum that are anticipated to be economically producible by application of development projects to known accumulations from a given date forward under defined conditions. Reserves must further satisfy four criteria: they must be discovered, recoverable, commercial and remaining (as of the evaluation date) based on the development project(s) applied. Reserves are further categorized in accordance with the level of certainty associated with the estimates and may be sub-classified based on project maturity and/or characterized by development and production status. All categories of reserve volumes quoted herein have been determined within the context of an economic limit test (pre-tax and exclusive of accumulated depreciation amounts) assessment prior to any NPV analysis.

RYDER SCOTT COMPANY    PETROLEUM CONSULTANTS

PetroChina Company Limited

March 14, 2018

Page 4

We are independent petroleum engineers with respect to CNODCI. Neither we nor any of our employees have any financial interest in the subject properties and neither the employment to do this work nor the compensation is contingent on our estimates of reserves for the properties which were reviewed.

The results of these studies, presented herein, are based on technical analysis conducted by teams of geoscientists and engineers from Ryder Scott.

This third party report is provided subject to all the terms, conditions and qualifications set-out in the Ryder Scott reports on these assets that are mentioned at the start of this letter report.

It should be clearly noted that the NPVs contained herein do not represent a Ryder Scott opinion as to the market value of the subject property, nor any interest in it.

Oil and NGL volumes appearing in this report have been quoted at stock tank conditions. Typically these volumes have been referred to in thousand barrel increments (Mstb). Natural gas volumes have been quoted in billions of standard cubic feet (Bscf) and are volumes of sales gas, after an allocation has been made for fuel and process shrinkage losses, at the standard conditions appropriate for the area.

It is Ryder Scott’s opinion that the estimates of total proved oil, gas and NGL volumes at December 31, 2017, summarized herein based on official reports submitted earlier to CNODCI, are, in the aggregate, reasonable and the reserves classification and categorization is appropriate and consistent with the SEC definitions and guidelines for reserves.

Very truly yours,

RYDER SCOTT COMPANY, L.P. TBPE Firm Registration No. F-1580
John MacDonald, P.Eng. APEGA License No. 32634 Vice President
Timour Baichev, P.Eng. APEGA License No. 87454 Vice President

DJM-TB (DPR)/pl

RYDER SCOTT COMPANY    PETROLEUM CONSULTANTS

EX-15.3

Page 1 of 19

Exhibit 15.3

PETROCHINA CANADA LTD.

RESERVES ASSESSMENT AND

EVALUATION OF

CANADIAN OIL AND GAS PROPERTIES

DUVERNAY AND GROUNDBIRCH ASSETS (SEC)

Effective December 31, 2017

1171386

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DUVERNAY AND GROUNDBIRCH ASSETS (SEC)

TABLE OF CONTENTS

	Page
COVER LETTER		3
INDEPENDENT PETROLEUM CONSULTANTS’ CONSENT		5
INTRODUCTION		7
SEC RESERVES DEFINITIONS		8
EVALUATION PROCEDURE		13
PRODUCT PRICE AND MARKET FORECASTS		17

2 March 02, 2018 10:55:50  

	February 20, 2017 Project 1171386

Mr. Michael Fox

PetroChina Canada Ltd.

Suite 2700, 707-5 Street SW

Calgary, Alberta T2P 1V8

Dear Sir:

Re: PetroChina Canada Ltd.

Third Party Corporate Evaluation

Duvernay and Groundbirch Assets

Effective December 31, 2017

GLJ Petroleum Consultants (GLJ) has completed an independent reserves assessment and evaluation of the oil and gas properties of PetroChina Canada Ltd. (the “Company”) as requested by the Company. The effective date of this evaluation is December 31, 2017.

This report has been prepared for the Company for the purpose of annual disclosure and other financial requirements. This evaluation has been prepared in accordance with reserves definitions, standards and procedures of the United States Securities and Exchange Commission (SEC). All values contained herein are in Canadian dollars.

It was GLJ’s primary mandate in this evaluation to provide an independent evaluation of the oil and gas reserves of the Company in aggregate. Accordingly, it may not be appropriate to extract individual property or entity estimates for other purposes. Our engagement letter notes these limitations on the use of this report.

This report represents a subset of the final corporate reserves of the Company, dated December 21, 2017. The reserves and values contained herein include the Duvernay joint venture assets (Kaybob Duvernay, Willesden Green Duvernay and Simonette Montney properties) and Groundbirch Montney asset. For further details please refer to the final SEC report of the Company dated December 21, 2017.

A summary of the reserves in barrels of oil equivalent and values for the Duvernay joint venture and Groundbirch Montney assets, as extracted from the corporate reserves report of the Company, are illustrated in the following tables.

4100, 400 - 3^rd Ave SW Calgary, AB, Canada T2P 4H2 | tel 403-266-9500 | gljpc.com

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Summary of Reserves

Company Proved Reserves

Effective December 31, 2017

	Proved Developed		Proved Undeveloped		Total Proved
Total Oil (Mbbl)
Duvernay Joint Venture		257		0		257
Groundbirch Montney		0		0		0
Total Sales Gas (MMcf)
Duvernay Joint Venture		109,975		227,762		337,738
Groundbirch Montney		22,893		0		22,893
Natural Gas Liquids (Mbbl)
Duvernay Joint Venture		14,059		27,763		41,822
Groundbirch Montney		196		0		196
Oil Equivalent (Mboe)
Duvernay Joint Venture		32,646		62,437		98,369
Groundbirch Montney		4,012		0		4,012

Summary of Values

Company Net Present Value at 10% Discount Factor

Effective December 31, 2017

Asset	Proved Developed		Proved Undeveloped		Total Proved
	($M)		($M)		($MM)
Duvernay Joint Venture		456,257		354,328		810,603
Groundbirch Montney		-5,850		0		-5,850

The volumes and values of reserves as presented for the Groundbirch Montney asset are representative of the first year of forecast production and is currently sub-economic at current commodity prices, using the SEC 2017-Dec-31 posted first day of the month, 12 month average commodity pricing. Please refer to the Duvernay and Groundbirch property reports for further details.

Please refer to the following sections for details of reserves methodology, results of the reserves evaluation and key factors used in the evaluation. It is trusted that this evaluation meets your current requirements. Should you have any questions regarding this analysis, please contact the undersigned.

Yours very truly,

GLJ PETROLEUM CONSULTANTS LTD.

Trisha S. MacDonald, P. Eng.

Manager, Engineering

TSM/JLA/ljn

Attachments

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INDEPENDENT PETROLEUM CONSULTANTS’ CONSENT

The undersigned firm of Independent Petroleum Consultants of Calgary, Alberta, Canada has prepared an independent evaluation of the PetroChina Canada Ltd. (the “Company”) Canadian oil and gas properties and hereby gives consent to the use of its name and to the said estimates. The effective date of the evaluation is December 31, 2017.

In the course of the evaluation, the Company provided GLJ Petroleum Consultants Ltd. personnel with basic information which included land data, well information, geological information, reservoir studies, estimates of on-stream dates, contract information, current hydrocarbon product prices, operating cost data, capital budget forecasts, financial data and future operating plans. Other engineering, geological or economic data required to conduct the evaluation and upon which this report is based, were obtained from public records, other operators and from GLJ Petroleum Consultants Ltd. nonconfidential files. The Company has provided a representation letter confirming that all information provided to GLJ Petroleum Consultants Ltd. is correct and complete to the best of its knowledge. Procedures recommended in the United States Securities and Exchange Commission (SEC) to verify certain interests and financial information were applied in this evaluation. In applying these procedures and tests, nothing came to GLJ Petroleum Consultants Ltd.’s attention that would suggest that information provided by the Company was not complete and accurate. GLJ Petroleum Consultants Ltd. reserves the right to review all calculations referred to or included in this report and to revise the estimates in light of erroneous data supplied or information existing but not made available which becomes known subsequent to the preparation of this report.

The accuracy of any reserves and production estimate is a function of the quality and quantity of available data and of engineering interpretation and judgment. While reserves and production estimates presented herein are considered reasonable, the estimates should be accepted with the understanding that reservoir performance subsequent to the date of the estimate may justify revision, either upward or downward.

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Revenue projections presented in this report are based in part on forecasts of market prices, currency exchange rates, inflation, market demand and government policy which are subject to many uncertainties and may, in future, differ materially from the forecasts utilized herein. Present values of revenues documented in this report do not necessarily represent the fair market value of the reserves evaluated herein.

PERMIT TO PRACTICE
GLJ PETROLEUM CONSULTANTS LTD.
Signature:
Date:	December 21, 2017
PERMIT NUMBER:    P  2066
The Association of Professional Engineers and Geoscientists of Alberta

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INTRODUCTION

GLJ Petroleum Consultants (GLJ) was commissioned by PetroChina Canada Ltd. (the “Company”) to prepare an independent evaluation of its oil and gas reserves effective December 31, 2017. The locations of the most significant reserves properties are indicated on the attached index map.

The evaluation was initiated in August 2017 and completed by December 2017. Estimates of reserves and projections of production were generally prepared using well information and production data available from public sources to approximately September 30, 2017. The Company provided land, accounting data and other technical information not available in the public domain to approximately December 15, 2017. In certain instances, the Company also provided recent engineering, geological and other information up to December 15, 2017. The Company has confirmed that, to the best of its knowledge, all information provided to GLJ is correct and complete as of the effective date.

The reserves definitions used in preparing this report (included herein under “Reserves Definitions”) are those required by the United States Securities Exchange Commission (SEC). The summary of reserves and value, using the SEC reserves definitions, uses the average historical prices derived from the first day of the month for January to December 2017.

The evaluation was conducted on the basis of the average of the first day posted prices in each of the 12 months of the Company’s fiscal year summarized in the Product Price and Market Forecasts section of this report.

Tables summarizing production, royalties, costs, revenue projections, reserves and present value estimates for various reserves categories for individual properties and the Company total are provided in the tabbed sections of this Summary Report.

The Evaluation Procedure section outlines general procedures used in preparing this evaluation. The individual property reports, provided under separate cover, provide additional evaluation details. The following summarizes evaluation matters that have been included/excluded in cash flow projections:

• The effect on projected revenues of the Company’s financial hedging activity has not been included,

• provisions for the abandonment and reclamation of all of the Company’s existing and future wells to which reserves have been attributed have been included; all other abandonment and reclamation costs have not been included,

• general and administrative (G&A) costs and overhead recovery have not been included,

• undeveloped land values have not been included.

Economic forecasts are provided on an after tax basis including tax pools provided by the Company in the “Evaluation Procedure” section.

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SEC RESERVES DEFINITIONS

The following definitions are excerpts from Regulation S-X 210.4-10. Portions of these definitions within square parentheses, [    ], have been transposed from other sections of Regulation S-X 210.4-10 to improve readability.

Resources

Resources are quantities of oil and gas estimated to exist in naturally occurring accumulations. A portion of the resources may be estimated to be recoverable, and another portion may be considered to be unrecoverable. Resources include both discovered and undiscovered accumulations.

Reserves

Reserves are estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in the production, installed means of delivering oil and gas or related substances to market, and all permits and financing required to implement the project.

Note: Reserves should not be assigned to adjacent reservoirs isolated by major, potentially sealing, faults until those reservoirs are penetrated and evaluated as economically producible. Reserves should not be assigned to areas that are clearly separated from a known accumulation by a non-productive reservoir (i.e. , absence of reservoir, structurally low reservoir, or negative test results). Such areas may contain prospective resources (i.e., potentially recoverable resources from undiscovered accumulations).

Proved Oil and Gas Reserves

Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.

(i) The area of the reservoir considered as proved includes:

(A) The area identified by drilling and limited by fluid contacts, if any, and

(B) Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible oil or gas on the basis of available geoscience and engineering data.

(ii) In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons (LKH) as seen in a well penetration unless geoscience, engineering, or performance data and reliable technology establishes a lower contact with reasonable certainty.

(iii) Where direct observation from well penetrations has defined a highest known oil (HKO) elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in the

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structurally higher portions of the reservoir only if geoscience, engineering, or performance data and reliable technology establish the higher contact with reasonable certainty.

(iv) Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when:

(A) Successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and

(B) The project has been approved for development by all necessary parties and entities, including governmental entities.

(v) Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.

Probable Reserves

Probable reserves are those additional reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered.

(i) When deterministic methods are used, it is as likely as not that actual remaining quantities recovered will exceed the sum of estimated proved plus probable reserves. When probabilistic methods are used, there should be at least a 50% probability that the actual quantities recovered will equal or exceed the proved plus probable reserves estimates.

(ii) Probable reserves may be assigned to areas of a reservoir adjacent to proved reserves where data control or interpretations of available data are less certain, even if the interpreted reservoir continuity of structure or productivity does not meet the reasonable certainty criterion. Probable reserves may be assigned to areas that are structurally higher than the proved area if these areas are in communication with the proved reservoir.

(iii) Probable reserves estimates also include potential incremental quantities associated with a greater percentage recovery of the hydrocarbons in place than assumed for proved reserves.

(iv) [The proved plus probable and proved plus probable plus possible reserves estimates must be based on reasonable alternative technical and commercial interpretations within the reservoir or subject project that are clearly documented, including comparisons to results in successful similar projects.]

[Where direct observation has defined a highest known oil (HKO) elevation and the potential exists for an associated gas cap, proved oil reserves should be assigned in the structurally higher portions of the reservoir above the HKO only if the higher contact can be established with reasonable certainty through reliable technology. Portions of the reservoir that do not meet this reasonable certainty criterion may be assigned as probable and possible oil or gas based on reservoir fluid properties and pressure gradient interpretations.]

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Possible Reserves

Possible reserves are those additional reserves that are less certain to be recovered than probable reserves.

(i) When deterministic methods are used, the total quantities ultimately recovered from a project have a low probability of exceeding proved plus probable plus possible reserves. When probabilistic methods are used, there should be at least a 10% probability that the total quantities ultimately recovered will equal or exceed the proved plus probable plus possible reserves estimates.

(ii) Possible reserves may be assigned to areas of a reservoir adjacent to probable reserves where data control and interpretations of available data are progressively less certain. Frequently, this will be in areas where geoscience and engineering data are unable to define clearly the area and vertical limits of commercial production from the reservoir by a defined project.

(iii) Possible reserves also include incremental quantities associated with a greater percentage recovery of the hydrocarbons in place than the recovery quantities assumed for probable reserves.

(iv) The proved plus probable and proved plus probable plus possible reserves estimates must be based on reasonable alternative technical and commercial interpretations within the reservoir or subject project that are clearly documented, including comparisons to results in successful similar projects.

(v) Possible reserves may be assigned where geoscience and engineering data identify directly adjacent portions of a reservoir within the same accumulation that may be separated from proved areas by faults with displacement less than formation thickness or other geological discontinuities and that have not been penetrated by a wellbore, and the registrant believes that such adjacent portions are in communication with the known (proved) reservoir. Possible reserves may be assigned to areas that are structurally higher or lower than the proved area if these areas are in communication with the proved reservoir.

(vi) Where direct observation has defined a highest known oil (HKO) elevation and the potential exists for an associated gas cap, proved oil reserves should be assigned in the structurally higher portions of the reservoir above the HKO only if the higher contact can be established with reasonable certainty through reliable technology. Portions of the reservoir that do not meet this reasonable certainty criterion may be assigned as probable and possible oil or gas based on reservoir fluid properties and pressure gradient interpretations.

Developed Oil and Gas Reserves

Developed oil and gas reserves are reserves of any category that can be expected to be recovered:

(i) Through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and

(ii) Through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well.

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Undeveloped Oil and Gas Reserves

Undeveloped oil and gas reserves are reserves of any category that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion.

(i) Reserves on undrilled acreage shall be limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances.

(ii) Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances, justify a longer time.

(iii) Under no circumstances shall estimates for undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir [see Other Definitions below], or by other evidence using reliable technology establishing reasonable certainty.

Other Pertinent Definitions

Analogous Reservoir

Analogous reservoirs, as used in resources assessments, have similar rock and fluid properties, reservoir conditions (depth, temperature, and pressure) and drive mechanisms, but are typically at a more advanced stage of development than the reservoir of interest and thus may provide concepts to assist in the interpretation of more limited data and estimation of recovery. When used to support proved reserves, an “analogous reservoir” refers to a reservoir that shares the following characteristics with the reservoir of interest:

(i) Same geological formation (but not necessarily in pressure communication with the reservoir of interest);

(ii) Same environment of deposition;

(iii) Similar geological structure; and

(iv) Same drive mechanism.

Reasonable Certainty

If deterministic methods are used, reasonable certainty means a high degree of confidence that the quantities will be recovered. If probabilistic methods are used, there should be at least a 90% probability that the quantities actually recovered will equal or exceed the estimate. A high degree of confidence exists if the quantity is much more likely to be achieved than not, and, as changes due to increased availability of geoscience (geological, geophysical, and geochemical), engineering, and economic data are made to estimated ultimate recovery (EUR) with time, reasonably certain EUR is much more likely to increase or remain constant than to decrease.

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Reliable Technology

Reliable technology is a grouping of one or more technologies (including computational methods) that has been field tested and has been demonstrated to provide reasonably certain results with consistency and repeatability in the formation being evaluated or in an analogous formation.

Reservoir

A porous and permeable underground formation containing a natural accumulation of producible oil and/or gas that is confined by impermeable rock or water barriers and is individual and separate from other reservoirs.

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EVALUATION PROCEDURE

TABLE OF CONTENTS

INTEREST DESCRIPTIONS	14
WELL DATA	14
ACCOUNTING SUMMARY	14
PRODUCTION FORECASTS	14
AFTER TAX ANALYSIS	15
ECONOMIC PARAMETERS	15
OIL EQUIVALENT OR GAS EQUIVALENT	15
LIST OF ABBREVIATIONS	16

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EVALUATION PROCEDURE

The following outlines the methodology employed by GLJ Petroleum Consultants (GLJ) in conducting the evaluation of the Company’s oil and gas properties. GLJ evaluation procedures are in compliance with standards outlined in the SPE-PRMS evaluation guidelines.

INTEREST DESCRIPTIONS

The Company provided GLJ with current land interest information. The Company provided a representation letter confirming accuracy of land information. Certain cross-checks of land and accounting information were undertaken by GLJ as recommended in the COGE Handbook. In this process, nothing came to GLJ’s attention that indicated that information provided by the Company was incomplete or unreliable.

In GLJ’s reports, “Company Interest” reserves and values refer to the sum of royalty interest* and working interest reserves before deduction of royalty burdens payable. “Working Interest” reserves equate to those reserves that are referred to as “Company Gross” reserves. Reserves and values reported herein are generally consistent with disclosure rules as required by the SEC.

^*Royalty interest reserves include royalty volumes derived only from other working interest owners.

WELL DATA

Pertinent interest and offset well data such as drill stem tests, workovers, pressure surveys, production tests, etc., were provided by the Company or were obtained from other operators, public records or GLJ nonconfidential files.

ACCOUNTING SUMMARY

The Company provided GLJ with available accounting data on a property basis and for the corporate total for the period January 1, 2017, to July 31, 2017. In some circumstances this information was also provided on a cost center basis to address major reserves entities that are a subset of a Company property. The Company has also provided historical accounting data by property and corporate totals for 2015 to 2016.

PRODUCTION FORECASTS

In establishing all production forecasts, consideration was given to existing gas contracts and the possibility of contract revisions, to the operator’s plans for development drilling and to reserves and well capability. Generally, development drilling in an area was not considered unless there was some indication from the operator that drilling could be expected.

The on-stream date for currently shut-in reserves was estimated with consideration given to the following:

• proximity to existing facilities

• plans of the operator

• economics

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AFTER TAX ANALYSIS

Canadian income taxes were calculated based on currently legislated federal and provincial tax rates, tax regulations and tax pool information provided by the Company. After tax values for reserves development status or production status subcategories (i.e. developed, undeveloped, producing, non-producing) are calculated by difference.

Tax Pools

The Company provided tax pool information pertinent to the Duvernay joint venture assets and Groundbirch Montney asset. For further information regarding after tax analysis and specific tax pool information, please refer to the comprehensive SEC report dated December 21, 2017

ECONOMIC PARAMETERS

Pertinent economic parameters are listed as follows:

a) The effective date is December 31, 2017.

b) Operating and capital costs were estimated in 2018 dollars and then escalated as summarized in the Product Price and Market Forecasts section of this report.

c) Economic forecasts were prepared for each property on a before income tax basis. Detailed discounting of future cash flow was performed using a discount factor of 10.0 percent with all values discounted annually to December 31, 2017, on a mid-calendar-year basis.

d) Royalty holidays applicable to existing wells or forecast drilling are included in individual well economics. These credits are itemized within the property reports.

e) Gas processing allowances relating to remaining undepreciated capital bases, were included in individual property economic evaluations.

f) Mineral taxes on freehold interests were included.

g) Field level overhead charges have been included; recovery of overhead expenses has not been included.

h) The Company’s office G&A costs have not been included.

i) Abandonment and reclamation costs for all existing and future wells to which reserves have been assigned have been included at the property level. Costs have been scheduled 5 years after the last year of production for each well. Additional abandonment and reclamation costs associated with pipelines and facilities have not been included in this analysis.

OIL EQUIVALENT OR GAS EQUIVALENT

In this report, quantities of hydrocarbons have been converted to barrels of oil equivalent (boe); or to sales gas equivalent (sge) using factors of 6 Mcf/boe for gas, 1 bbl/boe for all liquids, and 0 boe for sulphur. Users of oil equivalent values are cautioned that while boe based metrics are useful for comparative purposes, they may be misleading when used in isolation.

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LIST OF ABBREVIATIONS

AOF	absolute open flow
bbl	barrels
Bcf	billion cubic feet of gas at standard conditions
BIIP	bitumen initially-in-place
boe	barrel of oil equivalent, in this evaluation determined using 6 Mcf/boe for gas, 1 bbl/boe for all liquids, and 0 boe for sulphur
bopd	barrels of oil per day
Btu	British thermal units
bwpd	barrels of water per day
DSU	drilling spacing unit
GCA	gas cost allowance
GIIP	gas initially-in-place
GOC	gas-oil contact
GOR	gas-oil ratio
GORR	gross overriding royalty
GWC	gas-water contact
Mbbl	thousand barrels
Mboe	thousand boe
Mcf	thousand cubic feet of gas at standard conditions
Mcfe	thousand cubic feet of gas equivalent
Mlt	thousand long tons
M$	thousand dollars
MM$	million dollars
MMbbl	million barrels
MMboe	million boe
MMBtu	million British thermal units
MMcf	million cubic feet of gas at standard conditions
MRL	maximum rate limitation
Mstb	thousand stock tank barrels
MMstb	million stock tank barrels
NGL	natural gas liquids (ethane, propane, butane and condensate)
NPI	net profits interest
OIIP	oil initially-in-place
ORRI	overriding royalty interest
OWC	oil-water contact
P&NG	petroleum and natural gas
PIIP	petroleum initially-in-place
psia	pounds per square inch absolute
psig	pounds per square inch gauge
PVT	pressure-volume-temperature
RLI	reserves life index, calculated by dividing reserves by the forecast of first year production
scf	standard cubic feet
sge	sales gas equivalent – if presented in this evaluation, determined using 1 barrel of oil or natural gas liquid = 6 Mcfe; 0 for sulphur
stb	stock tank barrel
WI	working interest
WTI	West Texas Intermediate

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Table 1

GLJ Petroleum Consultants

Crude Oil and Natural Gas Liquids

SEC 2017-Dec-31 Posted (12 Month Avg.)

Effective January 1, 2018

NYMEX WTI Near Month Futures Contract Crude Oil at Cushing, Oklahoma

Brent Blend Crude Oil FOB North Sea

Light, Sweet Crude Oil (40 API, 0.3%S) at Edmonton

Bow River Crude Oil Stream Quality at Hardisty

WCS Crude Oil Stream Quality at Hardisty

Heavy Crude Oil Proxy (12 API) at Hardisty

Light Sour Crude Oil (35 API, 1.2%S) at Cromer

Medium Crude Oil (29 API, 2.0%S) at Cromer

Alberta Natural Gas Liquids (Then Current Dollars)

Inflation %

CADUSD Exchange Rate USD/CAD

Constant 2018$ USD/bbl

Then Current USD/bbl

Then Current USD/bbl

Then Current CAD/bbl

Then Current CAD/bbl

Then Current CAD/bbl

Then Current CAD/bbl

Then Current CAD/bbl

Then Current CAD/bbl

Spec Ethane CAD/bbl

Edmonton Propane CAD/bbl

Edmonton Butane CAD/bbl

Edmonton C5+ Stream Quality CAD/bbl

0.0

0.7690

51.03

51.03

54.07

63.43

51.48

51.09

45.18

62.68

60.55

7.28

28.38

44.70

67.46

Table 2

GLJ Petroleum Consultants

Natural Gas and Sulphur

SEC 2017-Dec-31 Posted (12 Month Avg.)

Effective January 1, 2018

Midwest Price at Chicago

Alliance Transfer Pool Spot

Alberta Plant Gate

NYMEX Henry Hub Near Month Contract

AECO/NIT Spot

Spot

Saskatchewan Plant Gate

British Columbia

Constant 2018 $ USD/ MMBtu

Then Current USD/MMBtu

Then Current USD/MMBtu

Then Current CAD/ MMBtu

Then Current CAD/ MMBtu

Constant 2018 $ CAD/ MMBtu

Then Current CAD/ MMBtu

ARP CAD/ MMBtu

SaskEnergy CAD/ MMBtu

Spot CAD/ MMBtu

Sumas Spot USD/ MMBtu

Westcoast Station 2 CAD/ MMBtu

Spot Plant Gate CAD/ MMBtu

Sulphur FOB Vancouver USD/lt

Alberta Sulphur at Plant Gate CAD/lt

2.98

2.98

2.86

2.35

2.45

2.09

2.09

2.09

2.19

2.25

2.73

1.44

1.23

85.75

61.51

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Table 3

GLJ Petroleum Consultants

International and Frontier

SEC 2017-Dec-31 Posted (12 Month Avg.)

Effective January 1, 2018

Inflation %	CADUSD Exchange Rate USD/CAD						NYMEX WTI Near Month Futures Contract Crude Oil at Cushing, Oklahoma				Light Louisiana Sweet Crude Oil				Maya Crude Oil				Brent Blend Crude Oil FOB NorthSea				NYMEX Henry Hub Near Month Contract				Algonquin City- Gates				National Balancing Point (UK)
			GBPUSD Exchange Rate USD/GBP		EURUSD Exchange Rate USD/EUR		Then Current USD/bbl		Then Current CAD/bbl		Then Current USD/bbl		Then Current CAD/bbl		Then Current USD/bbl		Then Current CAD/bbl		Then Current USD/bbl		Then Current CAD/bbl		Then Current USD/ MMBtu		Then Current CAD/ MMBtu		Then Current USD/ MMBtu		Then Current CAD/ MMBtu		Then Current USD/ MMBtu		Then Current CAD/ MMBtu
0.0		0.7690		1.2560		1.1260		51.03		66.36		54.18		70.46		47.06		61.20		54.07		70.31		2.98		3.88		3.06		3.98		6.50		8.45

Table 4

GLJ Petroleum Consultants

US Liquids and Natural Gas

SEC 2017-Dec-31 Posted (12 Month Avg.)

Effective January 1, 2018

US Natural Gas Liquids (Then Current Dollars)															US Natural Gas (Then Current Dollars)
Conway							Mont Belvieu								Rockies Natural Gas USD/MMBtu		Algonquin City-Gates Natural Gas USD/MMBtu
80%-20% E/P Mix USD/bbl	Propane USD/bbl		Butane USD/bbl		Condensate USD/bbl		Ethane USD/bbl		Propane USD/bbl		Butane USD/bbl		Condensate USD/bbl
7.71		32.03		38.50		48.63		10.57		34.04		38.29		49.86		2.72		3.06

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EX-15.4

Exhibit 15.4

January 31, 2018

China National Oil and Gas Exploration

And Development Corporation

International Holding Ltd (“CNODCI”)

No.6-1 Fuchengmen Beidajie

Xicheng District

Beijing, China 100034

Attention:	Mr. Lv Gong Xun, President
Reference:	CNODCI Interest in PetroKazakhstan Inc.
	Evaluation of Crude Oil Reserves
	Third Party Report

Dear Sir:

1. INTRODUCTION

McDaniel & Associates Consultants Ltd. (“McDaniel”) was requested by PetroKazakhstan Inc. (“PKI”) to prepare an evaluation of the crude oil reserves and the net present values of these reserves for the interests of PKI in the South Turgai Basin, Republic of Kazakhstan, effective as of December 31, 2017. McDaniel submitted to PKI an Executive Summary Report and Detailed Technical Report for the evaluation of PKI in January 2018.

PKI is an integrated oil and gas company, owned 67 percent by CNODCI and 33 percent by JSC KazMunaiGas Exploration Production (“KMG EP”). PKI requested McDaniel to prepare this Third Party Report for CNODCI based on the 67 percent interest owned by CNODCI in PKI for the assets of CNODCI that are held within three operating subsidiaries: PetroKazakhstan Kumkol Resources (“PKKR”), Kolzhan LLP (“Kolzhan”) and PetroKazakhstan Ventures Inc. (“PKVI”).

This report was prepared to support PKI’s and CNODCI’s annual securities filings with the SEC. The data employed in this evaluation and the assumptions and procedures used to estimate the reserves and net present values are consistent with standard industry reserves evaluation procedures.

2. METHODOLOGY

Crude oil reserves estimates and their associated net present values were evaluated in this report by McDaniel & Associates Consultants Ltd. for the interests of PKI in Kazakhstan.

Essentially all of the basic information employed in the preparation of this report was obtained from PKI including geological, geophysical, engineering and financial data. McDaniel utilized this data to prepare an independent assessment of the crude oil reserves as of December 31, 2017. The reserves estimates presented in this report have been prepared in accordance with the United States Securities and Exchange Commission (SEC) reserves definitions and guidance (see Section 3). Only the proved reserves and sub-classifications were included in this report.

2200, Bow Valley Square 3, 255 - 5 Avenue SW, Calgary AB T2P 3G6      Tel: (403) 262-5506      Fax: (403) 233-2744      www.mcdan.com

CNODCI Interest in PetroKazakhstan Inc. Evaluation of Oil and Gas Reserves – Third Party Report Page  2 January 31, 2018

Net present value estimates were calculated based on future revenue forecasts. As per SEC guidelines, the future net revenues and net present values presented were calculated using the first day of the month crude oil prices for each of the 12 months prior to the effective date of December 31, 2017 and were presented in United States dollars. No escalation of the prices were made nor were the operating and capital costs increased for inflation in this evaluation. Future capital costs and operating costs were based on PKI budgets for each respective property with adjustments as deemed appropriate by McDaniel.

3. RESERVES DEFINITIONS

The SEC reserves definitions are contained in the Final Rule of Modernization of Oil and Gas Reporting (17 CFR Parts 210, 211, 229 and 249) published by the SEC Regulation on January 14, 2009. A summary of the key proved reserves definitions in Regulation S-X 210.4-10 is presented below.

Reserves

Reserves are estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in the production, installed means of delivering oil and gas or related substances to market, and all permits and financing required to implement the project.

Note: Reserves should not be assigned to adjacent reservoirs isolated by major, potentially sealing, faults until those reservoirs are penetrated and evaluated as economically producible. Reserves should not be assigned to areas that are clearly separated from a known accumulation by a non- productive reservoir (i.e., absence of reservoir, structurally low reservoir, or negative test results). Such areas may contain prospective resources (i.e., potentially recoverable resources from undiscovered accumulations).

Proved Oil and Gas Reserves

Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.

(i) The area of the reservoir considered as proved includes:

(A) The area identified by drilling and limited by fluid contacts, if any, and

(B) Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible oil or gas on the basis of available geoscience and engineering data.

(ii) In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons (LKH) as seen in a well penetration unless geoscience, engineering, or performance data and reliable technology establishes a lower contact with reasonable certainty.

(iii) Where direct observation from well penetrations has defined a highest known oil (HKO) elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering, or performance data and reliable technology establish the higher contact with reasonable certainty.

CNODCI Interest in PetroKazakhstan Inc. Evaluation of Oil and Gas Reserves – Third Party Report Page  3 January 31, 2018

(iv) Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when:

(A) Successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and

(B) The project has been approved for development by all necessary parties and entities, including governmental entities.

(v) Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.

Analogous Reservoir

Analogous reservoirs, as used in resources assessments, have similar rock and fluid properties, reservoir conditions (depth, temperature, and pressure) and drive mechanisms, but are typically at a more advanced stage of development than the reservoir of interest and thus may provide concepts to assist in the interpretation of more limited data and estimation of recovery. When used to support proved reserves, an “analogous reservoir” refers to a reservoir that shares the following characteristics with the reservoir of interest:

(i) Same geological formation (but not necessarily in pressure communication with the reservoir of interest);

(ii) Same environment of deposition; (iii) Similar geological structure; and (iv) Same drive mechanism.

Reasonable Certainty

If deterministic methods are used, reasonable certainty means a high degree of confidence that the quantities will be recovered. If probabilistic methods are used, there should be at least a 90 percent probability that the quantities actually recovered will equal or exceed the estimate. A high degree of confidence exists if the quantity is much more likely to be achieved than not, and, as changes due to increased availability of geoscience (geological, geophysical, and geochemical), engineering, and economic data are made to estimated ultimate recovery (EUR) with time, reasonably certain EUR is much more likely to increase or remain constant than to decrease.

CNODCI Interest in PetroKazakhstan Inc. Evaluation of Oil and Gas Reserves – Third Party Report Page  4 January 31, 2018

4. EVALUATION SUMMARY

4.1 NET RESERVES

The net share of proved developed, proved undeveloped and total proved crude oil reserves as of December 31, 2017 attributable to CNODCI for each of the three subsidiary companies are summarized below.

CNODCI’S NET ENTITLEMENT OF PROVED RESERVES⁽¹⁾

AS OF DECEMBER 31, 2017

	Proved Developed		Proved Undeveloped		Total Proved
Crude Oil, Mbbl
PKKR		15,500		1,579		17,079
Kolzhan		7,295		3,476		10,770
PKVI		818		334		1,152
Total		23,613		5,389		29,001

(1) Net entitlement reserves are the working interest reserves in each property after deducting royalties payable to others. In the case of all properties, there are no royalties payable to others.

4.2 GROSS RESERVES

The total proved developed, proved undeveloped and total proved crude oil reserves as of December 31, 2017 for each of the three subsidiary companies are presented below for reference purposes only. These gross reserves estimates are based on a 100 percent working interest in each of the properties and include all reserves attributable to government and working interest partners.

GROSS PROVED RESERVES

AS OF DECEMBER 31, 2017

	Proved Developed		Proved Undeveloped		Total Proved
Crude Oil, Mbbl
PKKR		23,135		2,357		25,492
Kolzhan		17,569		9,045		26,614
PKVI		1,628		665		2,293
Total		42,332		12,067		54,399

4.3 NET PRESENT VALUES

The net present values for the proved developed, proved undeveloped and total proved crude oil reserves as of December 31, 2017 attributable to CNODCI for each of the three subsidiary companies are presented below. All of the net present values have been presented at a 10 percent discount rate.

CNODCI Interest in PetroKazakhstan Inc. Evaluation of Oil and Gas Reserves – Third Party Report Page  5 January 31, 2018

CNODCI NET PRESENT VALUES DISCOUNTED AT 10 PERCENT

AS OF DECEMBER 31, 2017, $MM

	Proved Developed		Proved Undeveloped		Total Proved
PKKR		155		24		179
Kolzhan		80		41		122
PKVI		11		5		16
Total		246		70		317

4.4 NET PRESENT VALUES SENSITIVITY ANALYSIS

A sensitivity analysis has been prepared for the net present values for the proved developed, proved undeveloped and total proved crude oil reserves as of December 31, 2017 attributable to CNODCI for each of the three subsidiary companies. At the request of PKI, all of the oil prices, capital costs and operating costs have been escalated at two percent per year throughout the evaluation period.

CNODCI NET PRESENT VALUES SENSITIVITY DISCOUNTED AT 10 PERCENT

AS OF DECEMBER 31, 2017, $MM

	Proved Developed		Proved Undeveloped		Total Proved
PKKR		158		25		183
Kolzhan		83		44		127
PKVI		12		5		17
Total		253		74		327

5 SUMMARY TABLES

Summary tables showing the reserves, reserves reconciliation, future production forecasts and future revenue forecasts are presented in the Appendix for each of the three subsidiary companies.

6 BASIS OF OPINION

McDaniel & Associates Consultants Ltd. has over 60 years of experience in the evaluation of oil and gas properties. McDaniel is registered with the Association of Professional Engineers and Geoscientists of Alberta (APEGA). All of the professionals involved in the preparation of this report have in excess of five years of experience in the evaluation of oil and gas properties. Mr. Cam Boulton, Vice President, supervised the preparation of this report. Mr. Boulton is a professional engineer registered with APEGA and has over 10 years of experience in the evaluation of oil and gas properties. All of the persons involved in the preparation of this report and McDaniel & Associates are independent of PKI and CNODCI.

In preparing this report, we relied upon certain factual information including ownership, well data, production data, prices, revenues, operating costs, capital costs, contracts, and other relevant data supplied by PKI. The supplied information was only relied upon where in our opinion it appeared reasonable and consistent with our knowledge of the properties; however, no independent verification of the information was made.

CNODCI Interest in PetroKazakhstan Inc. Evaluation of Oil and Gas Reserves – Third Party Report Page  6 January 31, 2018

This report was prepared by McDaniel for the use of PKI and CNODCI for its securities filings with the SEC and is not to be used for any other purpose without the knowledge and consent of McDaniel & Associates Consultants Ltd.

We reserve the right to revise any estimates provided herein if any relevant data existing prior to preparation of this report was not made available, if any data between the preparation date and the evaluation date of this evaluation were to vary significantly from that forecast, or if any data provided was found to be erroneous.

Sincerely,

McDANIEL & ASSOCIATES CONSULTANTS LTD.

APEGA PERMIT NUMBER: P3145

C. Boulton, P. Eng.

Vice President

CB:jep

[17-0192]

Table 1

CNODCI Interest in PKI

PetroKazakhstan Kumkol Resources

Summary of Reserves and Net Present Values

Effective December 31, 2017

Summary of Reserves⁽¹⁾⁽²⁾

	Crude Oil Reserves - Bbls						Natural Gas Reserves						Natural Gas Liquids Reserves
Reserve Category	Property Gross Mbbl		Company Gross Mbbl		Company Net Mbbl		Property Gross MMcf		Company Gross MMcf		Company Net MMcf		Property Gross Mbbl		Company Gross Mbbl		Company Net Mbbl
Proved Developed Reserves		23,135		15,500		15,500		—		—		—		—		—		—
Proved Undeveloped Reserves		2,357		1,579		1,579		—		—		—		—		—		—
Total Proved Reserves		25,492		17,079		17,079		—		—		—		—		—		—

	Crude Oil Reserves - Tonnes						BOE Reserves(3)
	Property Gross MT		Company Gross MT		Company Net MT		Property Gross Mbbl		Company Gross Mbbl		Company Net Mbbl
Proved Developed Reserves		2,982		1,998		1,998		23,135		15,500		15,500
Proved Undeveloped Reserves		307		206		206		2,357		1,579		1,579
Total Proved Reserves		3,289		2,204		2,204		25,492		17,079		17,079

Summary of Company Share of Net Present Values Before Income Taxes

	$MM US Dollars
Reserve Category	0.0%		5.0%		10.0%		15.0%		20.0%
Proved Developed Reserves		179		166		155		146		137
Proved Undeveloped Reserves		30		27		24		21		19
Total Proved Reserves		210		193		179		167		157

Summary of Company Share of Net Present Values After Income Taxes

	$MM US Dollars
Reserve Category	0.0%		5.0%		10.0%		15.0%		20.0%
Proved Developed Reserves		145		135		126		118		111
Proved Undeveloped Reserves		21		18		16		14		13
Total Proved Reserves		167		153		142		132		123

(1) The above reserves estimates are presented after applying license expiry and economic limit cutoffs.

(2) Company Gross reserves are based on Company working interest share of the reserves for each property. Company Net reserves are the working interest reserves in each property after deducting royalties payable to others. In the case of all properties, there are no royalties payable to others.

(3) Based on a gas to BOE conversion of 6:1

Table 2

CNODCI Interest in PKI

PetroKazakhstan Kumkol Resources

Forecast of Production and Revenues

Proved Developed Reserves

Effective December 31, 2017

Property Gross Share of Production and Gross Revenues

			Crude Oil										Natural Gas						Natural Gas Liquids
Year	Producing Well Count		Daily Rate Bopd		Annual Volume Mbbl		Annual Volume MT		Crude Oil Price US$/bbl		Sales Revenue US$MM		Annual Volume MMcf		Natural Gas Price US$/Mcf		Sales Revenue US$MM		Annual Volume Mbbl		NGL Price US$/bbl		Sales Revenue US$MM		Total Sales Revenue US$MM
2018		431		20,506		7,485		970		29		218		—		—		—		—		—		—		218
2019		408		15,977		5,832		756		28		165		—		—		—		—		—		—		165
2020		387		12,387		4,521		586		32		143		—		—		—		—		—		—		143
2021		356		8,631		3,150		410		32		99		—		—		—		—		—		—		99
2022		110		3,804		1,389		183		32		44		—		—		—		—		—		—		44
2023		31		1,190		434		56		32		14		—		—		—		—		—		—		14
2024		27		887		324		42		32		10		—		—		—		—		—		—		10
2025		—		—		—		—		—		—		—		—		—		—		—		—		—
2026		—		—		—		—		—		—		—		—		—		—		—		—		—
2027		—		—		—		—		—		—		—		—		—		—		—		—		—
2028		—		—		—		—		—		—		—		—		—		—		—		—		—
2029		—		—		—		—		—		—		—		—		—		—		—		—		—
2030		—		—		—		—		—		—		—		—		—		—		—		—		—
2031		—		—		—		—		—		—		—		—		—		—		—		—		—
2032		—		—		—		—		—		—		—		—		—		—		—		—		—
Rem.		—		—		—		—		—		—		—		—		—		—		—		—		—
Total						23,135		3,004				692		—				—		—				—		692

Property Gross Share of Royalties, Expenses, Taxes and Net Cash Flow

Year	Total MET US$MM		Total MET %		Export Rent Tax US$MM		Export Rent Tax %		Total Operating Costs US$MM		Aband. Costs US$MM		Capital Costs US$MM		Hist. Costs & Com. Bonus US$MM		Net Cash Flow B. Tax US$MM		Property Tax US$MM		Corporate Tax US$MM		Excess Profits Tax US$MM		Net Cash Flow A. Tax US$MM
2018		3		2		7		3		73		0		24		—		110		1		12		10		87
2019		2		1		3		2		66		0		25		—		69		1		9		4		54
2020		4		3		9		6		59		0		7		—		64		1		6		1		55
2021		3		3		6		6		49		19		6		—		16		1		2		0		13
2022		1		3		3		6		25		8		1		—		6		0		1		—		5
2023		0		3		1		6		9		0		—		—		3		0		0		—		3
2024		0		3		1		6		8		1		—		—		0		0		—		—		0
2025		—		—		—		—		—		—		—		—		—		—		—		—		—
2026		—		—		—		—		—		—		—		—		—		—		—		—		—
2027		—		—		—		—		—		—		—		—		—		—		—		—		—
2028		—		—		—		—		—		—		—		—		—		—		—		—		—
2029		—		—		—		—		—		—		—		—		—		—		—		—		—
2030		—		—		—		—		—		—		—		—		—		—		—		—		—
2031		—		—		—		—		—		—		—		—		—		—		—		—		—
2032		—		—		—		—		—		—		—		—		—		—		—		—		—
Rem.		—		—		—		—		—		—		—		—		—		—		—		—		—
Total		14		2		29		4		290		29		63		—		268		3		31		16		217

Company Working Interest Share Summary

Year	Gross Annual Oil Production Mbbl		Net Annual Oil Production Mbbl		Net Annual Gas Production MMcf		Net Annual NGL Production Mbbl		Gross Sales Revenue US$MM		Total MET US$MM		Export Tax US$MM		Operating & Aband. Costs US$MM		Capital Costs US$MM		Hist. Costs & Com. Bonus US$MM		Net Cash Flow B.  Tax US$MM		Total Taxes US$MM		Net Cash Flow A.T. US$MM
2018		5,015		5,015		—		—		146		2		4		49		16		—		74		16		58
2019		3,907		3,907		—		—		110		1		2		45		16		—		46		10		36
2020		3,029		3,029		—		—		96		3		6		40		4		—		43		6		37
2021		2,111		2,111		—		—		67		2		4		46		4		—		11		2		9
2022		930		930		—		—		29		1		2		22		1		—		4		1		3
2023		291		291		—		—		9		0		1		6		—		—		2		0		2
2024		217		217		—		—		7		0		0		6		—		—		0		0		0
2025		—		—		—		—		—		—		—		—		—		—		—		—		—
2026		—		—		—		—		—		—		—		—		—		—		—		—		—
2027		—		—		—		—		—		—		—		—		—		—		—		—		—
2028		—		—		—		—		—		—		—		—		—		—		—		—		—
2029		—		—		—		—		—		—		—		—		—		—		—		—		—
2030		—		—		—		—		—		—		—		—		—		—		—		—		—
2031		—		—		—		—		—		—		—		—		—		—		—		—		—
2032		—		—		—		—		—		—		—		—		—		—		—		—		—
Rem.		—		—		—		—		—		—		—		—		—		—		—		—		—
Total		15,500		15,500		—		—		464		9		19		214		42		—		179		34		145

Table 3

CNODCI Interest in PKI

PetroKazakhastan Kumkol Resources

Forecast of Production and Revenues

Total Proved Reserves

Effective December 31, 2017

Property Gross Share of Production and Gross Revenues

			Crude Oil										Natural Gas						Natural Gas Liquids
Year	Producing Well Count		Daily Rate Bopd		Annual Volume Mbbl		Annual Volume MT		Crude Oil Price US$/bbl		Sales Revenue US$MM		Annual Volume MMcf		Natural Gas Price US$/Mcf		Sales Revenue US$MM		Annual Volume Mbbl		NGL Price US$/ bbl		Sales Revenue US$MM		Total Sales Revenue US$MM
2018		438		21,495		7,846		1,018		29		228		—		—		—		—		—		—		228
2019		424		17,806		6,499		844		28		184		—		—		—		—		—		—		184
2020		408		14,077		5,138		667		32		162		—		—		—		—		—		—		162
2021		379		9,863		3,600		469		32		114		—		—		—		—		—		—		114
2022		122		4,484		1,637		216		32		52		—		—		—		—		—		—		52
2023		33		1,217		444		58		32		14		—		—		—		—		—		—		14
2024		29		898		328		42		32		10		—		—		—		—		—		—		10
2025		—		—		—		—		—		—		—		—		—		—		—		—		—
2026		—		—		—		—		—		—		—		—		—		—		—		—		—
2027		—		—		—		—		—		—		—		—		—		—		—		—		—
2028		—		—		—		—		—		—		—		—		—		—		—		—		—
2029		—		—		—		—		—		—		—		—		—		—		—		—		—
2030		—		—		—		—		—		—		—		—		—		—		—		—		—
2031		—		—		—		—		—		—		—		—		—		—		—		—		—
2032		—		—		—		—		—		—		—		—		—		—		—		—		—
Rem.		—		—		—		—		—		—		—		—		—		—		—		—		—
Total						25,492		3,313				764		—				—		—				—		764

Property Gross Share of Royalties, Expenses, Taxes and Net Cash Flow

Year	Total MET US$MM		Total MET %		Export Rent Tax US$MM		Export Rent Tax %		Total Operating Costs US$MM		Aband. Costs US$MM		Capital Costs US$MM		Hist. Costs & Com. Bonus US$MM		Net Cash Flow B.  Tax US$MM		Property Tax US$MM		Corporate Tax US$MM		Excess Profits Tax US$MM		Net Cash Flow A.  Tax US$MM
2018		4		2		7		3		74		0		32		—		112		1		13		12		86
2019		2		1		3		2		68		0		28		—		82		1		12		7		62
2020		4		3		10		6		61		0		9		—		77		1		9		3		65
2021		3		3		7		6		51		20		6		—		27		1		4		0		22
2022		2		3		3		6		26		8		1		—		12		0		1		—		11
2023		0		3		1		6		9		0		—		—		3		0		0		—		3
2024		0		3		1		6		8		1		—		—		0		0		—		—		0
2025		—		—		—		—		—		—		—		—		—		—		—		—		—
2026		—		—		—		—		—		—		—		—		—		—		—		—		—
2027		—		—		—		—		—		—		—		—		—		—		—		—		—
2028		—		—		—		—		—		—		—		—		—		—		—		—		—
2029		—		—		—		—		—		—		—		—		—		—		—		—		—
2030		—		—		—		—		—		—		—		—		—		—		—		—		—
2031		—		—		—		—		—		—		—		—		—		—		—		—		—
2032		—		—		—		—		—		—		—		—		—		—		—		—		—
Rem.		—		—		—		—		—		—		—		—		—		—		—		—		—
Total		16		2		32		4		297		30		76		—		313		3		39		22		249

Company Working Interest Share Summary

Year	Gross Annual Oil Production Mbbl		Net Annual Oil Production Mbbl		Net Annual Gas Production MMcf		Net Annual NGL Production Mbbl		Gross Sales Revenue US$MM		Total MET US$MM		Export Tax US$MM		Operating & Aband. Costs US$MM		Capital Costs US$MM		Hist. Costs & Com. Bonus US$MM		Net Cash Flow B. Tax US$MM		Total Taxes US$MM		Net Cash Flow A.T. US$MM
2018		5,257		5,257		—		—		153		2		5		50		21		—		75		17		58
2019		4,354		4,354		—		—		123		2		2		46		19		—		55		13		42
2020		3,443		3,443		—		—		109		3		7		41		6		—		51		8		43
2021		2,412		2,412		—		—		76		2		5		47		4		—		18		3		15
2022		1,097		1,097		—		—		35		1		2		23		1		—		8		1		7
2023		298		298		—		—		9		0		1		6		—		—		2		0		2
2024		220		220		—		—		7		0		0		6		—		—		0		0		0
2025		—		—		—		—		—		—		—		—		—		—		—		—		—
2026		—		—		—		—		—		—		—		—		—		—		—		—		—
2027		—		—		—		—		—		—		—		—		—		—		—		—		—
2028		—		—		—		—		—		—		—		—		—		—		—		—		—
2029		—		—		—		—		—		—		—		—		—		—		—		—		—
2030		—		—		—		—		—		—		—		—		—		—		—		—		—
2031		—		—		—		—		—		—		—		—		—		—		—		—		—
2032		—		—		—		—		—		—		—		—		—		—		—		—		—
Rem.		—		—		—		—		—		—		—		—		—		—		—		—		—
Total		17,079		17,079		—		—		512		11		22		219		51		—		210		43		167

Table 4

CNODCI Interest in PKI

Kolzhan LLP

Summary of Reserves and Net Present Values

Effective December 31, 2017

Summary of Reserves⁽¹⁾⁽²⁾

	Crude Oil Reserves - Bbls						Natural Gas Reserves						Natural Gas Liquids Reserves
Reserve Category	Property Gross Mbbl		Company Gross Mbbl		Company Net Mbbl		Property Gross MMcf		Company Gross MMcf		Company Net MMcf		Property Gross Mbbl		Company Gross Mbbl		Company Net Mbbl
Proved Developed Reserves		17,569		7,295		7,295		—		—		—		—		—		—
Proved Undeveloped Reserves		9,045		3,476		3,476		—		—		—		—		—		—
Total Proved Reserves		26,614		10,770		10,770		—		—		—		—		—		—

	Crude Oil Reserves - Tonnes						BOE Reserves(3)
	Property Gross MT		Company Gross MT		Company Net MT		Property Gross Mbbl		Company Gross Mbbl		Company Net Mbbl
Proved Developed Reserves		2,246		927		927		17,569		7,295		7,295
Proved Undeveloped Reserves		1,161		444		444		9,045		3,476		3,476
Total Proved Reserves		3,407		1,371		1,371		26,614		10,770		10,770

Summary of Company Share of Net Present Values Before Income Taxes

	$MM US Dollars
Reserve Category	0.0%		5.0%		10.0%		15.0%		20.0%
Proved Developed Reserves		109		93		80		71		64
Proved Undeveloped Reserves		66		51		41		34		28
Total Proved Reserves		175		144		122		105		92

Summary of Company Share of Net Present Values After Income Taxes

	$MM US Dollars
Reserve Category	0.0%		5.0%		10.0%		15.0%		20.0%
Proved Developed Reserves		69		58		50		44		39
Proved Undeveloped Reserves		35		27		21		17		14
Total Proved Reserves		105		86		72		61		53

(1) The above reserves estimates are presented after applying license expiry and economic limit cutoffs.

(2) Company Gross reserves are based on Company working interest share of the reserves for each property. Company Net reserves are the working interest reserves in each property after deducting royalties payable to others. In the case of all properties, there are no royalties payable to others.

(3) Based on a gas to BOE conversion of 6:1

Table 5

CNODCI Interest in PKI

Kolzhan LLP

Forecast of Production and Revenues

Proved Developed Reserves

Effective December 31, 2017

Property Gross Share of Production and Gross Revenues

			Crude Oil										Natural Gas						Natural Gas Liquids
Year	Producing Well Count		Daily Rate Bopd		Annual Volume Mbbl		Annual Volume MT		Crude Oil Price US$/bbl		Sales Revenue US$MM		Annual Volume MMcf		Natural Gas Price US$/Mcf		Sales Revenue US$MM		Annual Volume Mbbl		NGL Price US$/bbl		Sales Revenue US$MM		Total Sales Revenue US$MM
2018		110		10,665		3,893		497		28		110		—		—		—		—		—		—		110
2019		104		8,563		3,125		399		31		98		—		—		—		—		—		—		98
2020		94		7,056		2,575		329		31		81		—		—		—		—		—		—		81
2021		87		5,917		2,160		276		31		68		—		—		—		—		—		—		68
2022		84		4,989		1,821		233		31		57		—		—		—		—		—		—		57
2023		79		4,069		1,485		190		32		47		—		—		—		—		—		—		47
2024		71		3,276		1,196		153		32		38		—		—		—		—		—		—		38
2025		36		1,834		670		86		32		21		—		—		—		—		—		—		21
2026		32		1,141		416		54		32		13		—		—		—		—		—		—		13
2027		29		624		228		29		32		7		—		—		—		—		—		—		7
2028		—		—		—		—		—		—		—		—		—		—		—		—		—
2029		—		—		—		—		—		—		—		—		—		—		—		—		—
2030		—		—		—		—		—		—		—		—		—		—		—		—		—
2031		—		—		—		—		—		—		—		—		—		—		—		—		—
2032		—		—		—		—		—		—		—		—		—		—		—		—		—
Rem.		—		—		—		—		—		—		—		—		—		—		—		—		—
Total						17,569		2,246				541		—				—		—				—		541

Property Gross Share of Royalties, Expenses, Taxes and Net Cash Flow

Year	Total MET US$MM		Total MET %		Export Rent Tax US$MM		Export Rent Tax %		Total Operating Costs US$MM		Aband. Costs US$MM		Capital Costs US$MM		Hist. Costs & Com. Bonus US$MM		Net Cash Flow B. Tax US$MM		Property Tax US$MM		Corporate Tax US$MM		Excess Profits Tax US$MM		Net Cash Flow A. Tax US$MM
2018		2		1		2		2		27		0		13		—		66		0		14		22		31
2019		4		4		6		6		24		0		24		—		40		0		9		10		21
2020		2		3		5		6		21		0		5		—		47		0		8		9		29
2021		2		3		4		6		20		0		5		—		36		0		6		7		23
2022		2		3		4		6		18		0		5		—		29		0		5		5		19
2023		1		3		3		6		16		0		0		—		26		0		4		4		18
2024		1		3		2		6		15		3		0		—		17		0		3		2		12
2025		1		3		1		6		7		0		—		—		11		0		2		1		9
2026		0		3		1		6		6		0		—		—		5		0		1		—		5
2027		0		3		0		6		5		0		—		—		1		0		—		—		1
2028		—		—		—		—		—		—		—		—		—		—		—		—		—
2029		—		—		—		—		—		—		—		—		—		—		—		—		—
2030		—		—		—		—		—		—		—		—		—		—		—		—		—
2031		—		—		—		—		—		—		—		—		—		—		—		—		—
2032		—		—		—		—		—		—		—		—		—		—		—		—		—
Rem.		—		—		—		—		—		—		—		—		—		—		—		—		—
Total		15		3		29		5		159		7		53		—		278		2		51		60		166

Company Working Interest Share Summary

Year	Gross Annual Oil Production Mbbl		Net Annual Oil Production Mbbl		Net Annual Gas Production MMcf		Net Annual NGL Production Mbbl		Gross Sales Revenue US$MM		Total MET US$MM		Export Tax US$MM		Operating & Aband. Costs US$MM		Capital Costs US$MM		Hist. Costs & Com. Bonus US$MM		Net Cash Flow B. Tax US$MM		Total Taxes US$MM		Net Cash Flow A.T. US$MM
2018		1,685		1,685		—		—		49		1		1		13		5		—		29		13		16
2019		1,337		1,337		—		—		42		2		3		12		10		—		16		7		9
2020		1,088		1,088		—		—		34		1		2		11		2		—		19		6		12
2021		899		899		—		—		28		1		2		10		2		—		14		5		9
2022		749		749		—		—		24		1		1		9		2		—		11		3		7
2023		607		607		—		—		19		1		1		8		0		—		9		3		7
2024		489		489		—		—		15		0		1		9		0		—		5		2		4
2025		224		224		—		—		7		0		0		3		—		—		4		1		3
2026		139		139		—		—		4		0		0		2		—		—		2		0		2
2027		76		76		—		—		2		0		0		2		—		—		0		0		0
2028		—		—		—		—		—		—		—		—		—		—		—		—		—
2029		—		—		—		—		—		—		—		—		—		—		—		—		—
2030		—		—		—		—		—		—		—		—		—		—		—		—		—
2031		—		—		—		—		—		—		—		—		—		—		—		—		—
2032		—		—		—		—		—		—		—		—		—		—		—		—		—
Rem.		—		—		—		—		—		—		—		—		—		—		—		—		—
Total		7,295		7,295		—		—		225		7		12		77		20		—		109		40		69

Table 6

CNODCI Interest in PKI

Kolzhan LLP

Forecast of Production and Revenues

Total Proved Reserves

Effective December 31, 2017

Property Gross Share of Production and Gross Revenues

			Crude Oil										Natural Gas						Natural Gas Liquids
Year	Producing Well Count		Daily Rate Bopd		Annual Volume Mbbl		Annual Volume MT		Crude Oil Price US$/bbl		Sales Revenue US$MM		Annual Volume MMcf		Natural Gas Price US$/Mcf		Sales Revenue US$MM		Annual Volume Mbbl		NGL Price US$/bbl		Sales Revenue US$MM		Total Sales Revenue US$MM
2018		116		12,103		4,417		564		28		125		—		—		—		—		—		—		125
2019		122		12,276		4,481		573		31		141		—		—		—		—		—		—		141
2020		119		11,197		4,087		523		32		129		—		—		—		—		—		—		129
2021		114		9,170		3,347		428		32		105		—		—		—		—		—		—		105
2022		110		7,563		2,760		353		32		87		—		—		—		—		—		—		87
2023		105		6,167		2,251		288		32		71		—		—		—		—		—		—		71
2024		93		5,073		1,852		237		32		58		—		—		—		—		—		—		58
2025		83		3,952		1,442		185		32		45		—		—		—		—		—		—		45
2026		45		2,304		841		109		32		27		—		—		—		—		—		—		27
2027		41		1,543		563		73		32		18		—		—		—		—		—		—		18
2028		37		989		361		47		32		11		—		—		—		—		—		—		11
2029		33		579		211		27		32		7		—		—		—		—		—		—		7
2030		—		—		—		—		—		—		—		—		—		—		—		—		—
2031		—		—		—		—		—		—		—		—		—		—		—		—		—
2032		—		—		—		—		—		—		—		—		—		—		—		—		—
Rem.		—		—		—		—		—		—		—		—		—		—		—		—		—
Total						26,614		3,407				824		—				—		—				—		824

Property Gross Share of Royalties, Expenses, Taxes and Net Cash Flow

Year	Total MET US$MM		Total MET %		Export Rent Tax US$MM		Export Rent Tax %		Total Operating Costs US$MM		Aband. Costs US$MM		Capital Costs US$MM		Hist. Costs & Com. Bonus US$MM		Net Cash Flow B. Tax US$MM		Property Tax US$MM		Corporate Tax US$MM		Excess Profits Tax US$MM		Net Cash Flow A. Tax US$MM
2018		2		1		2		2		29		0		23		—		69		0		16		25		29
2019		6		4		9		6		29		0		34		—		63		0		15		18		30
2020		5		4		8		6		27		0		5		—		83		0		15		20		48
2021		4		4		7		6		25		0		6		—		64		0		11		15		37
2022		3		4		5		6		23		0		2		—		53		0		9		11		32
2023		2		3		4		6		21		0		0		—		43		0		7		9		27
2024		2		3		4		6		18		0		0		—		34		0		6		7		21
2025		1		3		3		6		16		3		—		—		22		0		4		4		14
2026		1		3		2		6		9		0		—		—		15		0		2		1		11
2027		1		3		1		6		8		0		—		—		8		0		1		0		7
2028		0		3		1		6		6		—		—		—		4		0		0		—		3
2029		0		3		0		6		5		—		—		—		1		0		—		—		1
2030		—		—		—		—		—		—		—		—		—		—		—		—		—
2031		—		—		—		—		—		—		—		—		—		—		—		—		—
2032		—		—		—		—		—		—		—		—		—		—		—		—		—
Rem.		—		—		—		—		—		—		—		—		—		—		—		—		—
Total		27		3		46		6		215		7		70		—		459		3		86		111		259

Company Working Interest Share Summary

Year	Gross Annual Oil Production Mbbl		Net Annual Oil Production Mbbl		Net Annual Gas Production MMcf		Net Annual NGL Production Mbbl		Gross Sales Revenue US$MM		Total MET US$MM		Export Tax US$MM		Operating & Aband. Costs US$MM		Capital Costs US$MM		Hist. Costs & Com. Bonus US$MM		Net Cash Flow B. Tax US$MM		Total Taxes US$MM		Net Cash Flow A.T. US$MM
2018		1,902		1,902		—		—		55		1		2		14		8		—		30		15		15
2019		1,861		1,861		—		—		59		2		4		14		14		—		25		12		13
2020		1,664		1,664		—		—		52		2		3		13		2		—		32		12		20
2021		1,362		1,362		—		—		43		2		3		12		2		—		24		9		15
2022		1,115		1,115		—		—		35		1		2		11		1		—		20		7		13
2023		899		899		—		—		28		1		2		10		0		—		16		6		10
2024		733		733		—		—		23		1		1		9		0		—		12		4		8
2025		572		572		—		—		18		1		1		9		—		—		7		3		4
2026		282		282		—		—		9		0		1		3		—		—		5		1		4
2027		189		189		—		—		6		0		0		3		—		—		3		1		2
2028		121		121		—		—		4		0		0		2		—		—		1		0		1
2029		71		71		—		—		2		0		0		2		—		—		0		0		0
2030		—		—		—		—		—		—		—		—		—		—		—		—		—
2031		—		—		—		—		—		—		—		—		—		—		—		—		—
2032		—		—		—		—		—		—		—		—		—		—		—		—		—
Rem.		—		—		—		—		—		—		—		—		—		—		—		—		—
Total		10,770		10,770		—		—		334		11		19		102		28		—		175		70		105

Table 7

CNODCI Interest in PKI

PetroKazakhstan Ventures Inc.

Summary of Reserves and Net Present Values

Effective December 31, 2017

Summary of Reserves⁽¹⁾⁽²⁾

	Crude Oil Reserves - Bbls						Natural Gas Reserves						Natural Gas Liquids Reserves
Reserve Category	Property Gross Mbbl		Company Gross Mbbl		Company Net Mbbl		Property Gross MMcf		Company Gross MMcf		Company Net MMcf		Property Gross Mbbl		Company Gross Mbbl		Company Net Mbbl
Proved Developed Reserves		1,628		818		818		—		—		—		—		—		—
Proved Undeveloped Reserves		665		334		334		—		—		—		—		—		—
Total Proved Reserves		2,293		1,152		1,152		—		—		—		—		—		—

	Crude Oil Reserves - Tonnes						BOE Reserves(3)
	Gross MT		Gross MT		Net MT		Gross Mbbl		Gross Mbbl		Net Mbbl
Proved Developed Reserves		213		107		107		1,628		818		818
Proved Undeveloped Reserves		87		44		44		665		334		334
Total Proved Reserves		300		151		151		2,293		1,152		1,152

Summary of Company Share of Net Present Values Before Income Taxes

	$MM US Dollars
Reserve Category	0.0%		5.0%		10.0%		15.0%		20.0%
Proved Developed Reserves		13		12		11		10		10
Proved Undeveloped Reserves		7		6		5		4		4
Total Proved Reserves		20		18		16		15		13

Summary of Company Share of Net Present Values After Income Taxes

	$MM US Dollars
Reserve Category	0.0%		5.0%		10.0%		15.0%		20.0%
Proved Developed Reserves		11		10		9		8		8
Proved Undeveloped Reserves		5		4		4		3		3
Total Proved Reserves		16		14		12		11		10

(1) The above reserves estimates are presented after applying license expiry and economic limit cutoffs.

(2) Company Gross reserves are based on Company working interest share of the reserves for each property.

Company Net reserves are the working interest reserves in each property after deducting royalties payable to others. In the case of all properties, there are no royalties payable to others.

(3) Based on a gas to BOE conversion of 6:1

Table 8

CNODCI Interest in PKI

PetroKazakhstan Ventures Inc.

Forecast of Production and Revenues

Proved Developed Reserves

Effective December 31, 2017

Property Gross Share of Production and Gross Revenues

			Crude Oil										Natural Gas						Natural Gas Liquids
Year	Producing Well Count		Daily Rate Bopd		Annual Volume Mbbl		Annual Volume MT		Crude Oil Price US$/bbl		Sales Revenue US$M		Annual Volume MMcf		Natural Gas Price US$/Mcf		Sales Revenue US$M		Annual Volume Mbbl		NGL Price US$/bbl		Sales Revenue US$M		Total Sales Revenue US$M
2018		16		1,698		620		80		27,110		16,807		—		—		—		—		—		—		16,807
2019		15		1,002		366		47		31,560		11,546		—		—		—		—		—		—		11,546
2020		16		645		236		30		31,560		7,435		—		—		—		—		—		—		7,435
2021		14		429		157		20		31,560		4,939		—		—		—		—		—		—		4,939
2022		9		265		97		13		31,560		3,058		—		—		—		—		—		—		3,058
2023		7		181		66		9		31,560		2,083		—		—		—		—		—		—		2,083
2024		6		134		49		6		31,560		1,546		—		—		—		—		—		—		1,546
2025		6		103		38		5		31,560		1,192		—		—		—		—		—		—		1,192
2026		—		—		—		—		—		—		—		—		—		—		—		—		—
2027		—		—		—		—		—		—		—		—		—		—		—		—		—
2028		—		—		—		—		—		—		—		—		—		—		—		—		—
2029		—		—		—		—		—		—		—		—		—		—		—		—		—
2030		—		—		—		—		—		—		—		—		—		—		—		—		—
2031		—		—		—		—		—		—		—		—		—		—		—		—		—
2032		—		—		—		—		—		—		—		—		—		—		—		—		—
Rem.		—		—		—		—		—		—		—		—		—		—		—		—		—
Total						1,628		210				48,607		—				—		—				—		48,607

Property Gross Share of Royalties, Expenses, Taxes and Net Cash Flow

Year	Total MET US$M		Total MET %		Export Rent Tax US$M		Export Rent Tax %		Total Operating Costs US$M		Aband. Costs US$M		Capital Costs US$M		Hist. Costs & Com. Bonus US$M		Net Cash Flow B. Tax US$M		Property Tax US$M		Corporate Tax US$M		Excess Profits Tax US$M		Net Cash Flow A. Tax US$M
2018		50		0		—		—		2,674		86		2,074		—		11,923		19		1,784		2,120		8,000
2019		344		3		725		6		2,224		86		3,267		—		4,901		44		641		29		4,186
2020		222		3		467		6		2,097		86		147		—		4,417		55		163		—		4,199
2021		147		3		310		6		1,841		86		129		—		2,426		48		—		—		2,378
2022		91		3		192		6		1,426		86		—		—		1,264		42		—		—		1,222
2023		62		3		131		6		1,143		86		—		—		661		36		—		—		626
2024		46		3		97		6		1,002		86		—		—		316		30		—		—		286
2025		36		3		75		6		903		—		—		—		179		26		—		—		153
2026		—		—		—		—		—		—		—		—		—		—		—		—		—
2027		—		—		—		—		—		—		—		—		—		—		—		—		—
2028		—		—		—		—		—		—		—		—		—		—		—		—		—
2029		—		—		—		—		—		—		—		—		—		—		—		—		—
2030		—		—		—		—		—		—		—		—		—		—		—		—		—
2031		—		—		—		—		—		—		—		—		—		—		—		—		—
2032		—		—		—		—		—		—		—		—		—		—		—		—		—
Rem.		—		—		—		—		—		—		—		—		—		—		—		—		—
Total		998		2		1,996		4		13,309		600		5,617		—		26,087		301		2,588		2,149		21,049

Company Working Interest Share Summary

Year	Gross Annual Oil Production Mbbl		Net Annual Oil Production Mbbl		Net Annual Gas Production MMcf		Net Annual NGL Production Mbbl		Gross Sales Revenue US$M		Total MET US$M		Export Tax US$M		Operating & Aband. Costs US$M		Capital Costs US$M		Hist. Costs & Com. Bonus US$M		Net Cash Flow B.  Tax US$M		Total Taxes US$M		Net Cash Flow A.T. US$M
2018		312		312		—		—		8,445		25		—		1,387		1,042		—		5,992		1,972		4,020
2019		184		184		—		—		5,802		173		364		1,161		1,642		—		2,463		359		2,103
2020		118		118		—		—		3,736		111		234		1,097		74		—		2,220		110		2,110
2021		79		79		—		—		2,482		74		156		968		65		—		1,219		24		1,195
2022		49		49		—		—		1,537		46		96		759		—		—		635		21		614
2023		33		33		—		—		1,047		31		66		617		—		—		332		18		314
2024		25		25		—		—		777		23		49		546		—		—		159		15		144
2025		19		19		—		—		599		18		38		454		—		—		90		13		77
2026		—		—		—		—		—		—		—		—		—		—		—		—		—
2027		—		—		—		—		—		—		—		—		—		—		—		—		—
2028		—		—		—		—		—		—		—		—		—		—		—		—		—
2029		—		—		—		—		—		—		—		—		—		—		—		—		—
2030		—		—		—		—		—		—		—		—		—		—		—		—		—
2031		—		—		—		—		—		—		—		—		—		—		—		—		—
2032		—		—		—		—		—		—		—		—		—		—		—		—		—
Rem.		—		—		—		—		—		—		—		—		—		—		—		—		—
Total		818		818		—		—		24,425		501		1,003		6,989		2,823		—		13,109		2,532		10,577

Table 9

CNODCI Interest in PKI

PetroKazakhstan Ventures Inc.

Forecast of Production and Revenues

Total Proved Reserves

Effective December 31, 2017

Property Gross Share of Production and Gross Revenues

			Crude Oil										Natural Gas						Natural Gas Liquids						Total Sales Revenue US$M
Year	Producing Well Count		Daily Rate Bopd		Annual Volume Mbbl		Annual Volume MT		Crude Oil Price US$/bbl		Sales Revenue US$M		Annual Volume MMcf		Natural Gas Price US$/Mcf		Sales Revenue US$M		Annual Volume Mbbl		NGL Price US$/bbl		Sales Revenue US$M
2018		17		1,848		675		87		27,110		18,291		—		—		—		—		—		—		18,291
2019		18		1,367		499		64		31,560		15,741		—		—		—		—		—		—		15,741
2020		19		1,023		373		48		31,560		11,781		—		—		—		—		—		—		11,781
2021		17		712		260		34		31,560		8,197		—		—		—		—		—		—		8,197
2022		12		472		172		22		31,560		5,438		—		—		—		—		—		—		5,438
2023		10		329		120		16		31,560		3,795		—		—		—		—		—		—		3,795
2024		9		239		87		11		31,560		2,753		—		—		—		—		—		—		2,753
2025		9		175		64		8		31,560		2,015		—		—		—		—		—		—		2,015
2026		7		117		43		6		31,560		1,350		—		—		—		—		—		—		1,350
2027		—		—		—		—		—		—		—		—		—		—		—		—		—
2028		—		—		—		—		—		—		—		—		—		—		—		—		—
2029		—		—		—		—		—		—		—		—		—		—		—		—		—
2030		—		—		—		—		—		—		—		—		—		—		—		—		—
2031		—		—		—		—		—		—		—		—		—		—		—		—		—
2032		—		—		—		—		—		—		—		—		—		—		—		—		—
Rem.		—		—		—		—		—		—		—		—		—		—		—		—		—
Total						2,293		296				69,362		—				—		—				—		69,362

Property Gross Share of Royalties, Expenses, Taxes and Net Cash Flow

Year	Total MET US$M		Total MET %		Export Rent Tax US$M		Export Rent Tax %		Total Operating Costs US$M		Aband. Costs US$M		Capital Costs US$M		Hist. Costs & Com. Bonus US$M		Net Cash Flow B. Tax US$M		Property Tax US$M		Corporate Tax US$M		Excess Profits Tax US$M		Net Cash Flow A. Tax US$M
2018		54		0		—		—		2,825		86		3,524		—		11,803		19		1,963		2,387		7,433
2019		469		3		988		6		2,595		86		3,992		—		7,612		44		1,255		507		5,805
2020		351		3		739		6		2,510		86		145		—		7,951		55		828		200		6,867
2021		244		3		514		6		2,202		86		129		—		5,022		48		359		—		4,614
2022		162		3		341		6		1,745		86		—		—		3,104		42		59		—		3,004
2023		113		3		238		6		1,495		86		—		—		1,863		36		—		—		1,828
2024		82		3		173		6		1,329		86		—		—		1,083		30		—		—		1,053
2025		60		3		126		6		1,213		—		—		—		616		26		—		—		590
2026		40		3		85		6		996		—		—		—		228		22		—		—		207
2027		—		—		—		—		—		—		—		—		—		—		—		—		—
2028		—		—		—		—		—		—		—		—		—		—		—		—		—
2029		—		—		—		—		—		—		—		—		—		—		—		—		—
2030		—		—		—		—		—		—		—		—		—		—		—		—		—
2031		—		—		—		—		—		—		—		—		—		—		—		—		—
2032		—		—		—		—		—		—		—		—		—		—		—		—		—
Rem.		—		—		—		—		—		—		—		—		—		—		—		—		—
Total		1,576		2		3,205		5		16,910		600		7,790		—		39,281		323		4,464		3,095		31,400

Company Working Interest Share Summary

Year	Gross Annual Oil Production Mbbl		Net Annual Oil Production Mbbl		Net Annual Gas Production MMcf		Net Annual NGL Production Mbbl		Gross Sales Revenue US$M		Total MET US$M		Export Tax US$M		Operating & Aband. Costs US$M		Capital Costs US$M		Hist. Costs & Com. Bonus US$M		Net Cash Flow B.  Tax US$M		Total Taxes US$M		Net Cash Flow A.T. US$M
2018		339		339		—		—		9,191		27		—		1,462		1,771		—		5,931		2,196		3,735
2019		251		251		—		—		7,910		236		496		1,347		2,006		—		3,825		908		2,917
2020		188		188		—		—		5,920		176		372		1,304		73		—		3,995		545		3,451
2021		131		131		—		—		4,119		123		258		1,150		65		—		2,523		205		2,318
2022		87		87		—		—		2,733		81		171		920		—		—		1,560		51		1,509
2023		60		60		—		—		1,907		57		120		794		—		—		936		18		919
2024		44		44		—		—		1,383		41		87		711		—		—		544		15		529
2025		32		32		—		—		1,013		30		64		609		—		—		309		13		297
2026		21		21		—		—		678		20		43		501		—		—		115		11		104
2027		—		—		—		—		—		—		—		—		—		—		—		—		—
2028		—		—		—		—		—		—		—		—		—		—		—		—		—
2029		—		—		—		—		—		—		—		—		—		—		—		—		—
2030		—		—		—		—		—		—		—		—		—		—		—		—		—
2031		—		—		—		—		—		—		—		—		—		—		—		—		—
2032		—		—		—		—		—		—		—		—		—		—		—		—		—
Rem.		—		—		—		—		—		—		—		—		—		—		—		—		—
Total		1,152		1,152		—		—		34,854		792		1,610		8,799		3,914		—		19,739		3,960		15,779

XML

Document and Entity Information	12 Months Ended
	Dec. 31, 2017 shares
Document information [Line Items]
Document Type	20-F
Amendment Flag	false
Document Period End Date	Dec. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	FY
Trading Symbol	PTR
Entity Registrant Name	PETROCHINA CO LTD
Entity Central Index Key	0001108329
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
A shares [member]
Document information [Line Items]
Entity Common Stock, Shares Outstanding	161,922,077,818
H shares [member]
Document information [Line Items]
Entity Common Stock, Shares Outstanding	21,098,900,000

XML

Consolidated Statements of Comprehensive Income - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Profit or loss [abstract]
REVENUE	¥ 2,015,890	¥ 1,616,903	¥ 1,725,428
OPERATING EXPENSES
Purchases, services and other	(1,285,716)	(959,640)	(1,056,795)
Employee compensation costs	(125,384)	(117,662)	(118,082)
Exploration expenses, including exploratory dry holes	(23,884)	(18,576)	(18,380)
Depreciation, depletion and amortization	(237,375)	(218,147)	(202,875)
Selling, general and administrative expenses	(77,042)	(74,255)	(71,270)
Taxes other than income taxes	(198,022)	(189,608)	(205,884)
Other (expenses) / income, net	(745)	21,620	27,110
TOTAL OPERATING EXPENSES	(1,948,168)	(1,556,268)	(1,646,176)
PROFIT FROM OPERATIONS	67,722	60,635	79,252
FINANCE COSTS
Exchange gain	8,217	12,828	9,536
Exchange loss	(9,311)	(11,571)	(10,168)
Interest income	2,901	2,491	2,019
Interest expense	(22,408)	(23,348)	(24,328)
TOTAL NET FINANCE COSTS	(20,601)	(19,600)	(22,941)
SHARE OF PROFIT OF ASSOCIATES AND JOINT VENTURES	5,968	4,105	1,504
PROFIT BEFORE INCOME TAX EXPENSE	53,089	45,140	57,815
Income tax expense	(16,296)	(15,768)	(15,726)
PROFIT FOR THE YEAR	36,793	29,372	42,089
OTHER COMPREHENSIVE INCOME RECLASSIFIABLE TO PROFIT OR LOSS
Currency translation differences	(431)	9,404	(20,965)
Fair value (loss)/ gain from available-for-sale financial assets, net of tax	(608)	(128)	596
Share of the other comprehensive (loss) / income of associates and joint ventures accounted for using the equity method	(326)	313	130
OTHER COMPREHENSIVE (LOSS) / INCOME, NET OF TAX	(1,365)	9,589	(20,239)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR	35,428	38,961	21,850
PROFIT FOR THE YEAR ATTRIBUTABLE TO:
Owners of the Company	22,798	7,857	35,517
Non-controlling interests	13,995	21,515	6,572
PROFIT FOR THE YEAR	36,793	29,372	42,089
TOTAL COMPREHENSIVE INCOME FOR THE YEAR ATTRIBUTABLE TO:
Owners of the Company	23,685	15,814	18,965
Non-controlling interests	11,743	23,147	2,885
TOTAL COMPREHENSIVE INCOME FOR THE YEAR	¥ 35,428	¥ 38,961	¥ 21,850
BASIC AND DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY(RMB)	¥ 0.12	¥ 0.04	¥ 0.19

XML

Consolidated Statements of Financial Position - CNY (¥) ¥ in Millions	Dec. 31, 2017	Dec. 31, 2016
NON-CURRENT ASSETS
Property, plant and equipment	¥ 1,702,813	¥ 1,739,545
Investments in associates and joint ventures	81,159	78,967
Available-for-sale financial assets	1,917	2,011
Advance operating lease payments	73,896	71,353
Intangible and other non-current assets	92,941	102,750
Deferred tax assets	26,724	20,360
TOTAL NON-CURRENT ASSETS	1,979,450	2,014,986
CURRENT ASSETS
Inventories	144,669	146,865
Accounts receivable	53,143	47,315
Prepayments and other current assets	72,014	77,583
Notes receivable	19,215	11,285
Time deposits with maturities over three months but within one year	13,344	686
Cash and cash equivalents	122,777	97,931
TOTAL CURRENT ASSETS	425,162	381,665
CURRENT LIABILITIES
Accounts payable and accrued liabilities	343,819	310,680
Income taxes payable	9,533	8,743
Other taxes payable	47,898	36,456
Short-term borrowings	175,417	143,384
TOTAL CURRENT LIABILITIES	576,667	499,263
NET CURRENT LIABILITIES	(151,505)	(117,598)
TOTAL ASSETS LESS CURRENT LIABILITIES	1,827,945	1,897,388
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY:
Share capital	183,021	183,021
Retained earnings	712,437	711,197
Reserves	298,062	294,806
TOTAL EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY	1,193,520	1,189,024
NON-CONTROLLING INTERESTS	187,799	183,711
TOTAL EQUITY	1,381,319	1,372,735
NON-CURRENT LIABILITIES
Long-term borrowings	289,858	372,887
Asset retirement obligations	131,546	125,392
Deferred tax liabilities	12,660	13,640
Other long-term obligations	12,562	12,734
TOTAL NON-CURRENT LIABILITIES	446,626	524,653
TOTAL EQUITY AND NON-CURRENT LIABILITIES	¥ 1,827,945	¥ 1,897,388

XML

Consolidated Statements of Cash Flows - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the year	¥ 36,793	¥ 29,372	¥ 42,089
Adjustments for:
Income tax expense	16,296	15,768	15,726
Depreciation, depletion and amortization	237,375	218,147	202,875
Capitalized exploratory costs charged to expense	9,455	9,689	9,608
Safety fund reserve	327	1,614	1,434
Share of profit of associates and joint ventures	(5,968)	(4,105)	(1,504)
Provision for impairment of receivables, net	3,254	1,609	74
Write down in inventories, net	1,069	2,634	3,335
Impairment of available-for-sale financial assets		(2)	74
Impairment of other non-current assets	3,784	115
Loss on disposal of property, plant and equipment	4,939	7,972	4,661
Remeasurement to fair value of pre-existing interest in acquiree			(22,807)
Gain on disposal of other non-current assets	(108)	(37)	(1,476)
Gain on disposal of subsidiaries	(613)	(24,674)	(280)
Dividend income		(60)	(288)
Interest income	(2,901)	(2,491)	(2,019)
Interest expense	22,408	23,348	24,328
Changes in working capital:
Accounts receivable, prepaid expenses and other current assets	(2,779)	5,281	5,581
Inventories	1,141	(22,638)	36,256
Accounts payable and accrued liabilities	65,229	16,825	(28,163)
CASH FLOWS GENERATED FROM OPERATIONS	389,701	278,367	289,504
Income taxes paid	(23,046)	(13,188)	(28,192)
NET CASH FLOWS FROM OPERATING ACTIVITIES	366,655	265,179	261,312
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(229,239)	(181,054)	(217,750)
Acquisition of investments in associates and joint ventures	(3,901)	(2,008)	(1,637)
Acquisition of available-for-sale financial assets	(16)	(400)	(625)
Prepayments on long-term operating leases	(3,928)	(2,586)	(2,524)
Acquisition of intangible assets and other non-current assets	(3,837)	(5,781)	(3,586)
Payments for acquisition of joint venture and subsidiaries	(1,106)		(6,496)
Proceeds from disposal of property, plant and equipment	1,146	2,127	1,923
Acquisition of subsidiaries			(17,855)
Proceeds from disposal of other non-current assets	921	991	16,987
Interest received	2,227	2,079	1,585
Dividends received	7,181	10,505	9,617
(Increase) / decrease in time deposits with maturities over three months	(12,994)	240	4,482
NET CASH FLOWS USED FOR INVESTING ACTIVITIES	(243,546)	(175,887)	(215,879)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of short-term borrowings	(578,129)	(458,780)	(530,808)
Repayments of long-term borrowings	(195,984)	(285,519)	(250,745)
Interest paid	(19,590)	(19,276)	(20,777)
Dividends paid to non-controlling interests	(12,621)	(2,401)	(5,314)
Dividends paid to owners of the company	(19,626)	(8,450)	(29,005)
Increase in short-term borrowings	601,862	460,478	481,762
Increase in long-term borrowings	128,390	247,429	311,809
Capital contribution from non-controlling interests	1,470	940	1,596
Decrease in other long-term obligations	(497)	(1,428)	(3,957)
NET CASH FLOWS USED FOR FINANCING ACTIVITIES	(94,725)	(67,007)	(45,439)
TRANSLATION OF FOREIGN CURRENCY	(3,538)	2,873	(999)
Increase / (decrease) in cash and cash equivalents	24,846	25,158	(1,005)
Cash and cash equivalents at beginning of the year	97,931	72,773	73,778
Cash and cash equivalents at end of the year	¥ 122,777	¥ 97,931	¥ 72,773

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Consolidated Statements of Changes in Equity - CNY (¥) ¥ in Millions	Total	Share Capital [member]	Retained earnings [member]	Reserves [member]	Attributable to owners of the company [member]	Non-controlling interests [member]
Beginning balance at Dec. 31, 2014	¥ 1,317,781	¥ 183,021	¥ 707,303	¥ 285,570	¥ 1,175,894	¥ 141,887
Profit	42,089		35,517		35,517	6,572
Other comprehensive income/(loss)	(20,239)			(16,552)	(16,552)	(3,687)
Special reserve-safety fund reserve	1,434			1,303	1,303	131
Transfer to reserves			(2,103)	2,103
Dividends	(34,520)		(29,005)		(29,005)	(5,515)
Acquisition of subsidiaries	36,285			12,530	12,530	23,755
Capital contribution from non-controlling interests	2,040					2,040
Other	(836)		43	(14)	29	(865)
Ending balance at Dec. 31, 2015	1,344,034	183,021	711,755	284,940	1,179,716	164,318
Profit	29,372		7,857		7,857	21,515
Other comprehensive income/(loss)	9,589			7,957	7,957	1,632
Special reserve-safety fund reserve	1,614			1,540	1,540	74
Dividends	(12,732)		(8,450)		(8,450)	(4,282)
Transaction with non-controlling interest in subsidiaries	(1,837)			224	224	(2,061)
Capital contribution from non-controlling interests	1,087					1,087
Other	1,608		35	145	180	1,428
Ending balance at Dec. 31, 2016	1,372,735	183,021	711,197	294,806	1,189,024	183,711
Profit	36,793		22,798		22,798	13,995
Other comprehensive income/(loss)	(1,365)			887	887	(2,252)
Special reserve-safety fund reserve	327			178	178	149
Transfer to reserves			(1,929)	1,929
Dividends	(30,030)		(19,626)		(19,626)	(10,404)
Transaction with non-controlling interest in subsidiaries	938			289	289	649
Capital contribution from non-controlling interests	2,584					2,584
Other	(663)		(3)	(27)	(30)	(633)
Ending balance at Dec. 31, 2017	¥ 1,381,319	¥ 183,021	¥ 712,437	¥ 298,062	¥ 1,193,520	¥ 187,799

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Organisation and Principal Activities

12 Months Ended

Dec. 31, 2017

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Organisation and Principal Activities

1 ORGANISATION AND PRINCIPAL ACTIVITIES

PetroChina Company Limited (the “Company”) was established as a joint stock company with limited liability on November 5, 1999 by China National Petroleum Corporation as the sole proprietor in accordance with the approval Guo Jing Mao Qi Gai [1999] No. 1024 “Reply on the approval of the establishment of PetroChina Company Limited” from the former State Economic and Trade Commission of the People’s Republic of China (“China” or “PRC”). CNPC restructured (“the Restructuring”) and injected its core business and the related assets and liabilities into the Company. 中国石油天然气集团公司 was renamed 中国石油天然气集团有限公司 (“CNPC” before and after the change of name) on December 19, 2017. CNPC is a wholly state-owned company registered in China. The Company and its subsidiaries are collectively referred to as the “Group”.

The Group is principally engaged in (i) the exploration, development and production and marketing of crude oil and natural gas; (ii) the refining of crude oil and petroleum products, production and marketing of primary petrochemical products, derivative petrochemical products and other chemical products; (iii) the marketing of refined products and trading business; and (iv) the transmission of natural gas, crude oil and refined products and the sale of natural gas (Note 37).

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Basis of Preparation

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Basis of Preparation

2 BASIS OF PREPARATION

The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (“IFRSs”) as issued by the International Accounting Standards Board (“IASB”). The consolidated financial statements have been prepared under the historical cost convention except as disclosed in the accounting policies below.

The preparation of financial statements in conformity with IFRSs requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the statement of financial position and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management’s best knowledge of current events and actions, actual results may ultimately differ from those estimates. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

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Summary of Principal Accounting Policies

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Principal Accounting Policies

3 SUMMARY OF PRINCIPAL ACCOUNTING POLICIES

(a) Basis of consolidation

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has right to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

A subsidiary is consolidated from the date on which control is transferred to the Group and is no longer consolidated from the date that control ceases. The acquisition method of accounting is used to account for the acquisition of subsidiaries except for business combinations under common control. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisitionbasis, the Group recognizes any non-controlling interests in the acquiree either at fair value or at the non-controlling interests’ proportionate share of the acquiree’s net assets.

The excess of the consideration transferred, the amount of any non-controlling interests in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognized directly in the statement of comprehensive income.

An acquisition of a business which is a business combination under common control is accounted for in a manner similar to a uniting of interests whereby the assets and liabilities acquired are accounted for at carryover predecessor values to the other party to the business combination with all periods presented as if the operations of the Group and the business acquired have always been combined. The difference between the consideration paid by the Group and the net assets or liabilities of the business acquired is adjusted against equity.

Intercompany transactions, balances and unrealized gains on transactions between group companies are eliminated. Unrealized losses are also eliminated. Where necessary, accounting policies of subsidiaries have been changed to ensure consistency with the policies adopted by the Group.

A listing of the Group’s principal subsidiaries is set out in Note 18.

(b) Investments in associates

Associates are entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for by the equity method of accounting in the consolidated financial statements of the Group and are initially recognized at cost.

Under this method of accounting, the Group’s share of the post-acquisition profits or losses of associates is recognized in the consolidated profit or loss and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amounts of the investments. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred obligations or made payments on behalf of the associate.

Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates; unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. The Group’s investment in associates includes goodwill identified on acquisition, net of any accumulated loss and is tested for impairment as part of the overall balance. Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired associate at the date of acquisition. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

A listing of the Group’s principal associates is shown in Note 16.

(c) Investments in joint ventures

Ventures are arrangements in which the Group with one or more parties have joint control, whereby the Group has rights to the net assets of the arrangements, rather than rights to their assets and obligations for their liabilities. The Group’s interests in joint ventures are accounted for by the equity method of accounting (Note 3(b)) in the consolidated financial statements.

A listing of the Group’s principal joint ventures is shown in Note 16.

(d) Transactions with non-controlling interests

Transactions with non-controlling interests are treated as transactions with owners in their capacity as owners of the Group. Gains and losses resulting from disposals to non-controlling interests are recorded in equity. The differences between any consideration paid and the relevant share of the carrying value of net assets of the subsidiary acquired resulting from the purchase of non-controlling interests, are recorded in equity.

When the Group ceases to have control or significant influence, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognized in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified to profit or loss.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognized in other comprehensive income are reclassified to profit or loss where appropriate.

(e) Foreign currencies

Items included in the financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). Most assets and operations of the Group are located in the PRC (Note 37), and the functional currency of the Company and most of the consolidated subsidiaries is the Renminbi (“RMB”). The consolidated financial statements are presented in the presentation currency of RMB.

Foreign currency transactions of the Group are accounted for at the exchange rates prevailing at the respective dates of the transactions; monetary assets and liabilities denominated in foreign currencies are translated at exchange rates at the date of the statement of financial position; gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities are recognized in the consolidated profit or loss.

For the Group entities that have a functional currency different from the Group’s presentation currency, assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of the statement of financial position. Income and expenses for each statement of comprehensive income presented are translated at the average exchange rates for each period and the resulting exchange differences are recognized in other comprehensive income.

(f) Property, plant and equipment

Property, plant and equipment, including oil and gas properties (Note 3(g)), are initially recorded in the consolidated statement of financial position at cost where it is probable that they will generate future economic benefits. Cost represents the purchase price of the asset and other costs incurred to bring the asset into existing use. Subsequent to their initial recognition, property, plant and equipment are carried at cost less accumulated depreciation, depletion and amortization (including any impairment).

Depreciation, to write off the cost of each asset, other than oil and gas properties (Note 3(g)), to their residual values over their estimated useful lives is calculated using the straight-line method.

The Group uses the following useful lives for depreciation purposes:

Buildings	8 - 40 years
Equipment and machinery	4 - 30 years
Motor vehicles	4 - 14 years
Other	5 - 12 years

No depreciation is provided on construction in progress until the assets are completed and ready for use.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

Property, plant and equipment, including oil and gas properties (Note 3(g)), are reviewed for possible impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the carrying amount of a cash generating unit exceeds the higher of its fair value less costs to sell and its value in use. Value in use is the estimated net present value of future cash flows to be derived from the cash generating unit.

Gains and losses on disposals of property, plant and equipment are determined by reference to their carrying amounts and are recorded in the consolidated profit or loss.

Interest and other costs on borrowings to finance the construction of property, plant and equipment are capitalized during the period of time that is required to complete and prepare the asset for its intended use. Costs for repairs and maintenance activities are expensed as incurred except for costs of components that result in improvements or betterments which are capitalized as part of property, plant and equipment and depreciated over their useful lives.

(g) Oil and gas properties

The successful efforts method of accounting is used for oil and gas exploration and production activities. Under this method, all costs for development wells, support equipment and facilities, and proved mineral interests in oil and gas properties are capitalized. Geological and geophysical costs are expensed when incurred. Costs of exploratory wells are capitalized pending determination of whether the wells find proved oil and gas reserves. Proved oil and gas reserves are the estimated quantities of crude oil and natural gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulation before the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether the estimate is a deterministic estimate or probabilistic estimate. Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average price during the 12-month period before the ending date of the period covered by the proved oil and gas reserve report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period unless prices are defined by contractual arrangements, excluding escalations based upon future conditions. The costs shall be that prevailing at the end of the period.

Exploratory wells in areas not requiring major capital expenditures are evaluated for economic viability within one year of completion of drilling. The related well costs are expensed as dry holes if it is determined that such economic viability is not attained. Otherwise, the related well costs are reclassified to oil and gas properties and are subject to impairment review (Note 3(f)). For exploratory wells that are found to have economically viable reserves in areas where major capital expenditure will be required before production can commence, the related well costs remain capitalized only if additional drilling is underway or firmly planned. Otherwise the related well costs are expensed as dry holes. The Group does not have any significant costs of unproved properties capitalized in oil and gas properties.

The Ministry of Land and Resources (Renamed as Department of Natural Resources) in China issues production licenses to applicants on the basis of the reserve reports approved by relevant authorities.

The cost of oil and gas properties is amortized at the field level based on the units of production method. Units of production rates are based on oil and gas reserves estimated to be recoverable from existing facilities based on the current terms of the Group’s production licenses.

(h) Intangible assets and goodwill

Expenditures on acquired patents, trademarks, technical know-how and licenses are capitalized at historical cost and amortized using the straight-line method over their estimated useful lives. Intangible assets are not subsequently revalued. The carrying amount of each intangible asset is reviewed annually and adjusted for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount and is recognized in the consolidated profit or loss. The recoverable amount is measured as the higher of fair value less costs to sell and value in use. Value in use is the estimated net present value of future cash flows to be derived from the asset.

Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over the interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree and the amount of any non-controlling interests in the acquiree.

Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognized immediately as an expense and is not subsequently reversed.

(i) Financial assets

Financial assets are classified into the following categories: financial assets at fair value through profit or loss, held-to-maturity investments, loans and receivables and available-for-sale financial assets. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. The Group has principally loans and receivables and available-for-sale financial assets and limited financial assets at fair value through profit or loss. The detailed accounting policies for loans and receivables, available-for-sale financial assets and financial assets at fair value through profit or loss held by the Group are set out below:

Classification

(i) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the date of the statement of financial position, which are classified as non-current assets. The Group’s loans and receivables comprise accounts receivable, notes receivable and other receivables. The recognition methods for loans and receivables are disclosed in the respective policy notes.

(ii) Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories; these are included in non-current assets unless management intends to dispose of the investment within 12 months of the date of the statement of financial position. The Group’s available-for-sale financial assets primarily comprise unquoted equity instruments.

(iii) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorized as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if expected to be settled within 12 months; otherwise, they are classified as non-current.

Recognition and measurement

Regular purchases and sales of financial assets are recognized on the trade-date, the date on which the Group commits to purchase or sell the asset. Investments are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognized at fair value, and transaction costs are expensed in profit or loss. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.

Available-for-sale financial assets are measured at fair value except where there are no quoted market prices in active markets and the fair values cannot be reliably measured using valuation techniques. Available-for-sale financial assets that do not have quoted market prices in active markets and whose fair value cannot be reliably measured are carried at cost. Changes in the fair value of monetary and non-monetary securities classified as available for sale are recognized in other comprehensive income. Financial assets at fair value through profit or loss are subsequently carried at fair value. Gains or losses arising from changes in the fair value of the “financial assets at fair value through profit or loss” category are presented in the statement of comprehensive income within “other income, net” in the period in which they arise.

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset is impaired. The amount of the impairment loss is measured as the difference between the carrying amount of the available-for-sale financial asset and the present value of the estimated cash flows.

(j) Leases

Leases of property, plant and equipment where the Group assumes substantially all the benefits and risks of ownership are classified as finance leases. The Group has no significant finance leases.

Leases of assets under which a significant portion of the risks and benefits of ownership are effectively retained by the lessors are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessors) are expensed on a straight-line basis over the lease terms. Payments made to the Department of Natural Resources to secure land use rights (excluding mineral properties) are treated as operating leases. Land use rights are generally obtained through advance lump-sum payments and the terms of use range up to 50 years.

(k) Inventories

Inventories include oil products, chemical products and materials and supplies which are stated at the lower of cost and net realizable value. Cost is primarily determined by the weighted average cost method. The cost of finished goods comprises raw materials, direct labor, other direct costs and related production overheads, but excludes borrowing costs. Net realizable value is the estimated selling price in the ordinary course of business, less the cost of completion and selling expenses.

(l) Accounts receivable

Accounts receivable are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision made for impairment of these receivables. Such provision for impairment is established if there is objective evidence that the Group will not be able to collect amounts due according to the original terms of the receivables. The factors the Group considers when assessing whether an account receivable is impaired include but are not limited to significant financial difficulties of the customer, probability that the debtor will enter bankruptcy or financial reorganization and default or delinquency in payments. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.

(m) Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, deposits held with banks and highly liquid investments with original maturities of three months or less from the time of purchase.

(n) Accounts payable

Accounts payable are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.

(o) Borrowings

Borrowings are recognized initially at fair value, net of transaction costs incurred. In subsequent periods, borrowings are stated at amortized cost using the effective interest method. Any difference between proceeds (net of transaction costs) and the redemption value is recognized in the consolidated profit or loss over the period of the borrowings.

General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognized in profit or loss in the period in which they are incurred.

Borrowings are classified as current liabilities unless the Group has unconditional rights to defer settlements of the liabilities for at least 12 months after the reporting period.

(p) Taxation

Deferred tax is provided in full, using the liability method, for temporary differences arising between the tax bases of assets and liabilities and their carrying values in the financial statements. However, deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates that have been enacted or substantively enacted by the date of the statement of financial position and are expected to apply to the period when the related deferred tax asset is realized or deferred tax liability is settled.

The principal temporary differences arise from depreciation on oil and gas properties and equipment and provision for impairment of receivables, inventories, investments and property, plant and equipment. Deferred tax assets relating to the carry forward of unused tax losses are recognized to the extent that it is probable that future taxable income will be available against which the unused tax losses can be utilized.

The Group also incurs various other taxes and levies that are not income taxes. “Taxes other than income taxes”, which form part of operating expenses, primarily comprise consumption tax (Note 9), resource tax (Note 9), crude oil special gain levy, urban construction tax, education surcharges and business tax.

(q) Revenue recognition

Sales are recognized upon delivery of products and customer acceptance or performance of services, net of value added taxes and discounts. Revenues are recognized only when the Group has transferred to the buyer the significant risks and rewards of ownership of the goods in the ordinary course of the Group’s activities, and when the amount of revenue and the costs incurred or to be incurred in respect of the transaction can be measured reliably and collectability of the related receivables is reasonably assured.

The Group markets a portion of its natural gas under take-or-pay contracts. Customers under the take-or-pay contracts are required to take or pay for the minimum natural gas deliveries specified in the contract clauses. Revenue recognition for natural gas sales and transmission tariff under the take-or-pay contracts follows the accounting policies described in this note. Payments received from customers for natural gas not yet taken are recorded as deferred revenues until actual deliveries take place.

(r) Provisions

Provisions are recognized when the Group has present legal or constructive obligations as a result of past events, it is probable that an outflow of resources will be required to settle the obligations, and reliable estimates of the amounts can be made.

Provision for future decommissioning and restoration is recognized in full on the installation of oil and gas properties. The amount recognized is the present value of the estimated future expenditure determined in accordance with local conditions and requirements. A corresponding addition to the related oil and gas properties of an amount equivalent to the provision is also created. This is subsequently depreciated as part of the costs of the oil and gas properties. Any change in the present value of the estimated expenditure other than due to passage of time which is regarded as interest expense, is reflected as an adjustment to the provision and oil and gas properties.

(s) Research and development

Research expenditure incurred is recognized as an expense. Costs incurred on development projects are recognized as intangible assets to the extent that such expenditure is expected to generate future economic benefits.

(t) Retirement benefit plans

The Group contributes to various employee retirement benefit plans organized by PRC municipal and provincial governments under which it is required to make monthly contributions to these plans at prescribed rates for its employees in China. The relevant PRC municipal and provincial governments undertake to assume the retirement benefit obligations of existing and future retired employees of the Group in China. The Group has similar retirement benefit plans for its employees in its overseas operations. Contributions to these PRC and overseas plans (“defined contribution plan”) are charged to expense as incurred. In addition, the Group joined the corporate annuity plan approved by relevant PRC authorities. Contribution to the annuity plan is charged to expense as incurred. The Group currently has no additional material obligations outstanding for the payment of retirement and other post-retirement benefits of employees in the PRC or overseas other than what described above.

(u) Related Parties

(a) A person, or a close member of that person’s family, is related to the Group if that person:

(i) has control or joint control over the Group;

(ii) has significant influence over the Group; or

(iii) is a member of the key management personnel of the Group or the Group’s parent.

(b) An entity is related to the Group if any of the following conditions applies:

(i) The entity and the Group are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

(iii) Both entities are joint ventures of the same third party.

(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

(v) The entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group.

(vi) The entity is controlled or jointly controlled by a person identified in (a).

(vii) A person identified in (a) (i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

(viii) The entity, or any member of a group of which it is a part, provides key management personnel services to the Group or to the Group’s parent.

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.

(v) New accounting developments

(i) New and amended standards adopted by the Group

There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning on or after January 1, 2017 that would be expected to have a material impact on the Group.

(ii) Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group.

IFRS 9 Financial Instruments (“IFRS 9”) published in July 2014, replaces the existing guidance in IAS 39 Financial Instruments: Recognition and Measurement (“IAS 39”). IFRS 9 includes revised guidance on the classification and measurement of financial instruments, a new expected credit loss model for calculating impairment on financial assets, and new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39.

IFRS 9 is effective for annual reporting periods beginning on or after January 1, 2018, on a retrospective basis. The Group plans to use the exemption from restating comparative information and will recognise any transition adjustments against the opening balance of equity at January 1, 2018. The adoption of this standard is expected to have an impact on the Group’s financial assets, but no impact on the Group’s financial liabilities. Under IFRS 9, the Group has designated equity investments classified as available-for-sale that are held for long-term strategic purpose as measured at fair value through other comprehensive income. Consequently, all fair value gains and losses will be recorded in other comprehensive income, no impairment losses will be recognised in profit or loss and no gains and losses will be reclassified to profit or loss on disposal.

The new impairment model in IFRS 9 replaces the “incurred loss” model in IAS 39 with an “expected credit loss” model. Under the expected credit loss model, it will no longer be necessary for a loss event to occur before an impairment loss is recognized. Instead, an entity is required to recognize and measure either a 12-month expected credit loss or a lifetime expected credit loss, depending on the asset and the facts and circumstances. The Group expects that the application of the expected credit loss model will result in earlier recognition of credit losses. Based on a preliminary assessment, the Group does not expect material change to the loss allowance for the Group’s loans and receivables.

IFRS 15 Revenue from contracts with customers (“IFRS 15”) establishes a comprehensive framework for determining whether, how much and when revenue is recognised and expands disclosure requirements relating to revenue recognition policies and how these relate to the revenue-generating contractual performance obligations. It replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes.

IFRS 15 is effective for annual reporting periods beginning on or after January 1, 2018, with early adoption permitted. The Group plans to adopt IFRS 15 using the cumulative effect method, with the effect of initially applying this standard recognised at the date of initial application. As a result, the Group will not apply the requirements of IFRS 15 to the comparative period presented. Based on the assessment of existing contracts with customers, the Group does not expect the application of IFRS 15 to have a significant impact on its consolidated financial statements.

IFRS 16 Lease (“IFRS 16”) introduces a single, on-balance lease sheet accounting model for lessees. A lessee recognizes a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. IFRS 16 replaces existing leases guidance including IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases—Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

IFRS 16 is effective for annual periods beginning on or after January 1, 2019, with early adoption permitted for entities that apply IFRS 15 completed at or before the date of initial application of IFRS 16. The Group has started an initial assessment of the potential impact on its consolidated financial statements. So far, the most significant impact identified is that the Group will recognize new assets and liabilities for its operating leases of oil and gas stations and land use rights. In addition, the nature of expenses related to the operating leases will change as IFRS 16 replaces the straight-line operating lease expense with a depreciation charge for right-of-use assets and interest expense on lease liabilities. No significant impact on the consolidated financial statements is expected for the Group’s finance leases.

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Financial Risk and Capital Management

12 Months Ended

Dec. 31, 2017

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Financial Risk and Capital Management

4 FINANCIAL RISK AND CAPITAL MANAGEMENT

4.1 Financial risk factors

The Group’s activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk.

(a) Market risk

Market risk is the possibility that changes in foreign exchange rates, interest rates and the prices of oil and gas products will adversely affect the value of assets, liabilities and expected future cash flows.

(i) Foreign exchange risk

The Group conducts its domestic business primarily in RMB, but maintains a portion of its assets in other currencies to pay for imported crude oil, imported equipment and other materials and to meet foreign currency financial liabilities. The Group is exposed to currency risks arising from fluctuations in various foreign currency exchange rates against the RMB. The RMB is not a freely convertible currency and is regulated by the PRC government. Limitations on foreign exchange transactions imposed by the PRC government could cause future exchange rates to vary significantly from current or historical exchange rates.

Additionally, the Group operates internationally and foreign exchange risk arises from future acquisitions and commercial transactions, recognized assets and liabilities and net investments in foreign operations. Certain entities in the Group might use currency derivatives to manage such foreign exchange risk.

(ii) Interest rate risk

The Group has no significant interest rate risk on interest-bearing assets. The Group’s exposure to interest rate risk arises from its borrowings. The Group’s borrowings at floating rates expose the Group to cash flow interest rate risk and its borrowings at fixed rates expose the Group to fair value interest rate risk. However, the exposure to interest rate risk is not material to the Group. A detailed analysis of the Group’s borrowings, together with their respective interest rates and maturity dates, is included in Note 27.

(iii) Price risk

The Group is engaged in a wide range of oil and gas products-related activities. Prices of oil and gas products are affected by a wide range of global and domestic factors which are beyond the control of the Group. The fluctuations in such prices may have favorable or unfavorable impacts on the Group. The Group did not enter into any material hedging of its price risk during the year.

(b) Credit risk

Credit risk arises from cash and cash equivalents, time deposits with banks and credit exposure to customers with outstanding receivable balances.

A substantial portion of the Group’s cash at bank and time deposits are placed with the major state-owned banks and financial institutions in China and management believes that the credit risk is low.

The Group performs ongoing assessment of the credit quality of its customers and sets appropriate credit limits taking into account the financial position and past history of defaults of customers. The Group’s accounts receivable balances over 3 years have been substantially provided for and accounts receivable balances within one year are generally neither past due nor impaired. The aging analysis of accounts receivable (net of impairment of accounts receivable) is presented in Note 22. The Group’s accounts receivable balances that are neither past due nor impaired are with customers with no recent history of default.

The carrying amounts of cash and cash equivalents, time deposits placed with banks, accounts receivable, other receivables and notes receivable included in the consolidated statement of financial position represent the Group’s maximum exposure to credit risk. No other financial assets carry a significant exposure to credit risk.

The Group has no significant concentration of credit risk.

(c) Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities.

In managing its liquidity risk, the Group has access to funding at market rates through equity and debt markets, including using undrawn committed borrowing facilities to meet foreseeable borrowing requirements.

Given the low level of gearing and continued access to funding, the Group believes that its liquidity risk is not material.

Analysis of the Group’s financial liabilities based on the remaining period at the date of the statement of financial position to the contractual maturity dates is presented in Note 27.

4.2 Capital management

The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern, optimize returns for owners and to minimize its cost of capital. In meeting its objectives of managing capital, the Group may issue new shares, adjust its debt levels or the mix between short-term and long-term borrowings.

The Group monitors capital on the basis of the gearing ratio which is calculated as interest-bearing borrowings / (interest-bearing borrowings + total equity). The gearing ratio at December 31, 2017 is 25.2% (December 31, 2016: 27.3%).

4.3 Fair value estimation

The methods and assumptions applied in determining the fair value of each class of financial assets and financial liabilities of the Group at December 31, 2017 and 2016 are disclosed in the respective accounting policies.

The carrying amounts of the following financial assets and financial liabilities approximate their fair value as all of them are short-term in nature: cash and cash equivalents, time deposits with maturities over three months but within one year, accounts receivable, other receivables, trade payables, other payables and short-term borrowings. The fair values of fixed rate long-term borrowings are likely to be different from their respective carrying amounts. Analysis of the fair values and carrying amounts of long-term borrowings is presented in Note 27.

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Critical Accounting Estimates and Judgements

12 Months Ended

Dec. 31, 2017

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Critical Accounting Estimates and Judgements

5 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgments are regularly evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The matters described below are considered to be the most critical in understanding the estimates and judgments that are involved in preparing the Group’s consolidated financial statements.

(a) Estimation of oil and gas reserves

Estimates of oil and natural gas reserves are key elements in the Group’s investment decision-making process. They are also an important element in testing for impairment. Changes in proved oil and gas reserves, particularly proved developed reserves, will affect unit-of-production depreciation, depletion and amortization recorded in the Group’s consolidated financial statements for property, plant and equipment related to oil and gas production activities. A reduction in proved developed reserves will increase depreciation, depletion and amortization charges. Proved oil and gas reserves estimates are subject to revision, either upward or downward, based on new information, such as from development drilling and production activities or from changes in economic factors, including product prices, contract terms, evolution of technology or development plans, etc.

(b) Estimation of impairment of property, plant and equipment

Property, plant and equipment, including oil and gas properties, are reviewed for possible impairments when events or changes in circumstances indicate that the carrying amount may not be recoverable. Determination as to whether and how much an asset is impaired involves management estimates and judgments such as the future price of crude oil, refined and chemical products, the operation costs, the product mix, production volumes and the oil and gas reserves. However, the impairment reviews and calculations are based on assumptions that are consistent with the Group’s business plans taking into account current economic conditions. Favorable changes to some assumptions, or not updating assumptions previously made, may allow the Group to avoid the need to impair any assets or make it necessary to reverse an impairment loss recognized in prior periods, whereas unfavourable changes may cause the assets to become impaired. For example, when the assumed future price and production volume of crude oil used for the expected future cash flows are different from the actual price and production volume of crude oil respectively experienced in future, the Group may either over or under recognize the impairment losses for certain assets.

(c) Estimation of asset retirement obligations

Provision is recognized for the future decommissioning and restoration of oil and gas properties. The amount of the provision recognized is the present values of the estimated future expenditures. The estimation of the future expenditures is based on current local conditions and requirements, including legal requirements, technology, price levels, etc. In addition to these factors, the present values of these estimated future expenditures are also impacted by the estimation of the economic lives of oil and gas properties and estimates of discount rates. Changes in any of these estimates will impact the operating results and the financial position of the Group over the remaining economic lives of the oil and gas properties.

(d) Deferred tax assets

According to the requirements of the competent tax authority, the Company paid income taxes of its branches in the eastern and western regions in aggregate. The tax losses recorded by the branches in the eastern region has given rise to deferred tax assets, which may be recoverable from future taxable profits generated by the branches in the eastern region. Any policy adjustments may increase or decrease the amount of tax expenses of the Company.

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Revenue

12 Months Ended

Dec. 31, 2017

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Revenue

6 REVENUE

Revenue represents revenues from the sale of crude oil, natural gas, refined products and petrochemical products and from the transmission of crude oil, refined products and natural gas. Analysis of revenue by segment is shown in Note 37.

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Profit Before Income Tax Expense

12 Months Ended

Dec. 31, 2017

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Profit Before Income Tax Expense

7 PROFIT BEFORE INCOME TAX EXPENSE

	2017		2016		2015
	RMB		RMB		RMB
Items credited and charged in arriving at the profit before income tax expense include:
Credited
Dividend income from available-for-sale financial assets		42		60		288
Reversal of provision for impairment of receivables		37		62		99
Reversal of write down in inventories		49		75		59
Government grants(i)		9,102		8,509		7,906
Remeasurement to fair value of pre-existing interest in acquiree		—		—		22,807
Gain on disposal of investment in subsidiaries(ii)		613		24,674		280
Charged
Amortization of intangible and other assets		4,495		4,896		4,141
Auditors’ remuneration (iii)		53		53		53
Cost of inventories recognized as expense		1,560,361		1,217,131		1,282,039
Provision for impairment of receivables		3,291		1,671		173
Loss on disposal of property, plant and equipment		4,939		7,972		4,661
Operating lease expenses		20,073		19,027		16,786
Research and development expenses		12,323		11,227		11,856
Write down in inventories		1,118		2,709		3,394

(i) Comprises proportionate refund of import value-added tax relating to the import of natural gas (including liquefied natural gas) provided by the PRC government. This value-added tax refund is applicable from January 1, 2011 to December 31, 2020 and available when the import prices of the natural gas and liquefied natural gas imported under any State-sanctioned pipelines are higher than their prescribed selling prices.

(ii) On November 24, 2015, the Board of Directors approved the sale by CNPC Exploration and Development Co., Ltd. (“CNPC E&D”), one of the Company’s wholly-owned subsidiaries, of its 50% of equity interest in Trans-Asia Gas Pipeline Co., Ltd. (“Trans-Asia Pipeline”) to CNIC Corporation Limited. The transaction was completed in the second quarter of 2016 and CNPC E&D lost control over Trans-Asia Pipeline accordingly. The gain recorded as “Other (expenses) / income, net” of RMB 24,534 represents the difference between the sum of total consideration equivalent to RMB 14,671 received from the transaction and the fair value of the remaining equity investment of RMB 14,527, and the net assets of the former subsidiary of RMB 4,034, together with the amounts of RMB 630 recognized previously in other comprehensive loss in relation to Trans-Asia Pipeline reclassified to profit or loss.

(iii) The auditors’ remuneration above represents the annual audit fees paid by the Company. This remuneration does not include fees of RMB 52 (2016: RMB 66, 2015: RMB 36) paid by subsidiaries to the Company’s current auditor and its network firms which primarily relates to audit fees of RMB 40 (2016: RMB 50, 2015: RMB 29), audit-related fees of RMB 8 (2016: RMB 8, 2015: RMB 6) and tax fees of RMB 3 (2016: RMB 7, 2015 RMB nil), and other service fees of RMB 1 (2016: RMB 1, 2015: RMB 1).

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Employee Compensation Costs

12 Months Ended

Dec. 31, 2017

Investments Schedule [Abstract]

Employee Compensation Costs

8 EMPLOYEE COMPENSATION COSTS

	2017		2016		2015
	RMB		RMB		RMB
Wages, salaries and allowances		82,639		75,461		75,651
Social security costs		42,745		42,201		42,431
		125,384		117,662		118,082

Social security costs mainly represent contributions to plans for staff welfare organized by the PRC municipal and provincial governments and others including contributions to the retirement benefit plans (Note 32).

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Taxes Other Than Income Taxes

12 Months Ended

Dec. 31, 2017

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Taxes Other Than Income Taxes

9 TAXES OTHER THAN INCOME TAXES

	2017		2016		2015
	RMB		RMB		RMB
Consumption tax		142,708		140,268		149,323
Resource tax		18,000		14,472		18,584
Other		37,314		34,868		37,977
		198,022		189,608		205,884

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Interest Expense

12 Months Ended

Dec. 31, 2017

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Interest Expense

10 INTEREST EXPENSE

	2017			2016			2015
	RMB			RMB			RMB
Interest on
Bank loans		1,569			891			1,259
Other loans		17,394			19,910			19,892
Accretion expense (Note 31)		5,453			5,126			5,950
Less: Amounts capitalized		(2,008	)		(2,579	)		(2,773	)
	22,408			23,348			24,328

Amounts capitalized are borrowing costs that are attributable to the construction of a qualifying asset. The average interest rate used to capitalize such general borrowing cost was 4.28% per annum for the year ended December 31, 2017 (2016: 4.28% per annum, 2015: 4.28%-5.76 % per annum).

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Emoluments of Directors and Supervisors

12 Months Ended

Dec. 31, 2017

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Emoluments of Directors and Supervisors

11 EMOLUMENTS OF DIRECTORS AND SUPERVISORS

Details of the emoluments of directors and supervisors for the years ended December 31, 2017, 2016 and 2015 are as follows:

	2017								2016		2015
Name	Fee for directors and supervisors		Salaries, allowances and other benefits		Contribution to retirement benefit scheme		Total		Total		Total
	RMB’000		RMB’000		RMB’000		RMB’000		RMB’000		RMB’000
Chairmen:
Mr. Wang Yilin(i)		—		—		—		—		—		—
Mr. Zhou Jiping(i)		—		—		—		—		—		—
Vice Chairmen:
Mr. Zhang Jianhua(ii)		—		—		—		—		—		—
Mr. Wang Dongjin(iii)		—		696		127		823		774		734
Executive directors:
Mr. Zhao Zhengzhang(iv)		—		118		41		159		759		671
Mr. Hou Qijun(iv)		—		572		76		648		—		—
Non-executive directors:
Mr. Yu Baocai		—		—		—		—		—		—
Mr. Shen Diancheng(vi)		—		—		—		—		—		—
Mr. Liu Yuezhen		—		—		—		—		—		—
Mr. Liu Hongbin(v)		—		—		—		—		679		699
Mr. Duan Liangwei(vi)		—		—		—		—		—		—
Mr. Qin Weizhong(vi)		—		—		—		—		—		—
Mr. Chen Zhiwu(vii)		—		—		—		—		234		220
Mr. Richard H. Matzke(vii)		—		—		—		—		241		230
Mr. Lin Boqiang		250		—		—		250		281		249
Mr. Zhang Biyi		250		—		—		250		278		252
Ms. Elsie Leung Oi-sie(vii)		220		—		—		220		—		—
Mr. Tokuchi Tatsuhito(vii)		226		—		—		226		—		—
Mr. Simon Henry(vii)		213		—		—		213		—		—
		1,159		—		—		1,159		1,713		1,650
Supervisors:
Mr. Xu Wenrong(viii)		—		—		—		—		—		—
Mr. Guo Jinping(viii)		—		—		—		—		—		—
Mr. Zhang Fengshan		—		—		—		—		—		—
Mr. Li Qingyi(viii)		—		—		—		—		—		—
Mr. Jia Yimin(viii)		—		—		—		—		—		—
Mr. Jiang Lifu		—		—		—		—		—		—
Mr. Lu Yaozhong(viii)		—		—		—		—		—		—
Mr. Wang Liang(x)		—		—		—		—		—		—
Mr. Yao Wei(ix)		—		—		—		—		469		796
Mr. Liu Hehe(ix)		—		—		—		—		352		724
Mr. Yang Hua (viii)		—		201		49		250		862		838
Mr. Fu Suotang(viii)		—		525		46		571		—		—
Mr. Li Jiamin		—		745		65		810		707		771
Mr. Liu Xianhua(ix)		—		671		62		733		528		—
Mr. Li Wendong(ix)		—		788		96		884		670		—
		—		2,930		318		3,248		3,588		3,129
		1,159		4,316		562		6,037		6,834		6,184

(i) Mr. Wang Yilin was elected as the chairman from June 23, 2015, and Mr. Zhou Jiping ceased being the chairman from June 23, 2015.

(ii) Mr. Zhang Jianhua was elected as the vice chairman and non-executive director from October 28, 2016.

(iii) Mr. Wang Dongjin also serves as the president and executive director.

(iv) Mr. Hou Qijun was elected as the vice president and executive director. Besides, Mr. Zhao Zhengzhang was elected as an executive director from June 23, 2015 and ceased being the executive director from June 8, 2017.

(v) Mr. Liu Hongbin ceased being the vice chairman and was transferred from the executive director to the non-executive director from October 28, 2016, besides, received no emoluments from the Company since the next day.

(vi) Mr. Shen Diancheng ceased being the non-executive director, and Mr. Duan Liangwei and Mr. Qin Weizhong were elected as the non-executive director from June 8, 2017.

(vii) Ms. Elsie Leung Oi-sie, Mr. Tokuchi Tatsuhito and Mr. Simon Henry were elected as the independent non-executive directors, besides, Mr. Chen Zhiwu and Mr. Richard H. Matzke ceased being the independent non-executive directors from June 8, 2017.

(viii) Mr. Xu Wenrong was elected as an non-executive director from May 25, 2016 and ceased being the non-executive from June 8, 2017. Mr. Xu Wenrong was elected as the Chairman of the Supervisory Committee and Mr. Lu Yaozhong was elected as the supervisor, besides, Mr. Guo Jinping, Mr. Li Qingyi and Mr. Jia Yimin ceased being the supervisors from June 8, 2017. Mr. Fu Suotang were elected as the staff supervisor, besides, Mr. Yang Hua ceased being the staff supervisor from June 8, 2017.

(ix) Mr. Li Wendong and Mr. Liu Xianhua were elected as the staff supervisors, besides, Mr. Yao Wei and Mr. Liu Hehe ceased being the staff supervisors from May 17, 2016.

(x) Mr. Wang Liang was elected as the supervisor from October 26, 2017.

(xi) The emoluments received by the following person are not reflected in the analysis shown above:

Mr. Liao Yongyuan ceased being the non-executive director and vice chairman from March 17, 2015, and emoluments received from the Company during the year 2017, 2016 and 2015 were RMB nil, RMB nil, respectively.

(xii) The deferred performance emoluments of RMB 1.64 which the company paid to the directors attributable to the year of 2013 to 2015 in accordance with the relevant regulations of the Chinese Government are not reflected in the 2016 annual remuneration shown above.

(xiii) The emoluments above are all pre-tax amounts.

None of the directors and supervisors has waived their remuneration during the year ended December 31, 2017. (2016: None of the directors and supervisors has waived their remuneration during the year ended December 31, 2016. 2015: None of the directors and supervisors has waived their remuneration during the year ended December 31, 2015)

The five highest paid individuals in the Company for the year ended December 31, 2017 include two supervisors whose emoluments are reflected in the analysis shown above and the note; and three senior managements whose allowances and other benefits were RMB 0.823, RMB 0.823 and RMB 0.732, respectively, and whose contribution to retirement benefit scheme were RMB 0.127, RMB 0.127 and RMB 0.127 respectively.

The five highest paid individuals in the Company for the year ended December 31, 2016 include two supervisors whose emoluments are reflected in the analysis shown above and the note; and three senior managements whose allowances and other benefits were RMB 0.783, RMB 0.783 and RMB 0.775, respectively, and whose contribution to retirement benefit scheme were RMB 0.122, RMB 0.122 and RMB 0.108, respectively.

The five highest paid individuals in the Company for the year ended December 31, 2015 include three supervisors whose emoluments are reflected in the analysis shown above and the note; and two senior managements whose allowances and other benefits were RMB 0.780 and RMB 0.768, respectively, and whose contribution to retirement benefit scheme were RMB 0.130 and RMB 0.132, respectively.

During 2017, 2016 and 2015, the Company did not incur any severance payment to any director for loss of office or any payment as inducement to any director to join the Company.

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Income Tax Expense

12 Months Ended

Dec. 31, 2017

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Income Tax Expense

12 INCOME TAX EXPENSE

	2017			2016			2015
	RMB			RMB			RMB
Current taxes		23,835			19,762			18,998
Deferred taxes (Note 30)		(7,539	)		(3,994	)		(3,272	)
		16,296			15,768			15,726

In accordance with the relevant PRC income tax rules and regulations, the PRC corporate income tax rate applicable to the Group is principally 25%. Operations of the Group in western regions in China qualified for certain tax incentives in the form of a preferential income tax rate of 15% through the year 2020.

The tax on the Group’s profit before taxation differs from the theoretical amount that would arise using the corporate income tax rate in the PRC applicable to the Group is as follows:

	2017			2016			2015
	RMB			RMB			RMB
Profit before income tax expense		53,089			45,140			57,815
Tax calculated at a tax rate of 25%		13,272			11,285			14,454
Tax return true-up		1,275			1,887			2,008
Effect of income taxes from international operations in excess of taxes at the PRC statutory tax rate		693			1,797			910
Effect of preferential tax rate		(5,058	)		(2,418	)		(5,436	)
Tax effect of income not subject to tax		(3,401	)		(4,935	)		(2,875	)
Tax effect of expenses not deductible for tax purposes		9,515			8,152			6,665
Income tax expense		16,296			15,768			15,726

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Basic and Diluted Earnings Per Share

12 Months Ended

Dec. 31, 2017

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Basic and Diluted Earnings Per Share

13 BASIC AND DILUTED EARNINGS PER SHARE

Basic and diluted earnings per share for the years ended December 31, 2017, 2016 and 2015 have been computed by dividing profit for the year attributable to owners of the Company of RMB 22,798, RMB 7,857 and RMB 35,517 respectively by 183,021 million shares issued and outstanding for the year.

There are no potentially dilutive ordinary shares.

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Dividends

12 Months Ended

Dec. 31, 2017

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Dividends

14 DIVIDENDS

	2017		2016		2015
	RMB		RMB		RMB
Interim dividends attributable to owners of the Company for 2017(a)		12,676		—		—
Proposed final dividends attributable to owners of the Company for 2017(b)		11,117		—		—
Interim dividends attributable to owners of the Company for 2016(c)		—		3,899		—
Final dividends attributable to owners of the Company for 2016(d)		—		6,957		—
Interim dividends attributable to owners of the Company for 2015(e)		—		—		11,433
Final dividends attributable to owners of the Company for 2015(f)		—		—		4,550
		23,793		10,856		15,983

(a) Interim dividends attributable to owners of the Company in respect of 2017 of RMB 0.06926 yuan per share amounting to a total of RMB 12,676 were paid on September 15, 2017 (A shares) and October 27, 2017 (H shares).

(b) At the 1st meeting of the Board in 2018, the Board of Directors proposed final dividends attributable to owners of the Company in respect of 2017 of RMB 0.06074 yuan per share amounting to a total of RMB 11,117. These consolidated financial statements do not reflect this dividend payable as the final dividends were proposed after the reporting period and will be accounted for in equity as an appropriation of retained earnings for the year ended December 31, 2018 when approved at the forthcoming Annual General Meeting.

(c) Interim dividends attributable to owners of the Company in respect of 2016 of RMB 0.02131 yuan per share amounting to a total of RMB 3,899 were paid on September 21, 2016 (A shares) and October 28, 2016 (H shares).

(d) Final dividends attributable to owners of the Company in respect of 2016 of RMB 0.03801 yuan per share amounting to a total of RMB 6,957 were paid on June 22, 2017 (A shares) and July 27, 2017 (H shares).

(e) Interim dividends attributable to owners of the Company in respect of 2015 of RMB 0.06247 yuan per share amounting to a total of RMB 11,433 were paid on September 18, 2015 (A shares) and October 27, 2015 (H shares).

(f) Final dividends attributable to owners of the Company in respect of 2015 of RMB 0.02486 yuan per share amounting to a total of RMB 4,550 were paid on June 8, 2016 (A shares) and July 14, 2016 (H shares).

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Property, Plant and Equipment

12 Months Ended

Dec. 31, 2017

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Property, Plant and Equipment

15 PROPERTY, PLANT AND EQUIPMENT

Year Ended December 31, 2017	Buildings			Oil and Gas Properties			Equipment and Machinery			Motor Vehicles			Other			Construction in Progress			Total
	RMB			RMB			RMB			RMB			RMB			RMB			RMB
Cost
At beginning of the year		214,710			1,909,213			990,832			29,227			22,268			229,371			3,395,621
Additions		1,042			9,193			3,995			824			528			204,159			219,741
Transfers		13,913			124,257			75,284			—			10,506			(223,960	)		—
Disposals or write offs		(3,280	)		(21,746	)		(11,061	)		(1,032	)		(441	)		(9,455	)		(47,015	)
Currency translation differences		(278	)		(9,588	)		(1,039	)		(29	)		(230	)		(242	)		(11,406	)
At end of the year		226,107			2,011,329			1,058,011			28,990			32,631			199,873			3,556,941
Accumulated depreciation and impairment
At beginning of the year		(85,323	)		(1,063,500	)		(469,475	)		(19,467	)		(11,971	)		(6,340	)		(1,656,076	)
Charge for the year and others		(9,968	)		(150,178	)		(49,509	)		(1,754	)		(1,857	)		—			(213,266	)
Impairment charge		(659	)		(3,961	)		(10,300	)		(3	)		(2,715	)		(309	)		(17,947	)
Disposals or write offs or transfers		2,075			11,426			9,663			921			(1,699	)		3,664			26,050
Currency translation differences		110			6,472			532			7			12			(22	)		7,111
At end of the year		(93,765	)		(1,199,741	)		(519,089	)		(20,296	)		(18,230	)		(3,007	)		(1,854,128	)
Net book value
At end of the year		132,342			811,588			538,922			8,694			14,401			196,866			1,702,813

Year Ended December 31, 2016	Buildings			Oil and Gas Properties			Equipment and Machinery			Motor Vehicles			Other			Construction in Progress			Total
	RMB			RMB			RMB			RMB			RMB			RMB			RMB
Cost
At beginning of the year		205,204			1,799,887			953,331			29,586			21,018			236,804			3,245,830
Additions		979			7,995			3,202			624			416			161,336			174,552
Transfers		10,644			109,171			40,216			—			965			(160,996	)		—
Disposals or write offs		(2,573	)		(23,047	)		(6,781	)		(1,027	)		(267	)		(9,689	)		(43,384	)
Currency translation differences		456			15,207			864			44			136			1,916			18,623
At end of the year		214,710			1,909,213			990,832			29,227			22,268			229,371			3,395,621
Accumulated depreciation and impairment
At beginning of the year		(76,904	)		(929,554	)		(421,315	)		(18,619	)		(10,740	)		(3,793	)		(1,460,925	)
Charge for the year and others		(9,677	)		(141,530	)		(47,750	)		(1,753	)		(1,297	)		—			(202,007	)
Impairment charge		(63	)		(711	)		(5,494	)		(1	)		(15	)		(2,218	)		(8,502	)
Disposals or write offs or transfers		1,469			15,536			5,501			930			219			6			23,661
Currency translation differences		(148	)		(7,241	)		(417	)		(24	)		(138	)		(335	)		(8,303	)
At end of the year		(85,323	)		(1,063,500	)		(469,475	)		(19,467	)		(11,971	)		(6,340	)		(1,656,076	)
Net book value
At end of the year		129,387			845,713			521,357			9,760			10,297			223,031			1,739,545

The impairment charge of the Group for the year ended December 31, 2017 amounted to RMB 17,947 (2016: RMB 8,502 primarily related to certain petrochemical and liquefied natural gas production facilities, 2015: RMB 25,022 primarily related to oil and gas properties) primarily related to certain oil and gas properties and petrochemical production facilities. The impairment of these properties is mainly due to the higher production costs and operating costs and the crude oil price fluctuating at a low level. The carrying amount of these assets has been reduced to the recoverable amount.

When determining whether there are indications of impairment for oil and gas properties, the Group considers factors, mainly including the decline of production and reserve volumes at the late development stage of certain oil blocks and the significant drop in economic benefits of certain oil blocks resulted from the higher production cost. The Group’s subsidiaries or branches under the exploration and production segment will determine whether there are any indications of impairment for their own oil blocks according to the Group’s guidance of indications of impairment for oil and gas properties, and perform the impairment tests on those oil blocks with indications of impairment, and report the results to the Group’s internal professional team (including operation and finance team) for further overall assessment and evaluation. The final results of the impairment tests will be submitted to the Group’s management for review and approval. The Group recorded impairment losses in 2017 related to oil and gas properties and construction in progress under the exploration and production segment due to the significant drop in economic benefits of certain oil blocks resulted from the higher production cost, and recorded impairment loss in 2016 and 2015 related to oil and gas properties and construction in progress under the exploration and production segment due to the fact that the international prices of crude oil significantly dropped as a result of the global economic downturn. In addition, the oil reserves of certain oil blocks decreased and the production costs of some super heavy oil blocks and ultra-low permeability oil blocks were high. The above factors jointly led to lower economic benefits of those oil blocks and the impairment losses for the oil and gas properties. The carrying amount of those impaired oil and gas properties was written down to their respective recoverable amounts, which were determined based on the present values of the expected future cash flows of the assets. The Group referred to the weighted average cost of capital of the oil and gas industry when determining discount rate, and made relevant adjustments according to specific risks in different countries or regions. In 2017, the after-tax discount rates adopted by most oil blocks of the Group ranged from 7.6% to 11.0% (2016: 7.1% to 10.3%, 2015: 7.0% to 10.0%).

The Group performs an impairment review to identify whether there is any indication that an asset may be impaired. When such an indication exists on those oil and gas properties identified, the Group follows the above procedure to estimate the recoverable amount of the assets. If the carrying amount of the oil and gas properties exceeds their recoverable amount, the carrying amount of the oil and gas properties will be written down to its recoverable amount.

The following table indicates the changes to the Group’s exploratory well costs, which are included in construction in progress, for the years ended December 31, 2017, 2016 and 2015.

	2017			2016			2015
	RMB			RMB			RMB
At beginning of the year		21,421			20,177			20,878
Additions to capitalized exploratory well costs pending the determination of proved reserves		25,165			21,847			21,698
Reclassified to wells, facilities, and equipment based on the determination of proved reserves		(14,288	)		(10,914	)		(12,791	)
Capitalized exploratory well costs charged to expense		(9,455	)		(9,689	)		(9,608	)
At end of the year		22,843			21,421			20,177

The following table provides an aging of capitalized exploratory well costs based on the date the drilling was completed.

	December 31, 2017		December 31, 2016
	RMB		RMB
One year or less		15,231		13,202
Over one year		7,612		8,219
Balance at December 31		22,843		21,421

RMB 7,612 at December 31, 2017 (December 31, 2016: RMB 8,219) of capitalized exploratory well costs over one year are principally related to wells that are under further evaluation of drilling results or pending completion of development planning to ascertain economic viability.

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Interests in Other Entities

12 Months Ended

Dec. 31, 2017

Associates and joint ventures [member]

Interests in Other Entities

16 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

The summarized financial information of the Group’s principal associates and joint ventures, including the aggregated amounts of assets, liabilities, revenue, profit or loss and the interest held by the Group were as follows:

Name	Country of Incorporation		Registered Capital		Principal Activities	Interest Held
						Direct%		Indirect%
Dalian West Pacific Petrochemical Co., Ltd.		PRC		USD 258 million	Production and sale of petroleum and petrochemical products		28.44		—
China Petroleum Finance Co., Ltd.(i)		PRC		8,331	Deposits, loans, settlement, lending, bills acceptance discounting, guarantee and other banking business		32.00		—
CNPC Captive Insurance Co., Ltd.		PRC		5,000	Property loss insurance, liability insurance, credit insurance and deposit insurance; as well as the application of the above insurance reinsurance and insurance capital business		49.00		—
China Marine Bunker (PetroChina) Co., Ltd.		PRC		1,000	Oil import and export trade and transportation, sale and storage		—		50.00
Arrow Energy Holdings Pty Ltd.		Australia		AUD 2	Exploration, development and sale of coal seam gas		—		50.00
Trans-Asia Gas Pipeline Co., Ltd.(ii)		PRC		5,000	Main contractor, investment holding, investment management, investment consulting, enterprise management advisory, technology development, promotion and technology consulting		—		50.00

(i) In August 2016, China National Petroleum Corporation injected RMB 19,471 cash into China Petroleum Finance Co., Ltd. (the “CP Finance”), of which RMB 2,890 and RMB 16,581 were recorded as “Registered Capital” and “Capital Reserve”, respectively. The registered capital of CP Finance was increased from RMB 5,441 to RMB 8,331. The Company’s share was diluted from 49% to 32%, and the Company’s share of net assets was increased RMB 307.

(ii) On November 24, 2015, the board of directors of the Company approved the sale by CNPC Exploration and Development Co., Ltd. (“CNPC E&D”), one of the Company’s subsidiaries, of its 50% equity interest in Trans-Asia Pipeline to CNIC Corporation Limited for a consideration equivalent to RMB 14,671. The transaction closed in the second quarter of 2016.

Dividends received and receivable from associates and joint ventures were RMB 7,034 in 2017 (2016: RMB 10,172, 2015: RMB 9,489).

In 2017, investments in associates and joint ventures of RMB 96 (2016: RMB 101, 2015: RMB 55) were disposed of, resulting in a gain of RMB 6 (2016: a loss of RMB 40, 2015: a gain of RMB 1,258).

In 2017, the share of profit and other comprehensive loss in all individually immaterial associates and joint ventures accounted for using equity method in aggregate was profit of RMB 3,235 (2016: profit of RMB 2,738, 2015: profit of RMB 3,846) and loss of RMB 845 (2016: loss of RMB 204, 2015: income of RMB 1,042), respectively.

Interest in Associates

Summarized financial information in respect of the Group’s principal associates and reconciliation to carrying amount is as follows:

	Dalian West Pacific Petrochemical Co., Ltd.						China Petroleum Finance Co., Ltd.				CNPC Captive Insurance Co., Ltd.
	December 31, 2017			December 31, 2016			December 31, 2017		December 31, 2016		December 31, 2017		December 31, 2016
	RMB			RMB			RMB		RMB		RMB		RMB
Percentage ownership interest (%)		28.44			28.44			32.00		32.00		49.00		49.00
Current assets		5,326			3,597			169,389		148,916		9,386		9,192
Non-current assets		4,141			4,373			309,481		270,507		2,764		2,166
Current liabilities		12,108			8,329			394,064		332,923		6,097		5,594
Non-current liabilities		333			5,217			24,977		29,998		1		1
Net (liabilities) / assets		(2,974	)		(5,576	)		59,829		56,502		6,052		5,763
Group’s share of net assets		—			—			19,145		18,080		2,965		2,824
Goodwill		—			—			349		349		—		—
Carrying amount of interest in associates		—			—			19,494		18,429		2,965		2,824

Summarized statement of comprehensive income is as follows:

	Dalian West Pacific Petrochemical Co., Ltd.							China Petroleum Finance Co., Ltd.							CNPC Captive Insurance Co., Ltd.
	2017		2016		2015			2017			2016		2015		2017		2016		2015
	RMB		RMB		RMB			RMB			RMB		RMB		RMB		RMB		RMB
Revenue		27,716		19,029		18,170			8,520			8,555		10,335		654		563		480
Profit for the year		2,602		1,475		(984	)		7,286			7,524		5,839		364		302		286
Other comprehensive (loss) / income		—		—		—			(1,395	)		655		294		1		2		1
Total comprehensive income / (loss)		2,602		1,475		(984	)		5,891			8,179		6,133		365		304		287
Group’s share of total comprehensive income		—		—		—			1,885			3,628		3,005		179		149		141
Dividends received by the Group		—		—		—			815			7,203		631		27		—		—

Interest in Joint Ventures

Summarized balance sheet in respect of the Group’s principal joint ventures and reconciliation to carrying amount is as follows:

	China Marine Bunker (PetroChina) Co., Ltd.				Arrow Energy Holdings Pty Ltd.						Trans-Asia Gas Pipeline Co., Ltd.
	December 31, 2017		December 31, 2016		December 31, 2017			December 31, 2016			December 31, 2017		December 31, 2016
	RMB		RMB		RMB			RMB			RMB		RMB
Percentage ownership interest (%)		50.00		50.00		50.00			50.00			50.00		50.00
Non-current assets		1,942		1,974		25,429			32,733			31,527		27,009
Current assets		6,449		6,453		540			708			3,957		4,045
Including: cash and cash equivalents		1,277		1,461		91			368			3,955		4,025
Non-current liabilities		232		749		21,569			25,308			2,100		2,100
Including: Non-current financial liabilities excluding trade and other payables and provisions		—		500		17,890			16,304			2,100		2,100
Current liabilities		5,309		4,902		583			690			343		414
Including: Current financial liabilities excluding trade and other payables and provisions		1,894		1,188		192			316			—		—
Net assets		2,850		2,776		3,817			7,443			33,041		28,540
Net assets attributable to owners of the Company		2,630		2,528		3,817			7,443			33,041		28,540
Group’s share of net assets		1,315		1,264		1,909			3,722			16,521		14,270
Elimination of unrealized profit		—		—		—			—			—		—
Elimination of transactions with the Group		—		—		(52	)		(45	)		—		—
Carrying amount of interest in joint ventures		1,315		1,264		1,857			3,677			16,521		14,270

Summarized statement of comprehensive income and dividends received by the Group is as follows:

	China Marine Bunker (PetroChina) Co., Ltd.									Arrow Energy Holdings Pty Ltd.									Trans-Asia Gas Pipeline Co., Ltd.
	2017			2016			2015			2017			2016			2015			2017			From the closing date to Dec 31, 2016
	RMB			RMB			RMB			RMB			RMB			RMB			RMB			RMB
Revenue		31,770			23,336			27,587			1,449			1,135			971			16			84
Depreciation, depletion and amortization		(93	)		(92	)		(88	)		(883	)		(624	)		(484	)		(3	)		(3	)
Interest income		12			9			35			2			5			6			65			55
Interest expense		(39	)		(45	)		(56	)		(1,300	)		(1,307	)		(1,189	)		(43	)		(32	)
Income tax expense		(44	)		(47	)		(33	)		—			—			—			—			(1	)
Net profit / (loss)		116			101			93			(5,518	)		(3,718	)		(10,753	)		5,846			88
Total comprehensive income / (loss)		87			171			176			(3,445	)		(3,402	)		(12,934	)		5,736			194
Total comprehensive income / (loss) by share		43			68			67			(1,723	)		(1,701	)		(6,467	)		2,868			97
Elimination of unrealized profit		—			—			—			—			—			—			(617	)		(354	)
Group’s share of total comprehensive income / (loss)		43			68			67			(1,723	)		(1,701	)		(6,467	)		2,251			(257	)
Dividends received by the Group		—			9			18			—			—			—			—			—

Subsidiaries [member]

Interests in Other Entities

18 SUBSIDIARIES

The principal subsidiaries of the Group are:

Company Name	Country of Incorporation	Issued Capital RMB		Type of Legal Entity	Attributable Equity Interest %		Voting Rights%	Principal Activities
Daqing Oilfield Company Limited	PRC		47,500	Limited liability company		100.00	100.00	Exploration, production and sale of crude oil and natural gas
CNPC Exploration and Development Company Limited (i)	PRC		16,100	Limited liability company		50.00	57.14	Exploration, production and sale of crude oil and natural gas in and outside the PRC
PetroChina Hong Kong Limited	Hong Kong		HKD 7,592 million	Limited liability company		100.00	100.00	Investment holding. The principal activities of its subsidiaries, associates and joint ventures are the exploration, production and sale of crude oil in and outside the PRC as well as natural gas sale and transmission in the PRC
PetroChina International Investment Company Limited	PRC		31,314	Limited liability company		100.00	100.00	Investment holding. The principal activities of its subsidiaries and joint ventures are the exploration, development and production of crude oil, natural gas, oil sands and coalbed methane outside the PRC
PetroChina International Company Limited	PRC		18,096	Limited liability company		100.00	100.00	Marketing of refined products and trading of crude oil and petrochemical products, storage, investment in refining, chemical engineering, storage facilities, service station, and transportation facilities and related business in and outside the PRC
PetroChina Pipelines Co., Ltd.	PRC		80,000	Limited liability company		72.26	72.26	Oil and gas pipeline transportation, investment holding, import and export of goods, agency of import and export, import and export of technology, technology promotion service, professional contractor, main contractor

(i) The Company consolidated the financial statements of the entity because it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

Summarized financial information in respect of the Group’s principal subsidiaries with significant non-controlling interests is as follows:

	CNPC Exploration and Development Company Limited				PetroChina Pipelines Co., Ltd.
	December 31, 2017		December 31, 2016		December 31, 2017		December 31, 2016
	RMB		RMB		RMB		RMB
Percentage ownership interest (%)		50.00		50.00		72.26		72.26
Current assets		24,722		26,489		2,882		19,193
Non-current assets		133,328		134,510		232,842		235,023
Current liabilities		13,273		15,504		6,059		26,186
Non-current liabilities		13,211		11,648		8,408		12,344
Net assets		131,566		133,847		221,257		215,686

Summarized statement of comprehensive income is as follows:

	CNPC Exploration and Development Company Limited								PetroChina Pipelines Co., Ltd. (note)
	2017			2016		2015			2017		2016		2015
	RMB			RMB		RMB			RMB		RMB		RMB
Revenue		37,304			28,196		33,541			43,627		41,794		2,796
Profit from continuing operations		3,696			24,153		2,448			17,891		20,420		1,015
Total comprehensive (loss) / income		(1,050	)		30,391		(7,889	)		17,891		20,420		1,015
Profit attributable to non-controlling interests		2,390			12,414		1,292			4,963		5,664		282
Dividends paid to non-controlling interests		1,420			444		775			3,569		—		720

Note: PetroChina Pipelines Co., Ltd. was established in November 2015.

Summarized statement of cash flows is as follows:

	CNPC Exploration and Development Company Limited									PetroChina Pipelines Co., Ltd. (note)
	2017			2016			2015			2017			2016			2015
	RMB			RMB			RMB			RMB			RMB			RMB
Net cash inflow from operating activities		18,545			9,053			8,293			31,160			30,270			2,554
Net cash (outflow) / inflow from investing activities		(12,304	)		(18,036	)		(2,762	)		2,869			14,799			(19,434	)
Net cash (outflow) / inflow from financing activities		(4,296	)		(2,248	)		(4,284	)		(36,190	)		(47,624	)		21,744
Effect of foreign exchange rate changes on cash and cash equivalents		(2,183	)		748			586			—			—			—
Net (decrease) / increase in cash and cash equivalents		(238	)		(10,483	)		1,833			(2,161	)		(2,555	)		4,864
Cash and cash equivalents at the beginning of the year		18,220			28,703			26,870			2,309			4,864			—
Cash and cash equivalents at the end of the year		17,982			18,220			28,703			148			2,309			4,864

Note: PetroChina Pipelines Co., Ltd. was established in November 2015.

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Available-for-sale Financial Assets

12 Months Ended

Dec. 31, 2017

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Available-for-sale Financial Assets

17 AVAILABLE-FOR-SALE FINANCIAL ASSETS

	December 31, 2017			December 31, 2016
	RMB			RMB
Available-for-sale financial assets		2,251			2,348
Less: Impairment losses		(334	)		(337	)
		1,917			2,011

Available-for-sale financial assets comprise principally unlisted equity securities and bonds.

In 2017, available-for-sale financial assets of RMB 12 (2016: RMB 176, 2015: RMB 381) were disposed of, resulting in the realization of a gain of RMB 11 (2016: a gain of RMB 184, 2015: a gain of RMB 177).

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Advance Operating Lease Payments

12 Months Ended

Dec. 31, 2017

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Advance Operating Lease Payments

19 ADVANCE OPERATING LEASE PAYMENTS

	December 31, 2017		December 31, 2016
	RMB		RMB
Land use rights		55,095		53,653
Advance lease payments		18,801		17,700
		73,896		71,353

Advance operating lease payments are amortized over the related lease terms using the straight-line method.

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Intangible and Other Non-current Assets

12 Months Ended

Dec. 31, 2017

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Intangible and Other Non-current Assets

20 INTANGIBLE AND OTHER NON-CURRENT ASSETS

	December 31, 2017							December 31, 2016
	Cost		Accumulated amortization			Net		Cost		Accumulated amortization			Net
	RMB		RMB			RMB		RMB		RMB			RMB
Patents and technical know-how		7,476		(5,620	)		1,856		7,237		(5,219	)		2,018
Computer software		10,638		(7,749	)		2,889		9,614		(6,790	)		2,824
Goodwill (i)		45,643		(3,709	)		41,934		46,097		—			46,097
Other		20,128		(7,207	)		12,921		19,134		(6,294	)		12,840
Intangible assets		83,885		(24,285	)		59,600		82,082		(18,303	)		63,779
Other assets							33,341							38,971
							92,941							102,750

(i) Goodwill primarily relates to the acquisition of Singapore Petroleum Company, Petroineos Trading Limited and PetroChina United Pipelines Co., Ltd., completed in 2009, 2011 and 2015, respectively. The recoverable amount of all cash-generating units has been determined based on value-in-use calculations. These calculations use post-tax cash flow projections based on financial budgets approved by management. The post-tax discount rates range from 8.9% to 10.5%, and reflect specific risks relating to the cash-generating unit. Based on the estimated recoverable amount, the impairment charge of the Group for the year ended December 31, 2017 amounted to RMB 3,709(2016: RMB Nil) primarily related to goodwill of PetroChina United Pipelines Co., Ltd..

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Inventories

12 Months Ended

Dec. 31, 2017

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Inventories

21 INVENTORIES

	December 31, 2017			December 31, 2016
	RMB			RMB
Crude oil and other raw materials		48,936			55,371
Work in progress		12,811			10,336
Finished goods		83,908			84,473
Spare parts and consumables		170			51
		145,825			150,231
Less: Write down in inventories		(1,156	)		(3,366	)
		144,669			146,865

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Accounts Receivable

12 Months Ended

Dec. 31, 2017

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Accounts Receivable

22 ACCOUNTS RECEIVABLE

	December 31, 2017			December 31, 2016
	RMB			RMB
Accounts receivable		57,914			49,338
Less: Provision for impairment of receivables		(4,771	)		(2,023	)
		53,143			47,315

The aging analysis of accounts receivable (net of impairment of accounts receivable) based on the invoice date (or date of revenue recognition, if earlier), at December 31, 2017 and 2016 is as follows:

	December 31, 2017		December 31, 2016
	RMB		RMB
Within 1 year		51,051		43,686
Between 1 and 2 years		1,203		2,744
Between 2 and 3 years		379		437
Over 3 years		510		448
		53,143		47,315

The Group offers its customers credit terms up to 180 days.

Movements in the provision for impairment of accounts receivable are as follows:

	2017			2016			2015
	RMB			RMB			RMB
At beginning of the year		2,023			523			516
Provision for impairment of accounts receivable		2,813			1,633			32
Receivables written off as uncollectible		(58	)		(97	)		(12	)
Reversal of provision for impairment of accounts receivable		(7	)		(36	)		(13	)
At end of the year		4,771			2,023			523

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Prepayments and Other Current Assets

12 Months Ended

Dec. 31, 2017

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Prepayments and Other Current Assets

23 PREPAYMENTS AND OTHER CURRENT ASSETS

	December 31, 2017			December 31, 2016
	RMB			RMB
Other receivables		16,535			13,206
Advances to suppliers		10,384			16,505
		26,919			29,711
Less: Provision for impairment		(2,824	)		(2,386	)
		24,095			27,325
Value-added tax to be deducted		39,203			36,010
Prepaid expenses		951			954
Prepaid income taxes		—			5,406
Other current assets		7,765			7,888
		72,014			77,583

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Notes Receivable

12 Months Ended

Dec. 31, 2017

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Notes Receivable

24 NOTES RECEIVABLE

Notes receivable represent mainly bills of acceptance issued by banks for the sale of goods and performance of services. All notes receivable are due within one year.

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Cash and Cash Equivalents

12 Months Ended

Dec. 31, 2017

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Cash and Cash Equivalents

25 CASH AND CASH EQUIVALENTS

The weighted average effective interest rate on bank deposits was 2.18% per annum for the year ended December 31, 2017 (2016: 1.36% per annum, 2015: 1.31% per annum).

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Accounts Payable and Accrued Liabilities

12 Months Ended

Dec. 31, 2017

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Accounts Payable and Accrued Liabilities

26 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

	December 31, 2017		December 31, 2016
	RMB		RMB
Trade payables		103,201		80,606
Advances from customers		67,176		60,590
Salaries and welfare payable		6,955		5,396
Accrued expenses		213		123
Dividends payable by subsidiaries to non-controlling shareholders		139		2,356
Interest payable		3,910		4,536
Construction fee and equipment cost payables		121,313		118,011
Loans borrowed from related parties		—		1,432
Other		40,912		37,630
		343,819		310,680

Other consists primarily of customer deposits.

The aging analysis of trade payables at December 31, 2017 and 2016 is as follows:

	December 31, 2017		December 31, 2016
	RMB		RMB
Within 1 year		94,996		74,450
Between 1 and 2 years		4,241		3,293
Between 2 and 3 years		1,894		944
Over 3 years		2,070		1,919
		103,201		80,606

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Borrowings

12 Months Ended

Dec. 31, 2017

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Borrowings

27 BORROWINGS

	December 31, 2017		December 31, 2016
	RMB		RMB
Short-term borrowings excluding current portion of long-term borrowings		93,881		71,969
Current portion of long-term borrowings		81,536		71,415
		175,417		143,384
Long-term borrowings		289,858		372,887
		465,275		516,271

Borrowings of the Group of RMB 45,463 were guaranteed by CNPC, its fellow subsidiaries and a third party at December 31, 2017 (December 31, 2016: RMB 65,692).

The Group’s borrowings include secured liabilities totaling RMB 2,829 at December 31, 2017 (December 31, 2016: RMB 251).

	December 31, 2017			December 31, 2016
	RMB			RMB
Total borrowings:
— interest free		130			145
— at fixed rates		253,369			282,822
— at floating rates		211,776			233,304
		465,275			516,271
Weighted average effective interest rates:
— bank loans		2.42	%		1.86	%
— corporate debentures		3.62	%		3.81	%
— medium-term notes		3.81	%		3.86	%
— other loans		3.87	%		3.77	%

The borrowings by major currency at December 31, 2017 and December 31, 2016 are as follows:

	December 31, 2017		December 31, 2016
	RMB		RMB
RMB		332,383		372,111
US Dollar		124,312		136,829
Other currency		8,580		7,331
		465,275		516,271

The fair values of the Group’s long-term borrowings including the current portion of long-term borrowings are RMB 343,707 (December 31, 2016: RMB 438,805) at December 31, 2017. The carrying amounts of short-term borrowings approximate their fair values.

The fair values are based on discounted cash flows using applicable discount rates based upon the prevailing market rates of interest available to the Group for financial instruments with substantially the same terms and characteristics at the dates of the statement of financial position. Such discount rates ranged from -0.24% to 6.04% per annum as of December 31, 2017 (December 31, 2016: -0.09% to 4.90% per annum) depending on the type of the borrowings.

The following table sets out the borrowings’ remaining contractual maturities at the date of the statement of financial position, which are based on contractual undiscounted cash flows including principal and interest, and the earliest contractual maturity date:

	December 31, 2017		December 31, 2016
	RMB		RMB
Within 1 year		189,050		160,572
Between 1 and 2 years		69,159		102,096
Between 2 and 5 years		191,879		209,653
After 5 years		70,179		106,879
		520,267		579,200

Reconciliation of movements of borrowings to cash flows arising from financing activities:

	Borrowings
	RMB
At 1 January 2017		516,271
Changes from financing cash flows:
Increase in borrowings		730,252
Repayments of borrowings		(773,940	)
Other borrowing costs paid		(173	)
Total changes from financing cash flows		(43,861	)
Exchange adjustments		(7,135	)
At 31 December 2017		465,275

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Share Capital

12 Months Ended

Dec. 31, 2017

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Share Capital

28 SHARE CAPITAL

	December 31, 2017		December 31, 2016
	RMB		RMB
Registered, issued and fully paid:
A shares		161,922		161,922
H shares		21,099		21,099
		183,021		183,021

In accordance with the Restructuring Agreement between CNPC and the Company effective as of November 5, 1999, the Company issued 160 billion state-owned shares in exchange for the assets and liabilities transferred to the Company by CNPC. The 160 billion state-owned shares were the initial registered capital of the Company with a par value of RMB 1.00 yuan per share.

On April 7, 2000, the Company issued 17,582,418,000 shares, represented by 13,447,897,000 H shares and 41,345,210 ADSs (each representing 100 H shares) in a global initial public offering (“Global Offering”) and the trading of the H shares and the ADSs on the Stock Exchange of Hong Kong Limited and the New York Stock Exchange commenced on April 7, 2000 and April 6, 2000, respectively. The H shares and ADSs were issued at prices of HK$ 1.28 per H share and US$ 16.44 per ADS respectively for which the net proceeds to the Company were approximately RMB 20 billion. The shares issued pursuant to the Global Offering rank equally with existing shares.

Pursuant to the approval of the China Securities Regulatory Commission, 1,758,242,000 state-owned shares of the Company owned by CNPC were converted into H shares for sale in the Global Offering.

On September 1, 2005, the Company issued an additional 3,196,801,818 new H shares at HK$ 6.00 per share and net proceeds to the Company amounted to approximately RMB 19,692. CNPC also sold 319,680,182 state-owned shares it held concurrently with PetroChina’s sale of new H shares in September 2005.

On October 31, 2007, the Company issued 4,000,000,000 new A shares at RMB 16.70 yuan per share and net proceeds to the Company amounted to approximately RMB 66,243 and the listing and trading of the A shares on the Shanghai Stock Exchange commenced on November 5, 2007.

Following the issuance of the A shares, all the existing state-owned shares issued before November 5, 2007 held by CNPC have been registered with the China Securities Depository and Clearing Corporation Limited as A shares.

Shareholders’ rights are governed by the Company Law of the PRC that requires an increase in registered capital to be approved by the shareholders in shareholders’ general meetings and the relevant PRC regulatory authorities.

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Reserves

12 Months Ended

Dec. 31, 2017

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Reserves

29 RESERVES

	2017			2016
	RMB			RMB
Capital Reserve
Beginning balance		133,308			133,308
Ending balance		133,308			133,308
Statutory Common Reserve Fund(a)
Beginning balance		186,840			186,840
Transfer from retained earnings		1,929			—
Ending balance		188,769			186,840
Special Reserve-Safety Fund Reserve
Beginning balance		13,188			11,648
Safety fund reserve		178			1,540
Ending balance		13,366			13,188
Currency Translation Differences
Beginning balance		(29,294	)		(37,066	)
Currency translation differences		1,249			7,772
Ending balance		(28,045	)		(29,294	)
Other Reserves
Beginning balance		(9,236	)		(9,790	)
Equity transaction with non-controlling interests		289			224
Acquisition of subsidiaries		(1	)		(259	)
Fair value loss on available-for-sale financial assets		(36	)		(128	)
Share of the other comprehensive (loss) / income of associates and joint ventures accounted for using the equity method		(326	)		313
Other		(26	)		404
Ending balance		(9,336	)		(9,236	)
		298,062			294,806

(a) Pursuant to the PRC regulations and the Company’s Articles of Association, the Company is required to transfer 10% of its net profit, as determined under the PRC accounting regulations, to a Statutory Common Reserve Fund (“Reserve Fund”). Appropriation to the Reserve Fund may cease when the fund aggregates to 50% of the Company’s registered capital. The transfer to this reserve must be made before distribution of dividends to shareholders.

The Reserve Fund shall only be used to make good previous years’ losses, to expand the Company’s production operations, or to increase the capital of the Company. Upon approval of a resolution of shareholders’ in a general meeting, the Company may convert its Reserve Fund into share capital and issue bonus shares to existing shareholders in proportion to their original shareholdings or to increase the nominal value of each share currently held by them, provided that the balance of the Reserve Fund after such issuance is not less than 25% of the Company’s registered capital.

(b) According to the relevant PRC regulations, the distributable reserve is the lower of the retained earnings computed under PRC accounting regulations and IFRS. As of December 31, 2017, the Company’s distributable reserve amounted to RMB 572,252 (December 31, 2016: RMB 574,536).

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Deferred Taxation

12 Months Ended

Dec. 31, 2017

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Deferred Taxation

30 DEFERRED TAXATION

Deferred taxation is calculated on temporary differences under the liability method using a principal tax rate of 25%.

The movements in the deferred taxation account are as follows:

	Year Ended December 31,
	2017			2016			2015
	RMB			RMB			RMB
At beginning of the year		(6,720	)		(3,807	)		905
Transfer to profit and loss (Note 12)		(7,539	)		(3,994	)		(3,272	)
Credit to other comprehensive income		195			1,081			(1,449	)
Acquisition of subsidiaries		—			—			9
At end of the year		(14,064	)		(6,720	)		(3,807	)

Deferred tax balances before offset are attributable to the following items:

	December 31, 2017		December 31, 2016
	RMB		RMB
Deferred tax assets:
Receivables and inventories		10,387		7,786
Tax losses		27,911		30,438
Impairment of long-term assets		9,712		7,551
Other		7,613		7,184
Total deferred tax assets		55,623		52,959
Deferred tax liabilities:
Accelerated tax depreciation		27,539		32,639
Other		14,020		13,600
Total deferred tax liabilities		41,559		46,239
Net deferred tax assets		14,064		6,720

Tax losses that can be carried forward to future years include deferred tax assets arising from the losses of the branches in the eastern region. The tax expenses of its branches in the eastern and western regions were paid in aggregate according to the requirements of the competent tax authority.

Deferred tax balances after offset are listed as follows:

	December 31, 2017		December 31, 2016
	RMB		RMB
Deferred tax assets		26,724		20,360
Deferred tax liabilities		12,660		13,640

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Asset Retirement Obligations

12 Months Ended

Dec. 31, 2017

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Asset Retirement Obligations

31 ASSET RETIREMENT OBLIGATIONS

	2017			2016			2015
	RMB			RMB			RMB
At beginning of the year		125,392			117,996			109,154
Liabilities incurred		2,981			2,942			4,266
Liabilities settled		(2,012	)		(843	)		(677	)
Accretion expense (Note 10)		5,453			5,126			5,950
Currency translation differences		(268	)		171			(697	)
At end of the year		131,546			125,392			117,996

Asset retirement obligations relate to oil and gas properties (Note 15).

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Pensions

12 Months Ended

Dec. 31, 2017

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Pensions

32 PENSIONS

The Group participates in various employee retirement benefit plans (Note 3(t)). Expenses incurred by the Group in connection with the retirement benefit plans for the year ended December 31, 2017 amounted to RMB 16,010 (2016: RMB 16,184, 2015: RMB 16,357).

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Contingent Liabilities

12 Months Ended

Dec. 31, 2017

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Contingent Liabilities

33 CONTINGENT LIABILITIES

(a) Bank and other guarantees

At December 31, 2017 and 2016, the Group did not guarantee related parties or third parties any significant borrowings or others.

(b) Environmental liabilities

China has adopted extensive environmental laws and regulations that affect the operation of the oil and gas industry. Under existing legislation, however, management believes that there are no probable liabilities, except for the amounts which have already been reflected in the consolidated financial statements, which may have a material adverse effect on the financial position of the Group.

(c) Legal contingencies

During the reporting period, the Group has complied with domestic and overseas significant laws and regulatory requirements. Notwithstanding certain insignificant lawsuits as well as other proceedings outstanding, management believes that any resulting liabilities will not have a material adverse effect on the financial position of the Group.

(d) Group insurance

The Group has insurance coverage for vehicles and certain assets that are subject to significant operating risks, third-party liability insurance against claims relating to personal injury, property and environmental damages that result from accidents and also employer liabilities insurance. The potential effect on the financial position of the Group of any liabilities resulting from future uninsured incidents cannot be estimated by the Group at present.

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Commitments

12 Months Ended

Dec. 31, 2017

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Commitments

34 COMMITMENTS

(a) Operating lease commitments

Operating lease commitments of the Group are mainly for leasing of land, buildings and equipment. Leases range from 1 to 50 years and usually do not contain renewal options. Future minimum lease payments as of December 31, 2017 and 2016 under non-cancellable operating leases are as follows:

	December 31, 2017		December 31, 2016
	RMB		RMB
No later than 1 year		11,519		10,108
Later than 1 year and no later than 5 years		37,033		30,757
Later than 5 years		180,833		148,961
		229,385		189,826

(b) Capital commitments

At December 31, 2017, the Group’s capital commitments contracted but not provided for mainly relating to property, plant and equipment were RMB 70,563 (December 31, 2016: RMB 59,664).

The operating lease and capital commitments above are transactions mainly with CNPC and its fellow subsidiaries.

(c) Exploration and production licenses

The Company is obligated to make annual payments with respect to its exploration and production licenses to the Department of Natural Resources. Payments incurred were RMB 609 for the year ended December 31, 2017 (2016: RMB 639, 2015: RMB 643).

According to the current policy, estimated annual payments for the next five years are as follows:

	December 31, 2017		December 31, 2016
	RMB		RMB
Within one year		800		800
Between one and two years		800		800
Between two and three years		800		800
Between three and four years		800		800
Between four and five years		800		800

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Major Customers

12 Months Ended

Dec. 31, 2017

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Major Customers

35 MAJOR CUSTOMERS

The Group’s major customers are as follows:

	2017				2016				2015
	Revenue		Percentage of Total revenue		Revenue		Percentage of Total revenue		Revenue		Percentage of Total revenue
	RMB		%		RMB		%		RMB		%
China Petroleum & Chemical Corporation		65,767		3		39,481		2		33,482		2
CNPC and its fellow subsidiaries		92,173		5		91,094		6		80,045		5
		157,940		8		130,575		8		113,527		7

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Related Party Transactions

12 Months Ended

Dec. 31, 2017

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Related Party Transactions

36 RELATED PARTY TRANSACTIONS

CNPC, the controlling shareholder of the Company, is a limited liability company directly controlled by the PRC government.

Related parties include CNPC and its fellow subsidiaries, their associates and joint ventures, other state-owned enterprises and their subsidiaries which the PRC government has control, joint control or significant influence over and enterprises which the Group is able to control, jointly control or exercise significant influence over, key management personnel of the Company and CNPC and their close family members.

(a) Transactions with CNPC and its fellow subsidiaries, associates and joint ventures of the Group

The Group has extensive transactions with other companies in CNPC and its fellow subsidiaries. Due to these relationships, it is possible that the terms of the transactions between the Group and other members of CNPC and its fellow subsidiaries are not the same as those that would result from transactions with other related parties or wholly unrelated parties.

The principal related party transactions with CNPC and its fellow subsidiaries, associates and joint ventures of the Group which were carried out in the ordinary course of business, are as follows:

On August 25, 2011, based on the terms of the Comprehensive Products and Services Agreement amended in 2008, the Company and CNPC entered into a new Comprehensive Products and Services Agreement (“the Comprehensive Products and Services Agreement”) for a period of three years which took effect on January 1, 2012. The Comprehensive Products and Services Agreement provides for a range of products and services which may be required and requested by either party. The products and services to be provided by CNPC and its fellow subsidiaries to the Group under the Comprehensive Products and Services Agreement include construction and technical services, production services, supply of material services, social services, ancillary services and financial services. The products and services required and requested by either party are provided in accordance with (1) government-prescribed prices; or (2) where there is no government-prescribed price, with reference to relevant market prices; or (3) where neither (1) nor (2) is applicable, the actual cost incurred or the agreed contractual price. On the basis of the existing Comprehensive Products and Services Agreement, the Company and CNPC entered into a new Comprehensive Products and Services Agreement on August 28, 2014 for a period of three years which took effect on January 1, 2015. The new Comprehensive Products and Services Agreement has already incorporated the terms of the current Comprehensive Products and Services Agreement which was amended in 2011. On the basis of the existing Comprehensive Products and Services Agreement, the Company and CNPC entered into a new Comprehensive Products and Services Agreement on August 24, 2017 for a period of three years which took effect on January 1, 2018. The new Comprehensive Products and Services Agreement has already incorporated the terms of the current Comprehensive Products and Services Agreement which was amended in 2014.

• Sales of goods represent the sale of crude oil, refined products, chemical products and natural gas, etc. The total amount of these transactions amounted to RMB 113,306 for the year ended December 31, 2017 (2016: RMB 104,034, 2015: RMB 106,304).

• Sales of services principally represent the provision of services in connection with the transportation of crude oil and natural gas, etc. The total amount of these transactions amounted to RMB 6,160 for the year ended December 31, 2017 (2016: RMB 5,053, 2015: RMB 6,919).

• Purchases of goods and services principally represent construction and technical services, production services, social services, ancillary services and material supply services, etc. The total amount of these transactions amounted to RMB 338,178 for the year ended December 31, 2017 (2016: RMB 292,168, 2015: RMB 322,028).

• Purchases of assets principally represent the purchases of manufacturing equipment, office equipment and transportation equipment, etc. The total amount of these transactions amounted to RMB 1,643 for the year ended December 31, 2017 (2016: RMB 1,058, 2015: RMB 1,141).

• Amounts due from and to CNPC and its fellow subsidiaries, associates and joint ventures of the Group included in the following accounts captions are summarized as follows:

	December 31, 2017		December 31, 2016
	RMB		RMB
Accounts receivable		10,219		6,657
Prepayments and other receivables		8,987		9,123
Other current assets		5,794		4,486
Other non-current assets		14,848		11,084
Accounts payable and accrued liabilities		66,001		64,772
Other non-current liabilities		3,053		3,755

• Interest income represents interest from deposits placed with CNPC and its fellow subsidiaries. The total interest income amounted to RMB 424 for the year ended December 31, 2017 (2016: RMB 224, 2015: RMB 304). The balance of deposits at December 31, 2017 was RMB 25,903 (December 31, 2016: RMB 32,626).

• Purchases of financial service principally represents interest charged on the loans from CNPC and its fellow subsidiaries, insurance fee, etc. The total amount of these transactions amounted to RMB 11,021 for the year ended December 31, 2017 (2016: RMB 12,139, 2015: RMB 14,739).

• The borrowings from CNPC and its fellow subsidiaries at December 31, 2017 were RMB 208,395 (December 31, 2016: RMB 255,285).

• Rents and other payments made under financial leasing represent the payable by the Group (including all rents, leasing service fees and prices for exercising purchase options) for the period according to the financial leasing agreements entered into by the Group and CNPC and its fellow subsidiaries. The total rents and other payments made under financial leasing amounted to RMB 835 for the year ended December 31, 2017 (2016: RMB 819, 2015: RMB 238).

On August 25, 2011, based on the Land Use Rights Leasing Contract signed in 2000, the Company and CNPC entered into a Supplemental Land Use Rights Leasing Contract which took effect on January 1, 2012. The Supplemental Land Use Rights Leasing Contract provides for the lease of land covering an aggregate area of approximately 1,783 million square meters located throughout the PRC at a maximal annual fee (exclusive of tax and government charges) of RMB 3,892. The Supplemental Land Use Rights Leasing Contract will expire at the same time as the Land Use Rights Leasing Contract. The area and total fee payable for the lease of all such property may be adjusted with the Company’s operating needs and by reference to market price every three years. The Company and CNPC each issued a confirmation letter to the Land Use Rights Leasing Contract on August 28, 2014, which adjusted the rental payable and the area for the leased land parcels. The Company agreed to rent from CNPC parcels of land with an aggregate area of approximately 1,777 million square meters with rental payable (exclusive of tax and government charges) adjusted to no more than RMB 4,831 in accordance with the area of leased land parcels and the current situation of the property market. The Land Use Rights Leasing Contract shall remain unchanged, apart from the rental payable and the leased area. The confirmation letter shall be effective from January 1, 2015. The Company and CNPC each issued a confirmation letter to the Land Use Rights Leasing Contract on August 24, 2017, which adjusted the rental payable and the area for the leased land parcels. The Company agreed to rent from CNPC parcels of land with an aggregate area of approximately 1,773 million square meters with annual rental payable (exclusive of tax and government charges) adjusted to no more than RMB 5,783 in accordance with the area of leased land parcels and the current situation of the property market. The Land Use Rights Leasing Contract shall remain unchanged, apart from the rental payable and the leased area. The confirmation letter shall be effective from January 1, 2018.

On August 25, 2011, based on the Buildings Leasing Contract and Supplemental Building Leasing Agreement, the Company and CNPC entered into a Revised Buildings Leasing Contract which took effect thereafter. Under this contract, buildings covering an aggregate area of 734,316 square meters were leased at an average annual fee of RMB 1,049 yuan per square meter. The Revised Building Leasing Contract will expire at the same time as the Building Leasing Agreement. The area and total fee payable for the lease of all such property may, every three years, be adjusted with the Company’s operating needs and by reference to market price which the adjusted prices will not exceed. The Company and CNPC each issued a confirmation letter to the Building Leasing Contract on August 28, 2014, which adjusted the rental payable and the gross floor area for the buildings leased. The Company agreed to lease from CNPC buildings with an aggregate gross floor area of approximately 1,179,586 square meters with rental payable adjusted to approximately RMB 708 in accordance with the gross floor area leased and the current situation of the market. The Building Leasing Contract shall remain unchanged apart from the rental payable and the gross floor area leased. The confirmation letter shall be effective from January 1, 2015. On August 24, 2017, based on the Buildings Leasing Contract and Supplemental Building Leasing Agreement, the Company and CNPC entered into a Revised Buildings Leasing Contract which took effect on January 1, 2018. Under this contract, buildings covering an aggregate area of 1,152,968 square meters were leased at annual rental payable approximately RMB 730. The Revised Building Leasing Contract will expire at Dec 31, 2037. The area and total fee payable for the lease of all such property may, every three years, be adjusted with the Company’s operating needs and by reference to market price which the adjusted prices will not exceed.

(b) Key management compensation

	Year End December 31,
	2017		2016		2015
	RMB’000		RMB’000		RMB’000
Emoluments and other benefits		11,779		12,549		11,256
Contribution to retirement benefit scheme		1,645		1,712		1,915
		13,424		14,261		13,171

Note: Emoluments set out above for the year ended December 31, 2017 exclude RMB nil paid to key management of the Company of the deferred merit pay in accordance with relevant requirements by the PRC government (2016: RMB 1.64, 2015: RMB nil) .

(c) Transactions with other state-controlled entities in the PRC

Apart from transactions with CNPC and its fellow subsidiaries, associates and joint ventures of the Group, the Group’s transactions with other state-controlled entities include but is not limited to the following:

• Sales and purchases of goods and services,

• Purchases of assets,

• Lease of assets; and

• Bank deposits and borrowings

These transactions are conducted in the ordinary course of the Group’s business.

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Segment Information

12 Months Ended

Dec. 31, 2017

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Segment Information

37 SEGMENT INFORMATION

The Group is principally engaged in a broad range of petroleum related products, services and activities. The Group’s operating segments comprise: Exploration and Production, Refining and Chemicals, Marketing, and Natural Gas and Pipeline. On the basis of these operating segments, the management of the Company assesses the segmental operating results and allocates resources. Sales between operating segments are conducted principally at market prices. Additionally, the Group presents geographical information based on entities located in regions with a similar risk profile.

The Exploration and Production segment is engaged in the exploration, development, production and marketing of crude oil and natural gas.

The Refining and Chemicals segment is engaged in the refining of crude oil and petroleum products, production and marketing of primary petrochemical products, derivative petrochemical products and other chemical products.

The Marketing segment is engaged in the marketing of refined products and the trading business.

The Natural Gas and Pipeline segment is engaged in the transmission of natural gas, crude oil and refined products and the sale of natural gas.

The Head Office and Other segment relates to cash management and financing activities, the corporate center, research and development, and other business services supporting the operating business segments of the Group.

The accounting policies of the operating segments are the same as those described in Note 3 — “Summary of Principal Accounting Policies”.

The segment information for the operating segments for the years ended December 31, 2017, 2016 and 2015 are as follows:

	Year Ended December 31, 2017
	Exploration and Production			Refining and Chemicals			Marketing			Natural Gas and Pipeline			Head Office and Other			Total
	RMB			RMB			RMB			RMB			RMB			RMB
Revenue		505,430			707,804			1,660,456			295,786			2,057			3,171,533
Less: intersegment sales		(409,303	)		(535,515	)		(179,692	)		(30,476	)		(657	)		(1,155,643	)
Revenue from external customers		96,127			172,289			1,480,764			265,310			1,400			2,015,890
Depreciation, depletion and amortization		(169,484	)		(32,319	)		(12,734	)		(21,146	)		(1,692	)		(237,375	)
Including: Impairment losses of property, plant and equipment		(6,565	)		(10,223	)		(7	)		(1,150	)		(2	)		(17,947	)
Profit / (loss) from operations		15,475			39,961			8,279			15,688			(11,681	)		67,722
Finance costs:
Exchange gain																	8,217
Exchange loss																	(9,311	)
Interest income																	2,901
Interest expense																	(22,408	)
Total net finance costs																	(20,601	)
Share of profit / (loss) of associates and joint ventures		1,716			(89	)		1,501			279			2,561			5,968
Profit before income tax expense																	53,089
Income tax expense																	(16,296	)
Profit for the year																	36,793
Segment assets		1,211,912			318,299			397,813			519,249			1,357,803			3,805,076
Other assets																	26,724
Investments in associates and joint ventures		39,517			1,375			11,938			5,534			22,795			81,159
Elimination of intersegment balances (a)																	(1,508,347	)
Total assets																	2,404,612
Capital expenditures		161,997			17,705			10,982			24,529			1,014			216,227
Segment liabilities		525,085			79,989			199,340			120,244			589,460			1,514,118
Other liabilities																	70,091
Elimination of intersegment balances (a)																	(560,916	)
Total liabilities																	1,023,293

	Year Ended December 31, 2016
	Exploration and Production			Refining and Chemicals			Marketing			Natural Gas and Pipeline			Head Office and Other			Total
	RMB			RMB			RMB			RMB			RMB			RMB
Revenue		412,484			582,510			1,301,616			247,477			2,197			2,546,284
Less: intersegment sales		(335,716	)		(438,853	)		(126,344	)		(27,784	)		(684	)		(929,381	)
Revenue from external customers		76,768			143,657			1,175,272			219,693			1,513			1,616,903
Depreciation, depletion and amortization		(155,192	)		(25,475	)		(12,891	)		(22,743	)		(1,846	)		(218,147	)
Including: Impairment losses of property, plant and equipment		(882	)		(3,413	)		(2	)		(4,205	)		—			(8,502	)
Profit / (loss) from operations		3,148			39,026			11,048			17,885			(10,472	)		60,635
Finance costs:
Exchange gain																	12,828
Exchange loss																	(11,571	)
Interest income																	2,491
Interest expense																	(23,348	)
Total net finance costs																	(19,600	)
Share of (loss) / profit of associates and joint ventures		(158	)		13			552			204			3,494			4,105
Profit before income tax expense																	45,140
Income tax expense																	(15,768	)
Profit for the year																	29,372
Segment assets		1,260,009			324,357			384,123			546,485			1,434,141			3,949,115
Other assets																	25,766
Investments in associates and joint ventures		42,398			1,262			10,455			3,305			21,547			78,967
Elimination of intersegment balances(a)																	(1,657,197	)
Total assets																	2,396,651
Capital expenditures		130,248			12,847			7,983			20,340			968			172,386
Segment liabilities		536,284			124,076			183,159			150,855			668,353			1,662,727
Other liabilities																	58,839
Elimination of intersegment balances(a)																	(697,650	)
Total liabilities																	1,023,916

	Year Ended December 31, 2015
	Exploration and Production			Refining and Chemicals			Marketing			Natural Gas and Pipeline			Head Office and Other			Total
	RMB			RMB			RMB			RMB			RMB			RMB
Revenue		475,412			642,428			1,383,426			281,778			2,507			2,785,551
Less: intersegment sales		(384,423	)		(502,007	)		(146,719	)		(26,259	)		(715	)		(1,060,123	)
Revenue from external customers		90,989			140,421			1,236,707			255,519			1,792			1,725,428
Depreciation, depletion and amortization		(148,958	)		(24,400	)		(12,974	)		(14,489	)		(2,054	)		(202,875	)
Including: Impairment losses of property, plant and equipment		(22,922	)		(1,843	)		(191	)		(66	)		—			(25,022	)
Profit/ (loss) from operations		33,961			4,883			(500	)		51,231			(10,323	)		79,252
Finance costs:
Exchange gain																	9,536
Exchange loss																	(10,168	)
Interest income																	2,019
Interest expense																	(24,328	)
Total net finance costs																	(22,941	)
Share of (loss) / profit of associates and joint ventures		(5,599	)		66			(156	)		4,206			2,987			1,504
Profit before income tax expense																	57,815
Income tax expense																	(15,726	)
Profit for the year																	42,089
Segment assets		1,221,942			311,149			343,721			597,240			1,518,486			3,992,538
Other assets																	28,043
Investments in associates and joint ventures		32,413			1,249			9,517			3,424			24,373			70,976
Elimination of intersegment balances (a)																	(1,697,713	)
Total assets																	2,393,844
Capital expenditures		157,822			15,725			7,061			20,360			1,270			202,238
Segment liabilities		511,098			114,888			148,556			206,920			727,579			1,709,041
Other liabilities																	47,261
Elimination of intersegment balances (a)																	(706,492	)
Total liabilities																	1,049,810

Geographical information

	Revenue						Non-current assets (b)
Year Ended December 31,	2017		2016		2015		2017		2016		2015
	RMB		RMB		RMB		RMB		RMB		RMB
Mainland China		1,294,516		1,101,055		1,185,189		1,711,605		1,739,351		1,796,288
Other		721,374		515,848		540,239		239,204		253,264		228,416
		2,015,890		1,616,903		1,725,428		1,950,809		1,992,615		2,024,704

(a) Elimination of intersegment balances represents elimination of intersegment accounts and investments.

(b) Non-current assets mainly include non-current assets other than financial instruments and deferred tax assets.

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Approval of financial statements

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Approval of financial statements

38 APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the Board of Directors on April 27, 2018.

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Supplementary Information on Oil and Gas Exploration and Production Activities (Unaudited) - Proved Oil and Gas Reserve Estimates

12 Months Ended

Dec. 31, 2017

Extractive Industries [Abstract]

Supplementary Information on Oil and Gas Exploration and Production Activities (Unaudited) - Proved Oil and Gas Reserve Estimates

Proved Oil and Gas Reserve Estimates

Proved oil and gas reserves cannot be measured exactly. Reserve estimates are based on many factors related to reservoir performance that require evaluation by the engineers interpreting the available data, as well as price and other economic factors. The reliability of these estimates at any point in time depends on both the quality and quantity of the technical and economic data, and the production performance of the reservoirs as well as engineering judgment. Consequently, reserve estimates are subject to revision as additional data become available during the producing life of a reservoir. When a commercial reservoir is discovered, proved reserves are initially determined based on limited data from the first well or wells. Subsequent data may better define the extent of the reservoir and additional production performance, well tests and engineering studies will likely improve the reliability of the reserve estimate. The evolution of technology may also result in the application of improved recovery techniques such as supplemental or enhanced recovery projects, or both, which have the potential to increase reserves.

Proved oil and gas reserves are the estimated quantities of crude oil and natural gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulation before the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether the estimate is a deterministic estimate or probabilistic estimate.

Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average price during the 12-month period before the ending date of the period covered by this report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions. The costs shall be that prevailing at the end of the period.

Proved developed oil and gas reserves are proved reserves that can be expected to be recovered:

a. Through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared with the cost of a new well.

b. Through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well.

Proved undeveloped oil and gas reserves are proved reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion.

The taxes, fees and royalty in China are domestic tax schemes and are paid in cash to PRC authorities. The proved reserves includes quantities that are ultimately produced and sold to pay these taxes, fees and royalty.

Proved reserve estimates as of December 31, 2017, 2016 and 2015 were based on reports prepared by DeGolyer and MacNaughton, McDaniel & Associates, Ryder Scott and GLJ independent engineering consultants.

Estimated quantities of net proved crude oil and condensate and natural gas reserves and of changes in net quantities of proved developed and undeveloped reserves for each of the periods indicated are as follows:

	Crude Oil and Condensate			Natural Gas			Total — All products
	(million barrels)			(billion cubic feet)			(million barrels of oil equivalent)
Proved developed and undeveloped reserves
The Group
Reserves at December 31, 2014		10,593			71,098			22,443
Changes resulting from:
Revisions of previous estimates		(1,663	)		(206	)		(1,697	)
Improved recovery		106			—			106
Extensions and discoveries		457			9,764			2,084
Production		(972	)		(3,131	)		(1,494	)
Reserves at December 31, 2015		8,521			77,525			21,442
Changes resulting from:
Revisions of previous estimates		(747	)		(308	)		(799	)
Improved recovery		93			—			93
Extensions and discoveries		492			4,770			1,287
Production		(921	)		(3,275	)		(1,467	)
Reserves at December 31, 2016		7,438			78,712			20,556
Changes resulting from:
Revisions of previous estimates		486			(1,751	)		195
Improved recovery		98			—			98
Extensions and discoveries		346			3,350			905
Production		(887	)		(3,423	)		(1,458	)
Reserves at December 31, 2017		7,481			76,888			20,296
Proved developed reserves at:
December 31, 2015		6,196			40,406			12,930
December 31, 2016		5,176			40,664			11,953
December 31, 2017		5,593			39,243			12,133
Proved undeveloped reserves at:
December 31, 2015		2,325			37,119			8,512
December 31, 2016		2,262			38,048			8,603
December 31, 2017		1,888			37,645			8,163
Equity method investments
Share of proved developed and undeveloped reserves of associates and joint ventures
December 31, 2015		504			354			563
December 31, 2016		504			348			562
December 31, 2017		395			372			457

At December 31, 2017, total proved developed and undeveloped reserves of the Group and equity method investments is 20,753 million barrels of oil equivalent (December 31, 2016: 21,118 million barrels of oil equivalent, December 31, 2015: 22,005 million barrels of oil equivalent), comprising 7,876 million barrels of crude oil and condensate (December 31, 2016: 7,942 million barrels, December 31, 2015: 9,025 million barrels) and 77,260 billion cubic feet of natural gas (December 31, 2016: 79,060 billion cubic feet, December 31, 2015: 77,879 billion cubic feet).

At December 31, 2017, 6,622 million barrels (December 31, 2016: 6,341 million barrels, December 31, 2015: 7,650 million barrels) of crude oil and condensate and 74,702 billion cubic feet (December 31, 2016: 76,245 billion cubic feet, December 31, 2015: 75,858 billion cubic feet) of natural gas proved developed and undeveloped reserves of the Group are located within Mainland China, and 859 million barrels (December 31, 2016: 1,097 million barrels, December 31, 2015: 871 million barrels) of crude oil and condensate and 2,186 billion cubic feet (December 31, 2016: 2,467 billion cubic feet, December 31, 2015: 1,667 billion cubic feet) of natural gas proved developed and undeveloped reserves of the Group are located overseas.

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Supplementary Information on Oil and Gas Exploration and Production Activities (Unaudited) - Capitalized Costs

12 Months Ended

Dec. 31, 2017

Extractive Industries [Abstract]

Supplementary Information on Oil and Gas Exploration and Production Activities (Unaudited) - Capitalized Costs

Capitalized Costs

	December 31, 2017			December 31, 2016
	RMB			RMB
The Group
Property costs and producing assets		1,604,141			1,519,124
Support facilities		407,188			390,089
Construction-in-progress		101,067			100,114
Total capitalized costs		2,112,396			2,009,327
Accumulated depreciation, depletion and amortization		(1,199,741	)		(1,063,500	)
Net capitalized costs		912,655			945,827
Equity method investments
Share of net capitalized costs of associates and joint ventures		25,837			28,999

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Supplementary Information on Oil and Gas Exploration and Production Activities (Unaudited) - Costs Incurred for Property Acquisitions, Exploration and Development Activities

12 Months Ended

Dec. 31, 2017

Extractive Industries [Abstract]

Supplementary Information on Oil and Gas Exploration and Production Activities (Unaudited) - Costs Incurred for Property Acquisitions, Exploration and Development Activities

Costs Incurred for Property Acquisitions, Exploration and Development Activities

	2017
	Mainland China		Other		Total
	RMB		RMB		RMB
The Group
Exploration costs		31,585		984		32,569
Development costs		110,104		18,596		128,700
Total		141,689		19,580		161,269
Equity method investments
Share of costs of property acquisition, exploration and development of associates and joint ventures		—		2,503		2,503
	2016
	Mainland China		Other		Total
	RMB		RMB		RMB
The Group
Exploration costs		28,413		685		29,098
Development costs		83,785		13,870		97,655
Total		112,198		14,555		126,753
Equity method investments
Share of costs of property acquisition, exploration and development of associates and joint ventures		—		1,990		1,990

	2015
	Mainland China		Other		Total
	RMB		RMB		RMB
The Group
Property acquisition costs		—		456		456
Exploration costs		28,542		1,011		29,553
Development costs		100,328		18,611		118,939
Total		128,870		20,078		148,948
Equity method investments
Share of costs of property acquisition, exploration and development of associates and joint ventures		—		2,798		2,798

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Supplementary Information on Oil and Gas Exploration and Production Activities (Unaudited) - Results of Operations for Oil and Gas Producing Activities

12 Months Ended

Dec. 31, 2017

Extractive Industries [Abstract]

Supplementary Information on Oil and Gas Exploration and Production Activities (Unaudited) - Results of Operations for Oil and Gas Producing Activities

Results of Operations for Oil and Gas Producing Activities

The results of operations for oil and gas producing activities for the years ended December 31, 2017, 2016 and 2015 are presented below. “Revenue” includes sales to third parties and inter-segment sales (at arm’s-length prices), net of value-added taxes. Resource tax, crude oil special gain levy and other taxes are included in “taxes other than income taxes”. Income taxes are computed using the applicable statutory tax rate, reflecting tax deductions and tax credits for the respective years ended.

	2017
	Mainland China			Other			Total
	RMB			RMB			RMB
The Group
Revenue
Sales to third parties		39,588			39,330			78,918
Inter-segment sales		305,336			5,082			310,418
		344,924			44,412			389,336
Production costs excluding taxes		(112,182	)		(7,830	)		(120,012	)
Exploration expenses		(16,732	)		(7,152	)		(23,884	)
Depreciation, depletion and amortization		(135,703	)		(18,436	)		(154,139	)
Taxes other than income taxes		(20,624	)		(3,534	)		(24,158	)
Accretion expense		(5,212	)		(241	)		(5,453	)
Income taxes		(12,098	)		(3,667	)		(15,765	)
Results of operations from producing activities		42,373			3,552			45,925
Equity method investments
Share of profit for producing activities of associates and joint ventures		—			2,050			2,050
Total of the Group and equity method investments results of operations for producing activities		42,373			5,602			47,975

	2016
	Mainland China			Other			Total
	RMB			RMB			RMB
The Group
Revenue
Sales to third parties		32,674			33,033			65,707
Inter-segment sales		245,091			2,898			247,989
		277,765			35,931			313,696
Production costs excluding taxes		(110,977	)		(7,233	)		(118,210	)
Exploration expenses		(17,952	)		(624	)		(18,576	)
Depreciation, depletion and amortization		(123,268	)		(18,973	)		(142,241	)
Taxes other than income taxes		(16,056	)		(3,133	)		(19,189	)
Accretion expense		(4,930	)		(196	)		(5,126	)
Income taxes		(2,150	)		(1,161	)		(3,311	)
Results of operations from producing activities		2,432			4,611			7,043
Equity method investments
Share of profit for producing activities of associates and joint ventures		—			649			649
Total of the Group and equity method investments results of operations for producing activities		2,432			5,260			7,692

	2015
	Mainland China			Other			Total
	RMB			RMB			RMB
The Group
Revenue
Sales to third parties		41,980			35,983			77,963
Inter-segment sales		292,656			4,696			297,352
		334,636			40,679			375,315
Production costs excluding taxes		(114,848	)		(9,177	)		(124,025	)
Exploration expenses		(17,045	)		(1,335	)		(18,380	)
Depreciation, depletion and amortization		(112,566	)		(22,753	)		(135,319	)
Taxes other than income taxes		(23,727	)		(5,050	)		(28,777	)
Accretion expense		(5,720	)		(230	)		(5,950	)
Income taxes		(15,629	)		(1,290	)		(16,919	)
Results of operations from producing activities		45,101			844			45,945
Equity method investments
Share of profit for producing activities of associates and joint ventures		—			(4,188	)		(4,188	)
Total of the Group and equity method investments results of operations for producing activities		45,101			(3,344	)		41,757

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Supplementary Information on Oil and Gas Exploration and Production Activities (Unaudited) - Standardized Measure of Discounted Future Net Cash Flows

12 Months Ended

Dec. 31, 2017

Extractive Industries [Abstract]

Supplementary Information on Oil and Gas Exploration and Production Activities (Unaudited) - Standardized Measure of Discounted Future Net Cash Flows

Standardized Measure of Discounted Future Net Cash Flows

The standardized measure of discounted future net cash flows related to proved oil and gas reserves at December 31, 2017, 2016 and 2015 is based on the prices used in estimating the Group’s proved oil and gas reserves, year-end costs, currently enacted tax rates related to existing proved oil and gas reserves and a 10% annual discount factor. “Future cash inflows” are net of value-added taxes. Corporate income taxes are included in “future income tax expense”. Other taxes are included in “future production costs” as production taxes.

The standardized measure of discounted future net cash flows related to proved oil and gas reserves at December 31, 2017, 2016 and 2015 is as follows:

	RMB
The Group
At December 31, 2017
Future cash inflows		5,287,272
Future production costs		(1,909,890	)
Future development costs		(571,125	)
Future income tax expense		(594,085	)
Future net cash flows		2,212,172
Discount at 10% for estimated timing of cash flows		(1,187,646	)
Standardized measure of discounted future net cash flows		1,024,526

	RMB
The Group
At December 31, 2016
Future cash inflows		4,585,822
Future production costs		(1,896,044	)
Future development costs		(553,558	)
Future income tax expense		(447,997	)
Future net cash flows		1,688,223
Discount at 10% for estimated timing of cash flows		(931,412	)
Standardized measure of discounted future net cash flows		756,811

	RMB
The Group
At December 31, 2015
Future cash inflows		5,443,534
Future production costs		(2,181,423	)
Future development costs		(444,553	)
Future income tax expense		(567,946	)
Future net cash flows		2,249,612
Discount at 10% for estimated timing of cash flows		(1,188,237	)
Standardized measure of discounted future net cash flows		1,061,375

At December 31, 2017, RMB 979,330 (December 31, 2016: RMB 731,206, December 31, 2015: RMB 1,023,933) of standardized measure of discounted future net cash flows related to proved oil and gas reserves located within mainland China and RMB 45,196 (December 31, 2016: RMB 25,605, December 31, 2015: RMB 37,442) of standardized measure of discounted future net cash flows related to proved oil and gas reserves located overseas.

Share of standardized measure of discounted future net cash flows of associates and joint ventures:

December 31, 2017	17,345
December 31, 2016	13,550
December 31, 2015	19,712

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Supplementary Information on Oil and Gas Exploration and Production Activities (Unaudited) - Changes in Standardized Measure of Discounted Future Net Cash Flows

12 Months Ended

Dec. 31, 2017

Extractive Industries [Abstract]

Supplementary Information on Oil and Gas Exploration and Production Activities (Unaudited) - Changes in Standardized Measure of Discounted Future Net Cash Flows

Changes in Standardized Measure of Discounted Future Net Cash Flows

Changes in the standardized measure of discounted net cash flows for the Group for each of the years ended December 31, 2017, 2016 and 2015 are as follows:

	Year Ended December 31,
	2017			2016			2015
	RMB			RMB			RMB
The Group
Beginning of the year		756,811			1,061,375			1,595,704
Sales and transfers of oil and gas produced, net of production costs		(232,387	)		(167,108	)		(209,600	)
Net changes in prices and production costs and other		367,132			(370,257	)		(716,150	)
Extensions, discoveries and improved recovery		77,249			81,248			157,220
Development costs incurred		38,613			32,918			49,064
Revisions of previous quantity estimates		14,555			(61,816	)		(121,809	)
Accretion of discount		76,860			113,324			172,090
Net change in income taxes		(74,307	)		67,127			134,856
End of the year		1,024,526			756,811			1,061,375

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Summary of Principal Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Basis of consolidation

(a) Basis of consolidation

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has right to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

A subsidiary is consolidated from the date on which control is transferred to the Group and is no longer consolidated from the date that control ceases. The acquisition method of accounting is used to account for the acquisition of subsidiaries except for business combinations under common control. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognizes any non-controlling interests in the acquiree either at fair value or at the non-controlling interests’ proportionate share of the acquiree’s net assets.

The excess of the consideration transferred, the amount of any non-controlling interests in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognized directly in the statement of comprehensive income.

An acquisition of a business which is a business combination under common control is accounted for in a manner similar to a uniting of interests whereby the assets and liabilities acquired are accounted for at carryover predecessor values to the other party to the business combination with all periods presented as if the operations of the Group and the business acquired have always been combined. The difference between the consideration paid by the Group and the net assets or liabilities of the business acquired is adjusted against equity.

Intercompany transactions, balances and unrealized gains on transactions between group companies are eliminated. Unrealized losses are also eliminated. Where necessary, accounting policies of subsidiaries have been changed to ensure consistency with the policies adopted by the Group.

A listing of the Group’s principal subsidiaries is set out in Note 18.

Investments in associates

(b) Investments in associates

Associates are entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for by the equity method of accounting in the consolidated financial statements of the Group and are initially recognized at cost.

Under this method of accounting, the Group’s share of the post-acquisition profits or losses of associates is recognized in the consolidated profit or loss and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amounts of the investments. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred obligations or made payments on behalf of the associate.

Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates; unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. The Group’s investment in associates includes goodwill identified on acquisition, net of any accumulated loss and is tested for impairment as part of the overall balance. Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired associate at the date of acquisition. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

A listing of the Group’s principal associates is shown in Note 16.

Investments in joint ventures

(c) Investments in joint ventures

Ventures are arrangements in which the Group with one or more parties have joint control, whereby the Group has rights to the net assets of the arrangements, rather than rights to their assets and obligations for their liabilities. The Group’s interests in joint ventures are accounted for by the equity method of accounting (Note 3(b)) in the consolidated financial statements.

A listing of the Group’s principal joint ventures is shown in Note 16.

Transactions with non-controlling interests

(d) Transactions with non-controlling interests

Transactions with non-controlling interests are treated as transactions with owners in their capacity as owners of the Group. Gains and losses resulting from disposals to non-controlling interests are recorded in equity. The differences between any consideration paid and the relevant share of the carrying value of net assets of the subsidiary acquired resulting from the purchase of non-controlling interests, are recorded in equity.

When the Group ceases to have control or significant influence, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognized in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified to profit or loss.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognized in other comprehensive income are reclassified to profit or loss where appropriate.

Foreign currencies

(e) Foreign currencies

Items included in the financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). Most assets and operations of the Group are located in the PRC (Note 37), and the functional currency of the Company and most of the consolidated subsidiaries is the Renminbi (“RMB”). The consolidated financial statements are presented in the presentation currency of RMB.

Foreign currency transactions of the Group are accounted for at the exchange rates prevailing at the respective dates of the transactions; monetary assets and liabilities denominated in foreign currencies are translated at exchange rates at the date of the statement of financial position; gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities are recognized in the consolidated profit or loss.

For the Group entities that have a functional currency different from the Group’s presentation currency, assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of the statement of financial position. Income and expenses for each statement of comprehensive income presented are translated at the average exchange rates for each period and the resulting exchange differences are recognized in other comprehensive income.

Property, plant and equipment

(f) Property, plant and equipment

Property, plant and equipment, including oil and gas properties (Note 3(g)), are initially recorded in the consolidated statement of financial position at cost where it is probable that they will generate future economic benefits. Cost represents the purchase price of the asset and other costs incurred to bring the asset into existing use. Subsequent to their initial recognition, property, plant and equipment are carried at cost less accumulated depreciation, depletion and amortization (including any impairment).

Depreciation, to write off the cost of each asset, other than oil and gas properties (Note 3(g)), to their residual values over their estimated useful lives is calculated using the straight-line method.

The Group uses the following useful lives for depreciation purposes:

Buildings	8 - 40 years
Equipment and machinery	4 - 30 years
Motor vehicles	4 - 14 years
Other	5 - 12 years

No depreciation is provided on construction in progress until the assets are completed and ready for use.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

Property, plant and equipment, including oil and gas properties (Note 3(g)), are reviewed for possible impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the carrying amount of a cash generating unit exceeds the higher of its fair value less costs to sell and its value in use. Value in use is the estimated net present value of future cash flows to be derived from the cash generating unit.

Gains and losses on disposals of property, plant and equipment are determined by reference to their carrying amounts and are recorded in the consolidated profit or loss.

Interest and other costs on borrowings to finance the construction of property, plant and equipment are capitalized during the period of time that is required to complete and prepare the asset for its intended use. Costs for repairs and maintenance activities are expensed as incurred except for costs of components that result in improvements or betterments which are capitalized as part of property, plant and equipment and depreciated over their useful lives.

Oil and gas properties

(g) Oil and gas properties

The successful efforts method of accounting is used for oil and gas exploration and production activities. Under this method, all costs for development wells, support equipment and facilities, and proved mineral interests in oil and gas properties are capitalized. Geological and geophysical costs are expensed when incurred. Costs of exploratory wells are capitalized pending determination of whether the wells find proved oil and gas reserves. Proved oil and gas reserves are the estimated quantities of crude oil and natural gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulation before the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether the estimate is a deterministic estimate or probabilistic estimate. Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average price during the 12-month period before the ending date of the period covered by the proved oil and gas reserve report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period unless prices are defined by contractual arrangements, excluding escalations based upon future conditions. The costs shall be that prevailing at the end of the period.

Exploratory wells in areas not requiring major capital expenditures are evaluated for economic viability within one year of completion of drilling. The related well costs are expensed as dry holes if it is determined that such economic viability is not attained. Otherwise, the related well costs are reclassified to oil and gas properties and are subject to impairment review (Note 3(f)). For exploratory wells that are found to have economically viable reserves in areas where major capital expenditure will be required before production can commence, the related well costs remain capitalized only if additional drilling is underway or firmly planned. Otherwise the related well costs are expensed as dry holes. The Group does not have any significant costs of unproved properties capitalized in oil and gas properties.

The Ministry of Land and Resources (Renamed as Department of Natural Resources) in China issues production licenses to applicants on the basis of the reserve reports approved by relevant authorities.

The cost of oil and gas properties is amortized at the field level based on the units of production method. Units of production rates are based on oil and gas reserves estimated to be recoverable from existing facilities based on the current terms of the Group’s production licenses.

Intangible assets and goodwill

(h) Intangible assets and goodwill

Expenditures on acquired patents, trademarks, technical know-how and licenses are capitalized at historical cost and amortized using the straight-line method over their estimated useful lives. Intangible assets are not subsequently revalued. The carrying amount of each intangible asset is reviewed annually and adjusted for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount and is recognized in the consolidated profit or loss. The recoverable amount is measured as the higher of fair value less costs to sell and value in use. Value in use is the estimated net present value of future cash flows to be derived from the asset.

Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over the interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree and the amount of any non-controlling interests in the acquiree.

Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognized immediately as an expense and is not subsequently reversed.

Financial assets

(i) Financial assets

Financial assets are classified into the following categories: financial assets at fair value through profit or loss, held-to-maturity investments, loans and receivables and available-for-sale financial assets. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. The Group has principally loans and receivables and available-for-sale financial assets and limited financial assets at fair value through profit or loss. The detailed accounting policies for loans and receivables, available-for-sale financial assets and financial assets at fair value through profit or loss held by the Group are set out below:

Classification

(i) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the date of the statement of financial position, which are classified as non-current assets. The Group’s loans and receivables comprise accounts receivable, notes receivable and other receivables. The recognition methods for loans and receivables are disclosed in the respective policy notes.

(ii) Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories; these are included in non-current assets unless management intends to dispose of the investment within 12 months of the date of the statement of financial position. The Group’s available-for-sale financial assets primarily comprise unquoted equity instruments.

(iii) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorized as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if expected to be settled within 12 months; otherwise, they are classified as non-current.

Recognition and measurement

Regular purchases and sales of financial assets are recognized on the trade-date, the date on which the Group commits to purchase or sell the asset. Investments are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognized at fair value, and transaction costs are expensed in profit or loss. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.

Available-for-sale financial assets are measured at fair value except where there are no quoted market prices in active markets and the fair values cannot be reliably measured using valuation techniques. Available-for-sale financial assets that do not have quoted market prices in active markets and whose fair value cannot be reliably measured are carried at cost. Changes in the fair value of monetary and non-monetary securities classified as available for sale are recognized in other comprehensive income. Financial assets at fair value through profit or loss are subsequently carried at fair value. Gains or losses arising from changes in the fair value of the “financial assets at fair value through profit or loss” category are presented in the statement of comprehensive income within “other income, net” in the period in which they arise.

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset is impaired. The amount of the impairment loss is measured as the difference between the carrying amount of the available-for-sale financial asset and the present value of the estimated cash flows.

Leases

(j) Leases

Leases of property, plant and equipment where the Group assumes substantially all the benefits and risks of ownership are classified as finance leases. The Group has no significant finance leases.

Leases of assets under which a significant portion of the risks and benefits of ownership are effectively retained by the lessors are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessors) are expensed on a straight-line basis over the lease terms. Payments made to the Department of Natural Resources to secure land use rights (excluding mineral properties) are treated as operating leases. Land use rights are generally obtained through advance lump-sum payments and the terms of use range up to 50 years.

Inventories

(k) Inventories

Inventories include oil products, chemical products and materials and supplies which are stated at the lower of cost and net realizable value. Cost is primarily determined by the weighted average cost method. The cost of finished goods comprises raw materials, direct labor, other direct costs and related production overheads, but excludes borrowing costs. Net realizable value is the estimated selling price in the ordinary course of business, less the cost of completion and selling expenses.

Accounts receivable

(l) Accounts receivable

Accounts receivable are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision made for impairment of these receivables. Such provision for impairment is established if there is objective evidence that the Group will not be able to collect amounts due according to the original terms of the receivables. The factors the Group considers when assessing whether an account receivable is impaired include but are not limited to significant financial difficulties of the customer, probability that the debtor will enter bankruptcy or financial reorganization and default or delinquency in payments. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.

Cash and cash equivalents

(m) Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, deposits held with banks and highly liquid investments with original maturities of three months or less from the time of purchase.

Accounts payable

(n) Accounts payable

Accounts payable are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.

Borrowings

(o) Borrowings

Borrowings are recognized initially at fair value, net of transaction costs incurred. In subsequent periods, borrowings are stated at amortized cost using the effective interest method. Any difference between proceeds (net of transaction costs) and the redemption value is recognized in the consolidated profit or loss over the period of the borrowings.

General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognized in profit or loss in the period in which they are incurred.

Borrowings are classified as current liabilities unless the Group has unconditional rights to defer settlements of the liabilities for at least 12 months after the reporting period.

Taxation

(p) Taxation

Deferred tax is provided in full, using the liability method, for temporary differences arising between the tax bases of assets and liabilities and their carrying values in the financial statements. However, deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates that have been enacted or substantively enacted by the date of the statement of financial position and are expected to apply to the period when the related deferred tax asset is realized or deferred tax liability is settled.

The principal temporary differences arise from depreciation on oil and gas properties and equipment and provision for impairment of receivables, inventories, investments and property, plant and equipment. Deferred tax assets relating to the carry forward of unused tax losses are recognized to the extent that it is probable that future taxable income will be available against which the unused tax losses can be utilized.

The Group also incurs various other taxes and levies that are not income taxes. “Taxes other than income taxes”, which form part of operating expenses, primarily comprise consumption tax (Note 9), resource tax (Note 9), crude oil special gain levy, urban construction tax, education surcharges and business tax.

Revenue recognition

(q) Revenue recognition

Sales are recognized upon delivery of products and customer acceptance or performance of services, net of value added taxes and discounts. Revenues are recognized only when the Group has transferred to the buyer the significant risks and rewards of ownership of the goods in the ordinary course of the Group’s activities, and when the amount of revenue and the costs incurred or to be incurred in respect of the transaction can be measured reliably and collectability of the related receivables is reasonably assured.

The Group markets a portion of its natural gas under take-or-pay contracts. Customers under the take-or-pay contracts are required to take or pay for the minimum natural gas deliveries specified in the contract clauses. Revenue recognition for natural gas sales and transmission tariff under the take-or-pay contracts follows the accounting policies described in this note. Payments received from customers for natural gas not yet taken are recorded as deferred revenues until actual deliveries take place.

Provisions

(r) Provisions

Provisions are recognized when the Group has present legal or constructive obligations as a result of past events, it is probable that an outflow of resources will be required to settle the obligations, and reliable estimates of the amounts can be made.

Provision for future decommissioning and restoration is recognized in full on the installation of oil and gas properties. The amount recognized is the present value of the estimated future expenditure determined in accordance with local conditions and requirements. A corresponding addition to the related oil and gas properties of an amount equivalent to the provision is also created. This is subsequently depreciated as part of the costs of the oil and gas properties. Any change in the present value of the estimated expenditure other than due to passage of time which is regarded as interest expense, is reflected as an adjustment to the provision and oil and gas properties.

Research and development

(s) Research and development

Research expenditure incurred is recognized as an expense. Costs incurred on development projects are recognized as intangible assets to the extent that such expenditure is expected to generate future economic benefits.

Retirement benefit plans

(t) Retirement benefit plans

The Group contributes to various employee retirement benefit plans organized by PRC municipal and provincial governments under which it is required to make monthly contributions to these plans at prescribed rates for its employees in China. The relevant PRC municipal and provincial governments undertake to assume the retirement benefit obligations of existing and future retired employees of the Group in China. The Group has similar retirement benefit plans for its employees in its overseas operations. Contributions to these PRC and overseas plans (“defined contribution plan”) are charged to expense as incurred. In addition, the Group joined the corporate annuity plan approved by relevant PRC authorities. Contribution to the annuity plan is charged to expense as incurred. The Group currently has no additional material obligations outstanding for the payment of retirement and other post-retirement benefits of employees in the PRC or overseas other than what described above.

Related Parties

(u) Related Parties

(a) A person, or a close member of that person’s family, is related to the Group if that person:

(i) has control or joint control over the Group;

(ii) has significant influence over the Group; or

(iii) is a member of the key management personnel of the Group or the Group’s parent.

(b) An entity is related to the Group if any of the following conditions applies:

(i) The entity and the Group are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

(iii) Both entities are joint ventures of the same third party.

(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

(v) The entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group.

(vi) The entity is controlled or jointly controlled by a person identified in (a).

(vii) A person identified in (a) (i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

(viii) The entity, or any member of a group of which it is a part, provides key management personnel services to the Group or to the Group’s parent.

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.

New accounting developments

(v) New accounting developments

(i) New and amended standards adopted by the Group

There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning on or after January 1, 2017 that would be expected to have a material impact on the Group.

(ii) Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group.

IFRS 9 Financial Instruments (“IFRS 9”) published in July 2014, replaces the existing guidance in IAS 39 Financial Instruments: Recognition and Measurement (“IAS 39”). IFRS 9 includes revised guidance on the classification and measurement of financial instruments, a new expected credit loss model for calculating impairment on financial assets, and new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39.

IFRS 9 is effective for annual reporting periods beginning on or after January 1, 2018, on a retrospective basis. The Group plans to use the exemption from restating comparative information and will recognise any transition adjustments against the opening balance of equity at January 1, 2018. The adoption of this standard is expected to have an impact on the Group’s financial assets, but no impact on the Group’s financial liabilities. Under IFRS 9, the Group has designated equity investments classified as available-for-sale that are held for long-term strategic purpose as measured at fair value through other comprehensive income. Consequently, all fair value gains and losses will be recorded in other comprehensive income, no impairment losses will be recognised in profit or loss and no gains and losses will be reclassified to profit or loss on disposal.

The new impairment model in IFRS 9 replaces the “incurred loss” model in IAS 39 with an “expected credit loss” model. Under the expected credit loss model, it will no longer be necessary for a loss event to occur before an impairment loss is recognized. Instead, an entity is required to recognize and measure either a 12-month expected credit loss or a lifetime expected credit loss, depending on the asset and the facts and circumstances. The Group expects that the application of the expected credit loss model will result in earlier recognition of credit losses. Based on a preliminary assessment, the Group does not expect material change to the loss allowance for the Group’s loans and receivables.

IFRS 15 Revenue from contracts with customers (“IFRS 15”) establishes a comprehensive framework for determining whether, how much and when revenue is recognised and expands disclosure requirements relating to revenue recognition policies and how these relate to the revenue-generating contractual performance obligations. It replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes.

IFRS 15 is effective for annual reporting periods beginning on or after January 1, 2018, with early adoption permitted. The Group plans to adopt IFRS 15 using the cumulative effect method, with the effect of initially applying this standard recognised at the date of initial application. As a result, the Group will not apply the requirements of IFRS 15 to the comparative period presented. Based on the assessment of existing contracts with customers, the Group does not expect the application of IFRS 15 to have a significant impact on its consolidated financial statements.

IFRS 16 Lease (“IFRS 16”) introduces a single, on-balance lease sheet accounting model for lessees. A lessee recognizes a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. IFRS 16 replaces existing leases guidance including IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases—Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

IFRS 16 is effective for annual periods beginning on or after January 1, 2019, with early adoption permitted for entities that apply IFRS 15 completed at or before the date of initial application of IFRS 16. The Group has started an initial assessment of the potential impact on its consolidated financial statements. So far, the most significant impact identified is that the Group will recognize new assets and liabilities for its operating leases of oil and gas stations and land use rights. In addition, the nature of expenses related to the operating leases will change as IFRS 16 replaces the straight-line operating lease expense with a depreciation charge for right-of-use assets and interest expense on lease liabilities. No significant impact on the consolidated financial statements is expected for the Group’s finance leases.

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Summary of Principal Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Useful Lives for Depreciation Purposes

The Group uses the following useful lives for depreciation purposes:

Buildings	8 - 40 years
Equipment and machinery	4 - 30 years
Motor vehicles	4 - 14 years
Other	5 - 12 years

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Profit Before Income Tax Expense (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Profit Before Income Tax Expense

	2017		2016		2015
	RMB		RMB		RMB
Items credited and charged in arriving at the profit before income tax expense include:
Credited
Dividend income from available-for-sale financial assets		42		60		288
Reversal of provision for impairment of receivables		37		62		99
Reversal of write down in inventories		49		75		59
Government grants(i)		9,102		8,509		7,906
Remeasurement to fair value of pre-existing interest in acquiree		—		—		22,807
Gain on disposal of investment in subsidiaries(ii)		613		24,674		280
Charged
Amortization of intangible and other assets		4,495		4,896		4,141
Auditors’ remuneration (iii)		53		53		53
Cost of inventories recognized as expense		1,560,361		1,217,131		1,282,039
Provision for impairment of receivables		3,291		1,671		173
Loss on disposal of property, plant and equipment		4,939		7,972		4,661
Operating lease expenses		20,073		19,027		16,786
Research and development expenses		12,323		11,227		11,856
Write down in inventories		1,118		2,709		3,394

(i) Comprises proportionate refund of import value-added tax relating to the import of natural gas (including liquefied natural gas) provided by the PRC government. This value-added tax refund is applicable from January 1, 2011 to December 31, 2020 and available when the import prices of the natural gas and liquefied natural gas imported under any State-sanctioned pipelines are higher than their prescribed selling prices.

(ii) On November 24, 2015, the Board of Directors approved the sale by CNPC Exploration and Development Co., Ltd. (“CNPC E&D”), one of the Company’s wholly-owned subsidiaries, of its 50% of equity interest in Trans-Asia Gas Pipeline Co., Ltd. (“Trans-Asia Pipeline”) to CNIC Corporation Limited. The transaction was completed in the second quarter of 2016 and CNPC E&D lost control over Trans-Asia Pipeline accordingly. The gain recorded as “Other (expenses) / income, net” of RMB 24,534 represents the difference between the sum of total consideration equivalent to RMB 14,671 received from the transaction and the fair value of the remaining equity investment of RMB 14,527, and the net assets of the former subsidiary of RMB 4,034, together with the amounts of RMB 630 recognized previously in other comprehensive loss in relation to Trans-Asia Pipeline reclassified to profit or loss.

(iii) The auditors’ remuneration above represents the annual audit fees paid by the Company. This remuneration does not include fees of RMB 52 (2016: RMB 66, 2015: RMB 36) paid by subsidiaries to the Company’s current auditor and its network firms which primarily relates to audit fees of RMB 40 (2016: RMB 50, 2015: RMB 29), audit-related fees of RMB 8 (2016: RMB 8, 2015: RMB 6) and tax fees of RMB 3 (2016: RMB 7, 2015 RMB nil), and other service fees of RMB 1 (2016: RMB 1, 2015: RMB 1).

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Employee Compensation Costs (Tables)

12 Months Ended

Dec. 31, 2017

Investments Schedule [Abstract]

Summary of Employee Compensation Costs

	2017		2016		2015
	RMB		RMB		RMB
Wages, salaries and allowances		82,639		75,461		75,651
Social security costs		42,745		42,201		42,431
		125,384		117,662		118,082

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Taxes Other Than Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Taxes Other Than Income Taxes

	2017		2016		2015
	RMB		RMB		RMB
Consumption tax		142,708		140,268		149,323
Resource tax		18,000		14,472		18,584
Other		37,314		34,868		37,977
		198,022		189,608		205,884

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Interest Expense (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Interest Expense

	2017			2016			2015
	RMB			RMB			RMB
Interest on
Bank loans		1,569			891			1,259
Other loans		17,394			19,910			19,892
Accretion expense (Note 31)		5,453			5,126			5,950
Less: Amounts capitalized		(2,008	)		(2,579	)		(2,773	)
	22,408			23,348			24,328

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Emoluments of Directors and Supervisors (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Details of the Emoluments of Directors and Supervisors

Details of the emoluments of directors and supervisors for the years ended December 31, 2017, 2016 and 2015 are as follows:

	2017								2016		2015
Name	Fee for directors and supervisors		Salaries, allowances and other benefits		Contribution to retirement benefit scheme		Total		Total		Total
	RMB’000		RMB’000		RMB’000		RMB’000		RMB’000		RMB’000
Chairmen:
Mr. Wang Yilin(i)		—		—		—		—		—		—
Mr. Zhou Jiping(i)		—		—		—		—		—		—
Vice Chairmen:
Mr. Zhang Jianhua(ii)		—		—		—		—		—		—
Mr. Wang Dongjin(iii)		—		696		127		823		774		734
Executive directors:
Mr. Zhao Zhengzhang(iv)		—		118		41		159		759		671
Mr. Hou Qijun(iv)		—		572		76		648		—		—
Non-executive directors:
Mr. Yu Baocai		—		—		—		—		—		—
Mr. Shen Diancheng(vi)		—		—		—		—		—		—
Mr. Liu Yuezhen		—		—		—		—		—		—
Mr. Liu Hongbin(v)		—		—		—		—		679		699
Mr. Duan Liangwei(vi)		—		—		—		—		—		—
Mr. Qin Weizhong(vi)		—		—		—		—		—		—
Mr. Chen Zhiwu(vii)		—		—		—		—		234		220
Mr. Richard H. Matzke(vii)		—		—		—		—		241		230
Mr. Lin Boqiang		250		—		—		250		281		249
Mr. Zhang Biyi		250		—		—		250		278		252
Ms. Elsie Leung Oi-sie(vii)		220		—		—		220		—		—
Mr. Tokuchi Tatsuhito(vii)		226		—		—		226		—		—
Mr. Simon Henry(vii)		213		—		—		213		—		—
		1,159		—		—		1,159		1,713		1,650
Supervisors:
Mr. Xu Wenrong(viii)		—		—		—		—		—		—
Mr. Guo Jinping(viii)		—		—		—		—		—		—
Mr. Zhang Fengshan		—		—		—		—		—		—
Mr. Li Qingyi(viii)		—		—		—		—		—		—
Mr. Jia Yimin(viii)		—		—		—		—		—		—
Mr. Jiang Lifu		—		—		—		—		—		—
Mr. Lu Yaozhong(viii)		—		—		—		—		—		—
Mr. Wang Liang(x)		—		—		—		—		—		—
Mr. Yao Wei(ix)		—		—		—		—		469		796
Mr. Liu Hehe(ix)		—		—		—		—		352		724
Mr. Yang Hua (viii)		—		201		49		250		862		838
Mr. Fu Suotang(viii)		—		525		46		571		—		—
Mr. Li Jiamin		—		745		65		810		707		771
Mr. Liu Xianhua(ix)		—		671		62		733		528		—
Mr. Li Wendong(ix)		—		788		96		884		670		—
		—		2,930		318		3,248		3,588		3,129
		1,159		4,316		562		6,037		6,834		6,184

(i) Mr. Wang Yilin was elected as the chairman from June 23, 2015, and Mr. Zhou Jiping ceased being the chairman from June 23, 2015.

(ii) Mr. Zhang Jianhua was elected as the vice chairman and non-executive director from October 28, 2016.

(iii) Mr. Wang Dongjin also serves as the president and executive director.

(iv) Mr. Hou Qijun was elected as the vice president and executive director. Besides, Mr. Zhao Zhengzhang was elected as an executive director from June 23, 2015 and ceased being the executive director from June 8, 2017.

(v) Mr. Liu Hongbin ceased being the vice chairman and was transferred from the executive director to the non-executive director from October 28, 2016, besides, received no emoluments from the Company since the next day.

(vi) Mr. Shen Diancheng ceased being the non-executive director, and Mr. Duan Liangwei and Mr. Qin Weizhong were elected as the non-executive director from June 8, 2017.

(vii) Ms. Elsie Leung Oi-sie, Mr. Tokuchi Tatsuhito and Mr. Simon Henry were elected as the independent non-executive directors, besides, Mr. Chen Zhiwu and Mr. Richard H. Matzke ceased being the independent non-executive directors from June 8, 2017.

(viii) Mr. Xu Wenrong was elected as an non-executive director from May 25, 2016 and ceased being the non-executive from June 8, 2017. Mr. Xu Wenrong was elected as the Chairman of the Supervisory Committee and Mr. Lu Yaozhong was elected as the supervisor, besides, Mr. Guo Jinping, Mr. Li Qingyi and Mr. Jia Yimin ceased being the supervisors from June 8, 2017. Mr. Fu Suotang were elected as the staff supervisor, besides, Mr. Yang Hua ceased being the staff supervisor from June 8, 2017.

(ix) Mr. Li Wendong and Mr. Liu Xianhua were elected as the staff supervisors, besides, Mr. Yao Wei and Mr. Liu Hehe ceased being the staff supervisors from May 17, 2016.

(x) Mr. Wang Liang was elected as the supervisor from October 26, 2017.

(xi) The emoluments received by the following person are not reflected in the analysis shown above:

Mr. Liao Yongyuan ceased being the non-executive director and vice chairman from March 17, 2015, and emoluments received from the Company during the year 2017, 2016 and 2015 were RMB nil, RMB nil, respectively.

(xii) The deferred performance emoluments of RMB 1.64 which the company paid to the directors attributable to the year of 2013 to 2015 in accordance with the relevant regulations of the Chinese Government are not reflected in the 2016 annual remuneration shown above.

(xiii) The emoluments above are all pre-tax amounts.

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Income Tax Expense (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Income Tax Expense

	2017			2016			2015
	RMB			RMB			RMB
Current taxes		23,835			19,762			18,998
Deferred taxes (Note 30)		(7,539	)		(3,994	)		(3,272	)
		16,296			15,768			15,726

Reconciliation of Tax on Profit Before Taxation and the Tax using the Corporate Income Tax Rate in the PRC Applicable to the Group

The tax on the Group’s profit before taxation differs from the theoretical amount that would arise using the corporate income tax rate in the PRC applicable to the Group is as follows:

	2017			2016			2015
	RMB			RMB			RMB
Profit before income tax expense		53,089			45,140			57,815
Tax calculated at a tax rate of 25%		13,272			11,285			14,454
Tax return true-up		1,275			1,887			2,008
Effect of income taxes from international operations in excess of taxes at the PRC statutory tax rate		693			1,797			910
Effect of preferential tax rate		(5,058	)		(2,418	)		(5,436	)
Tax effect of income not subject to tax		(3,401	)		(4,935	)		(2,875	)
Tax effect of expenses not deductible for tax purposes		9,515			8,152			6,665
Income tax expense		16,296			15,768			15,726

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Dividends (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Dividends

	2017		2016		2015
	RMB		RMB		RMB
Interim dividends attributable to owners of the Company for 2017(a)		12,676		—		—
Proposed final dividends attributable to owners of the Company for 2017(b)		11,117		—		—
Interim dividends attributable to owners of the Company for 2016(c)		—		3,899		—
Final dividends attributable to owners of the Company for 2016(d)		—		6,957		—
Interim dividends attributable to owners of the Company for 2015(e)		—		—		11,433
Final dividends attributable to owners of the Company for 2015(f)		—		—		4,550
		23,793		10,856		15,983

(a) Interim dividends attributable to owners of the Company in respect of 2017 of RMB 0.06926 yuan per share amounting to a total of RMB 12,676 were paid on September 15, 2017 (A shares) and October 27, 2017 (H shares).

(b) At the 1st meeting of the Board in 2018, the Board of Directors proposed final dividends attributable to owners of the Company in respect of 2017 of RMB 0.06074 yuan per share amounting to a total of RMB 11,117. These consolidated financial statements do not reflect this dividend payable as the final dividends were proposed after the reporting period and will be accounted for in equity as an appropriation of retained earnings for the year ended December 31, 2018 when approved at the forthcoming Annual General Meeting.

(c) Interim dividends attributable to owners of the Company in respect of 2016 of RMB 0.02131 yuan per share amounting to a total of RMB 3,899 were paid on September 21, 2016 (A shares) and October 28, 2016 (H shares).

(d) Final dividends attributable to owners of the Company in respect of 2016 of RMB 0.03801 yuan per share amounting to a total of RMB 6,957 were paid on June 22, 2017 (A shares) and July 27, 2017 (H shares).

(e) Interim dividends attributable to owners of the Company in respect of 2015 of RMB 0.06247 yuan per share amounting to a total of RMB 11,433 were paid on September 18, 2015 (A shares) and October 27, 2015 (H shares).

(f) Final dividends attributable to owners of the Company in respect of 2015 of RMB 0.02486 yuan per share amounting to a total of RMB 4,550 were paid on June 8, 2016 (A shares) and July 14, 2016 (H shares).

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Property, Plant and Equipment (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Property, Plant and Equipment

Year Ended December 31, 2017	Buildings			Oil and Gas Properties			Equipment and Machinery			Motor Vehicles			Other			Construction in Progress			Total
	RMB			RMB			RMB			RMB			RMB			RMB			RMB
Cost
At beginning of the year		214,710			1,909,213			990,832			29,227			22,268			229,371			3,395,621
Additions		1,042			9,193			3,995			824			528			204,159			219,741
Transfers		13,913			124,257			75,284			—			10,506			(223,960	)		—
Disposals or write offs		(3,280	)		(21,746	)		(11,061	)		(1,032	)		(441	)		(9,455	)		(47,015	)
Currency translation differences		(278	)		(9,588	)		(1,039	)		(29	)		(230	)		(242	)		(11,406	)
At end of the year		226,107			2,011,329			1,058,011			28,990			32,631			199,873			3,556,941
Accumulated depreciation and impairment
At beginning of the year		(85,323	)		(1,063,500	)		(469,475	)		(19,467	)		(11,971	)		(6,340	)		(1,656,076	)
Charge for the year and others		(9,968	)		(150,178	)		(49,509	)		(1,754	)		(1,857	)		—			(213,266	)
Impairment charge		(659	)		(3,961	)		(10,300	)		(3	)		(2,715	)		(309	)		(17,947	)
Disposals or write offs or transfers		2,075			11,426			9,663			921			(1,699	)		3,664			26,050
Currency translation differences		110			6,472			532			7			12			(22	)		7,111
At end of the year		(93,765	)		(1,199,741	)		(519,089	)		(20,296	)		(18,230	)		(3,007	)		(1,854,128	)
Net book value
At end of the year		132,342			811,588			538,922			8,694			14,401			196,866			1,702,813

Year Ended December 31, 2016	Buildings			Oil and Gas Properties			Equipment and Machinery			Motor Vehicles			Other			Construction in Progress			Total
	RMB			RMB			RMB			RMB			RMB			RMB			RMB
Cost
At beginning of the year		205,204			1,799,887			953,331			29,586			21,018			236,804			3,245,830
Additions		979			7,995			3,202			624			416			161,336			174,552
Transfers		10,644			109,171			40,216			—			965			(160,996	)		—
Disposals or write offs		(2,573	)		(23,047	)		(6,781	)		(1,027	)		(267	)		(9,689	)		(43,384	)
Currency translation differences		456			15,207			864			44			136			1,916			18,623
At end of the year		214,710			1,909,213			990,832			29,227			22,268			229,371			3,395,621
Accumulated depreciation and impairment
At beginning of the year		(76,904	)		(929,554	)		(421,315	)		(18,619	)		(10,740	)		(3,793	)		(1,460,925	)
Charge for the year and others		(9,677	)		(141,530	)		(47,750	)		(1,753	)		(1,297	)		—			(202,007	)
Impairment charge		(63	)		(711	)		(5,494	)		(1	)		(15	)		(2,218	)		(8,502	)
Disposals or write offs or transfers		1,469			15,536			5,501			930			219			6			23,661
Currency translation differences		(148	)		(7,241	)		(417	)		(24	)		(138	)		(335	)		(8,303	)
At end of the year		(85,323	)		(1,063,500	)		(469,475	)		(19,467	)		(11,971	)		(6,340	)		(1,656,076	)
Net book value
At end of the year		129,387			845,713			521,357			9,760			10,297			223,031			1,739,545

Changes to Exploratory Well Costs

The following table indicates the changes to the Group’s exploratory well costs, which are included in construction in progress, for the years ended December 31, 2017, 2016 and 2015.

	2017			2016			2015
	RMB			RMB			RMB
At beginning of the year		21,421			20,177			20,878
Additions to capitalized exploratory well costs pending the determination of proved reserves		25,165			21,847			21,698
Reclassified to wells, facilities, and equipment based on the determination of proved reserves		(14,288	)		(10,914	)		(12,791	)
Capitalized exploratory well costs charged to expense		(9,455	)		(9,689	)		(9,608	)
At end of the year		22,843			21,421			20,177

Aging of Capitalized Exploratory Well Costs

The following table provides an aging of capitalized exploratory well costs based on the date the drilling was completed.

	December 31, 2017		December 31, 2016
	RMB		RMB
One year or less		15,231		13,202
Over one year		7,612		8,219
Balance at December 31		22,843		21,421

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Interests in Other Entities (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summarized Financial Information of the Group's Principal Associates and Joint Ventures

The summarized financial information of the Group’s principal associates and joint ventures, including the aggregated amounts of assets, liabilities, revenue, profit or loss and the interest held by the Group were as follows:

Name	Country of Incorporation		Registered Capital		Principal Activities	Interest Held
						Direct%		Indirect%
Dalian West Pacific Petrochemical Co., Ltd.		PRC		USD 258 million	Production and sale of petroleum and petrochemical products		28.44		—
China Petroleum Finance Co., Ltd.(i)		PRC		8,331	Deposits, loans, settlement, lending, bills acceptance discounting, guarantee and other banking business		32.00		—
CNPC Captive Insurance Co., Ltd.		PRC		5,000	Property loss insurance, liability insurance, credit insurance and deposit insurance; as well as the application of the above insurance reinsurance and insurance capital business		49.00		—
China Marine Bunker (PetroChina) Co., Ltd.		PRC		1,000	Oil import and export trade and transportation, sale and storage		—		50.00
Arrow Energy Holdings Pty Ltd.		Australia		AUD 2	Exploration, development and sale of coal seam gas		—		50.00
Trans-Asia Gas Pipeline Co., Ltd.(ii)		PRC		5,000	Main contractor, investment holding, investment management, investment consulting, enterprise management advisory, technology development, promotion and technology consulting		—		50.00

(i) In August 2016, China National Petroleum Corporation injected RMB 19,471 cash into China Petroleum Finance Co., Ltd. (the “CP Finance”), of which RMB 2,890 and RMB 16,581 were recorded as “Registered Capital” and “Capital Reserve”, respectively. The registered capital of CP Finance was increased from RMB 5,441 to RMB 8,331. The Company’s share was diluted from 49% to 32%, and the Company’s share of net assets was increased RMB 307.

(ii) On November 24, 2015, the board of directors of the Company approved the sale by CNPC Exploration and Development Co., Ltd. (“CNPC E&D”), one of the Company’s subsidiaries, of its 50% equity interest in Trans-Asia Pipeline to CNIC Corporation Limited for a consideration equivalent to RMB 14,671. The transaction closed in the second quarter of 2016.

Summarized Financial Information of the Group's Principal Associates and Reconciliation to Carrying Amount

Summarized financial information in respect of the Group’s principal associates and reconciliation to carrying amount is as follows:

	Dalian West Pacific Petrochemical Co., Ltd.						China Petroleum Finance Co., Ltd.				CNPC Captive Insurance Co., Ltd.
	December 31, 2017			December 31, 2016			December 31, 2017		December 31, 2016		December 31, 2017		December 31, 2016
	RMB			RMB			RMB		RMB		RMB		RMB
Percentage ownership interest (%)		28.44			28.44			32.00		32.00		49.00		49.00
Current assets		5,326			3,597			169,389		148,916		9,386		9,192
Non-current assets		4,141			4,373			309,481		270,507		2,764		2,166
Current liabilities		12,108			8,329			394,064		332,923		6,097		5,594
Non-current liabilities		333			5,217			24,977		29,998		1		1
Net (liabilities) / assets		(2,974	)		(5,576	)		59,829		56,502		6,052		5,763
Group’s share of net assets		—			—			19,145		18,080		2,965		2,824
Goodwill		—			—			349		349		—		—
Carrying amount of interest in associates		—			—			19,494		18,429		2,965		2,824

Summarized statement of comprehensive income is as follows:

	Dalian West Pacific Petrochemical Co., Ltd.							China Petroleum Finance Co., Ltd.							CNPC Captive Insurance Co., Ltd.
	2017		2016		2015			2017			2016		2015		2017		2016		2015
	RMB		RMB		RMB			RMB			RMB		RMB		RMB		RMB		RMB
Revenue		27,716		19,029		18,170			8,520			8,555		10,335		654		563		480
Profit for the year		2,602		1,475		(984	)		7,286			7,524		5,839		364		302		286
Other comprehensive (loss) / income		—		—		—			(1,395	)		655		294		1		2		1
Total comprehensive income / (loss)		2,602		1,475		(984	)		5,891			8,179		6,133		365		304		287
Group’s share of total comprehensive income		—		—		—			1,885			3,628		3,005		179		149		141
Dividends received by the Group		—		—		—			815			7,203		631		27		—		—

Summarized Balance Sheet and Reconciliation to Carrying Amount and Statement of Comprehensive Income and Dividends Received of the Group's Principal Joint Ventures

Summarized balance sheet in respect of the Group’s principal joint ventures and reconciliation to carrying amount is as follows:

	China Marine Bunker (PetroChina) Co., Ltd.				Arrow Energy Holdings Pty Ltd.						Trans-Asia Gas Pipeline Co., Ltd.
	December 31, 2017		December 31, 2016		December 31, 2017			December 31, 2016			December 31, 2017		December 31, 2016
	RMB		RMB		RMB			RMB			RMB		RMB
Percentage ownership interest (%)		50.00		50.00		50.00			50.00			50.00		50.00
Non-current assets		1,942		1,974		25,429			32,733			31,527		27,009
Current assets		6,449		6,453		540			708			3,957		4,045
Including: cash and cash equivalents		1,277		1,461		91			368			3,955		4,025
Non-current liabilities		232		749		21,569			25,308			2,100		2,100
Including: Non-current financial liabilities excluding trade and other payables and provisions		—		500		17,890			16,304			2,100		2,100
Current liabilities		5,309		4,902		583			690			343		414
Including: Current financial liabilities excluding trade and other payables and provisions		1,894		1,188		192			316			—		—
Net assets		2,850		2,776		3,817			7,443			33,041		28,540
Net assets attributable to owners of the Company		2,630		2,528		3,817			7,443			33,041		28,540
Group’s share of net assets		1,315		1,264		1,909			3,722			16,521		14,270
Elimination of unrealized profit		—		—		—			—			—		—
Elimination of transactions with the Group		—		—		(52	)		(45	)		—		—
Carrying amount of interest in joint ventures		1,315		1,264		1,857			3,677			16,521		14,270

Summarized statement of comprehensive income and dividends received by the Group is as follows:

	China Marine Bunker (PetroChina) Co., Ltd.									Arrow Energy Holdings Pty Ltd.									Trans-Asia Gas Pipeline Co., Ltd.
	2017			2016			2015			2017			2016			2015			2017			From the closing date to Dec 31, 2016
	RMB			RMB			RMB			RMB			RMB			RMB			RMB			RMB
Revenue		31,770			23,336			27,587			1,449			1,135			971			16			84
Depreciation, depletion and amortization		(93	)		(92	)		(88	)		(883	)		(624	)		(484	)		(3	)		(3	)
Interest income		12			9			35			2			5			6			65			55
Interest expense		(39	)		(45	)		(56	)		(1,300	)		(1,307	)		(1,189	)		(43	)		(32	)
Income tax expense		(44	)		(47	)		(33	)		—			—			—			—			(1	)
Net profit / (loss)		116			101			93			(5,518	)		(3,718	)		(10,753	)		5,846			88
Total comprehensive income / (loss)		87			171			176			(3,445	)		(3,402	)		(12,934	)		5,736			194
Total comprehensive income / (loss) by share		43			68			67			(1,723	)		(1,701	)		(6,467	)		2,868			97
Elimination of unrealized profit		—			—			—			—			—			—			(617	)		(354	)
Group’s share of total comprehensive income / (loss)		43			68			67			(1,723	)		(1,701	)		(6,467	)		2,251			(257	)
Dividends received by the Group		—			9			18			—			—			—			—			—

Principal Subsidiaries of the Group

The principal subsidiaries of the Group are:

Company Name	Country of Incorporation	Issued Capital RMB		Type of Legal Entity	Attributable Equity Interest %		Voting Rights%	Principal Activities
Daqing Oilfield Company Limited	PRC		47,500	Limited liability company		100.00	100.00	Exploration, production and sale of crude oil and natural gas
CNPC Exploration and Development Company Limited (i)	PRC		16,100	Limited liability company		50.00	57.14	Exploration, production and sale of crude oil and natural gas in and outside the PRC
PetroChina Hong Kong Limited	Hong Kong		HKD 7,592 million	Limited liability company		100.00	100.00	Investment holding. The principal activities of its subsidiaries, associates and joint ventures are the exploration, production and sale of crude oil in and outside the PRC as well as natural gas sale and transmission in the PRC
PetroChina International Investment Company Limited	PRC		31,314	Limited liability company		100.00	100.00	Investment holding. The principal activities of its subsidiaries and joint ventures are the exploration, development and production of crude oil, natural gas, oil sands and coalbed methane outside the PRC
PetroChina International Company Limited	PRC		18,096	Limited liability company		100.00	100.00	Marketing of refined products and trading of crude oil and petrochemical products, storage, investment in refining, chemical engineering, storage facilities, service station, and transportation facilities and related business in and outside the PRC
PetroChina Pipelines Co., Ltd.	PRC		80,000	Limited liability company		72.26	72.26	Oil and gas pipeline transportation, investment holding, import and export of goods, agency of import and export, import and export of technology, technology promotion service, professional contractor, main contractor

(i) The Company consolidated the financial statements of the entity because it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

Summarized Financial Information of the Group's Principal Subsidiaries with Significant Non-controlling Interests

Summarized financial information in respect of the Group’s principal subsidiaries with significant non-controlling interests is as follows:

	CNPC Exploration and Development Company Limited				PetroChina Pipelines Co., Ltd.
	December 31, 2017		December 31, 2016		December 31, 2017		December 31, 2016
	RMB		RMB		RMB		RMB
Percentage ownership interest (%)		50.00		50.00		72.26		72.26
Current assets		24,722		26,489		2,882		19,193
Non-current assets		133,328		134,510		232,842		235,023
Current liabilities		13,273		15,504		6,059		26,186
Non-current liabilities		13,211		11,648		8,408		12,344
Net assets		131,566		133,847		221,257		215,686

Summarized statement of comprehensive income is as follows:

	CNPC Exploration and Development Company Limited								PetroChina Pipelines Co., Ltd. (note)
	2017			2016		2015			2017		2016		2015
	RMB			RMB		RMB			RMB		RMB		RMB
Revenue		37,304			28,196		33,541			43,627		41,794		2,796
Profit from continuing operations		3,696			24,153		2,448			17,891		20,420		1,015
Total comprehensive (loss) / income		(1,050	)		30,391		(7,889	)		17,891		20,420		1,015
Profit attributable to non-controlling interests		2,390			12,414		1,292			4,963		5,664		282
Dividends paid to non-controlling interests		1,420			444		775			3,569		—		720

Note: PetroChina Pipelines Co., Ltd. was established in November 2015.

Summarized statement of cash flows is as follows:

	CNPC Exploration and Development Company Limited									PetroChina Pipelines Co., Ltd. (note)
	2017			2016			2015			2017			2016			2015
	RMB			RMB			RMB			RMB			RMB			RMB
Net cash inflow from operating activities		18,545			9,053			8,293			31,160			30,270			2,554
Net cash (outflow) / inflow from investing activities		(12,304	)		(18,036	)		(2,762	)		2,869			14,799			(19,434	)
Net cash (outflow) / inflow from financing activities		(4,296	)		(2,248	)		(4,284	)		(36,190	)		(47,624	)		21,744
Effect of foreign exchange rate changes on cash and cash equivalents		(2,183	)		748			586			—			—			—
Net (decrease) / increase in cash and cash equivalents		(238	)		(10,483	)		1,833			(2,161	)		(2,555	)		4,864
Cash and cash equivalents at the beginning of the year		18,220			28,703			26,870			2,309			4,864			—
Cash and cash equivalents at the end of the year		17,982			18,220			28,703			148			2,309			4,864

Note: PetroChina Pipelines Co., Ltd. was established in November 2015.

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Available-for-sale Financial Assets (Tables)

12 Months Ended

Dec. 31, 2017

Trade receivables [member]

Summary of Financial Assets

	December 31, 2017			December 31, 2016
	RMB			RMB
Accounts receivable		57,914			49,338
Less: Provision for impairment of receivables		(4,771	)		(2,023	)
		53,143			47,315

Financial assets available-for-sale, category [Member]

Summary of Financial Assets

	December 31, 2017			December 31, 2016
	RMB			RMB
Available-for-sale financial assets		2,251			2,348
Less: Impairment losses		(334	)		(337	)
		1,917			2,011

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Advance Operating Lease Payments (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Advance Operating Lease Payments

	December 31, 2017		December 31, 2016
	RMB		RMB
Land use rights		55,095		53,653
Advance lease payments		18,801		17,700
		73,896		71,353

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Intangible and Other Non-current Assets (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Intangible and Other Non-current Assets

	December 31, 2017							December 31, 2016
	Cost		Accumulated amortization			Net		Cost		Accumulated amortization			Net
	RMB		RMB			RMB		RMB		RMB			RMB
Patents and technical know-how		7,476		(5,620	)		1,856		7,237		(5,219	)		2,018
Computer software		10,638		(7,749	)		2,889		9,614		(6,790	)		2,824
Goodwill (i)		45,643		(3,709	)		41,934		46,097		—			46,097
Other		20,128		(7,207	)		12,921		19,134		(6,294	)		12,840
Intangible assets		83,885		(24,285	)		59,600		82,082		(18,303	)		63,779
Other assets							33,341							38,971
							92,941							102,750

(i) Goodwill primarily relates to the acquisition of Singapore Petroleum Company, Petroineos Trading Limited and PetroChina United Pipelines Co., Ltd., completed in 2009, 2011 and 2015, respectively. The recoverable amount of all cash-generating units has been determined based on value-in-use calculations. These calculations use post-tax cash flow projections based on financial budgets approved by management. The post-tax discount rates range from 8.9% to 10.5%, and reflect specific risks relating to the cash-generating unit. Based on the estimated recoverable amount, the impairment charge of the Group for the year ended December 31, 2017 amounted to RMB 3,709(2016: RMB Nil) primarily related to goodwill of PetroChina United Pipelines Co., Ltd..

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Inventories (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Inventories

	December 31, 2017			December 31, 2016
	RMB			RMB
Crude oil and other raw materials		48,936			55,371
Work in progress		12,811			10,336
Finished goods		83,908			84,473
Spare parts and consumables		170			51
		145,825			150,231
Less: Write down in inventories		(1,156	)		(3,366	)
		144,669			146,865

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Accounts Receivable (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Aging Analysis of Accounts Receivable (Net of Impairment of Accounts Receivable)

The aging analysis of accounts receivable (net of impairment of accounts receivable) based on the invoice date (or date of revenue recognition, if earlier), at December 31, 2017 and 2016 is as follows:

	December 31, 2017		December 31, 2016
	RMB		RMB
Within 1 year		51,051		43,686
Between 1 and 2 years		1,203		2,744
Between 2 and 3 years		379		437
Over 3 years		510		448
		53,143		47,315

Movements in Provision for Impairment of Accounts Receivable

Movements in the provision for impairment of accounts receivable are as follows:

	2017			2016			2015
	RMB			RMB			RMB
At beginning of the year		2,023			523			516
Provision for impairment of accounts receivable		2,813			1,633			32
Receivables written off as uncollectible		(58	)		(97	)		(12	)
Reversal of provision for impairment of accounts receivable		(7	)		(36	)		(13	)
At end of the year		4,771			2,023			523

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Prepayments and Other Current Assets (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Prepayments and Other Current Assets

	December 31, 2017			December 31, 2016
	RMB			RMB
Other receivables		16,535			13,206
Advances to suppliers		10,384			16,505
		26,919			29,711
Less: Provision for impairment		(2,824	)		(2,386	)
		24,095			27,325
Value-added tax to be deducted		39,203			36,010
Prepaid expenses		951			954
Prepaid income taxes		—			5,406
Other current assets		7,765			7,888
		72,014			77,583

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Accounts Payable and Accrued Liabilities (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Accounts Payable and Accrued Liabilities

	December 31, 2017		December 31, 2016
	RMB		RMB
Trade payables		103,201		80,606
Advances from customers		67,176		60,590
Salaries and welfare payable		6,955		5,396
Accrued expenses		213		123
Dividends payable by subsidiaries to non-controlling shareholders		139		2,356
Interest payable		3,910		4,536
Construction fee and equipment cost payables		121,313		118,011
Loans borrowed from related parties		—		1,432
Other		40,912		37,630
		343,819		310,680

Aging Analysis of Trade Payables

The aging analysis of trade payables at December 31, 2017 and 2016 is as follows:

	December 31, 2017		December 31, 2016
	RMB		RMB
Within 1 year		94,996		74,450
Between 1 and 2 years		4,241		3,293
Between 2 and 3 years		1,894		944
Over 3 years		2,070		1,919
		103,201		80,606

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Borrowings (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Borrowings

	December 31, 2017		December 31, 2016
	RMB		RMB
Short-term borrowings excluding current portion of long-term borrowings		93,881		71,969
Current portion of long-term borrowings		81,536		71,415
		175,417		143,384
Long-term borrowings		289,858		372,887
		465,275		516,271

Borrowings by Interest Rate

The Group’s borrowings include secured liabilities totaling RMB 2,829 at December 31, 2017 (December 31, 2016: RMB 251).

	December 31, 2017			December 31, 2016
	RMB			RMB
Total borrowings:
— interest free		130			145
— at fixed rates		253,369			282,822
— at floating rates		211,776			233,304
		465,275			516,271
Weighted average effective interest rates:
— bank loans		2.42	%		1.86	%
— corporate debentures		3.62	%		3.81	%
— medium-term notes		3.81	%		3.86	%
— other loans		3.87	%		3.77	%

Borrowings by Major Currency

The borrowings by major currency at December 31, 2017 and December 31, 2016 are as follows:

	December 31, 2017		December 31, 2016
	RMB		RMB
RMB		332,383		372,111
US Dollar		124,312		136,829
Other currency		8,580		7,331
		465,275		516,271

Borrowings' Remaining Contractual Maturities

The following table sets out the borrowings’ remaining contractual maturities at the date of the statement of financial position, which are based on contractual undiscounted cash flows including principal and interest, and the earliest contractual maturity date:

	December 31, 2017		December 31, 2016
	RMB		RMB
Within 1 year		189,050		160,572
Between 1 and 2 years		69,159		102,096
Between 2 and 5 years		191,879		209,653
After 5 years		70,179		106,879
		520,267		579,200

Summary of Reconcilation of Movements of Borrowings to Cash Flows Arising from Financing Activities

Reconciliation of movements of borrowings to cash flows arising from financing activities:

	Borrowings
	RMB
At 1 January 2017		516,271
Changes from financing cash flows:
Increase in borrowings		730,252
Repayments of borrowings		(773,940	)
Other borrowing costs paid		(173	)
Total changes from financing cash flows		(43,861	)
Exchange adjustments		(7,135	)
At 31 December 2017		465,275

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Share Capital (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Share Capital

	December 31, 2017		December 31, 2016
	RMB		RMB
Registered, issued and fully paid:
A shares		161,922		161,922
H shares		21,099		21,099
		183,021		183,021

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Reserves (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Reserves

	2017			2016
	RMB			RMB
Capital Reserve
Beginning balance		133,308			133,308
Ending balance		133,308			133,308
Statutory Common Reserve Fund(a)
Beginning balance		186,840			186,840
Transfer from retained earnings		1,929			—
Ending balance		188,769			186,840
Special Reserve-Safety Fund Reserve
Beginning balance		13,188			11,648
Safety fund reserve		178			1,540
Ending balance		13,366			13,188
Currency Translation Differences
Beginning balance		(29,294	)		(37,066	)
Currency translation differences		1,249			7,772
Ending balance		(28,045	)		(29,294	)
Other Reserves
Beginning balance		(9,236	)		(9,790	)
Equity transaction with non-controlling interests		289			224
Acquisition of subsidiaries		(1	)		(259	)
Fair value loss on available-for-sale financial assets		(36	)		(128	)
Share of the other comprehensive (loss) / income of associates and joint ventures accounted for using the equity method		(326	)		313
Other		(26	)		404
Ending balance		(9,336	)		(9,236	)
		298,062			294,806

(a) Pursuant to the PRC regulations and the Company’s Articles of Association, the Company is required to transfer 10% of its net profit, as determined under the PRC accounting regulations, to a Statutory Common Reserve Fund (“Reserve Fund”). Appropriation to the Reserve Fund may cease when the fund aggregates to 50% of the Company’s registered capital. The transfer to this reserve must be made before distribution of dividends to shareholders.

The Reserve Fund shall only be used to make good previous years’ losses, to expand the Company’s production operations, or to increase the capital of the Company. Upon approval of a resolution of shareholders’ in a general meeting, the Company may convert its Reserve Fund into share capital and issue bonus shares to existing shareholders in proportion to their original shareholdings or to increase the nominal value of each share currently held by them, provided that the balance of the Reserve Fund after such issuance is not less than 25% of the Company’s registered capital.

(b) According to the relevant PRC regulations, the distributable reserve is the lower of the retained earnings computed under PRC accounting regulations and IFRS. As of December 31, 2017, the Company’s distributable reserve amounted to RMB 572,252 (December 31, 2016: RMB 574,536).

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Deferred Taxation (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Movements in Deferred Taxation

The movements in the deferred taxation account are as follows:

	Year Ended December 31,
	2017			2016			2015
	RMB			RMB			RMB
At beginning of the year		(6,720	)		(3,807	)		905
Transfer to profit and loss (Note 12)		(7,539	)		(3,994	)		(3,272	)
Credit to other comprehensive income		195			1,081			(1,449	)
Acquisition of subsidiaries		—			—			9
At end of the year		(14,064	)		(6,720	)		(3,807	)

Deferred Tax Balances Before Offset

Deferred tax balances before offset are attributable to the following items:

	December 31, 2017		December 31, 2016
	RMB		RMB
Deferred tax assets:
Receivables and inventories		10,387		7,786
Tax losses		27,911		30,438
Impairment of long-term assets		9,712		7,551
Other		7,613		7,184
Total deferred tax assets		55,623		52,959
Deferred tax liabilities:
Accelerated tax depreciation		27,539		32,639
Other		14,020		13,600
Total deferred tax liabilities		41,559		46,239
Net deferred tax assets		14,064		6,720

Deferred Tax Balances After Offset

Deferred tax balances after offset are listed as follows:

	December 31, 2017		December 31, 2016
	RMB		RMB
Deferred tax assets		26,724		20,360
Deferred tax liabilities		12,660		13,640

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Asset Retirement Obligations (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Summary of Asset Retirement Obligations

	2017			2016			2015
	RMB			RMB			RMB
At beginning of the year		125,392			117,996			109,154
Liabilities incurred		2,981			2,942			4,266
Liabilities settled		(2,012	)		(843	)		(677	)
Accretion expense (Note 10)		5,453			5,126			5,950
Currency translation differences		(268	)		171			(697	)
At end of the year		131,546			125,392			117,996

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Commitments (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Future Minimum Lease Payments Under Non-cancellable Operating Leases

Future minimum lease payments as of December 31, 2017 and 2016 under non-cancellable operating leases are as follows:

	December 31, 2017		December 31, 2016
	RMB		RMB
No later than 1 year		11,519		10,108
Later than 1 year and no later than 5 years		37,033		30,757
Later than 5 years		180,833		148,961
		229,385		189,826

Exploration and Production Licenses Estimated Annual Payments

According to the current policy, estimated annual payments for the next five years are as follows:

	December 31, 2017		December 31, 2016
	RMB		RMB
Within one year		800		800
Between one and two years		800		800
Between two and three years		800		800
Between three and four years		800		800
Between four and five years		800		800

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Major Customers (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Group's Major Customers

The Group’s major customers are as follows:

	2017				2016				2015
	Revenue		Percentage of Total revenue		Revenue		Percentage of Total revenue		Revenue		Percentage of Total revenue
	RMB		%		RMB		%		RMB		%
China Petroleum & Chemical Corporation		65,767		3		39,481		2		33,482		2
CNPC and its fellow subsidiaries		92,173		5		91,094		6		80,045		5
		157,940		8		130,575		8		113,527		7

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Related Party Transactions (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Amounts Due From and To CNPC and its Fellow Subsidiaries, Associates and Joint Ventures of the Group

• Amounts due from and to CNPC and its fellow subsidiaries, associates and joint ventures of the Group included in the following accounts captions are summarized as follows:

	December 31, 2017		December 31, 2016
	RMB		RMB
Accounts receivable		10,219		6,657
Prepayments and other receivables		8,987		9,123
Other current assets		5,794		4,486
Other non-current assets		14,848		11,084
Accounts payable and accrued liabilities		66,001		64,772
Other non-current liabilities		3,053		3,755

Key Management Compensation

Key management compensation

	Year End December 31,
	2017		2016		2015
	RMB’000		RMB’000		RMB’000
Emoluments and other benefits		11,779		12,549		11,256
Contribution to retirement benefit scheme		1,645		1,712		1,915
		13,424		14,261		13,171

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Segment Information (Tables)

12 Months Ended

Dec. 31, 2017

Text block1 [abstract]

Segment Information for the Operating Segments

The segment information for the operating segments for the years ended December 31, 2017, 2016 and 2015 are as follows:

	Year Ended December 31, 2017
	Exploration and Production			Refining and Chemicals			Marketing			Natural Gas and Pipeline			Head Office and Other			Total
	RMB			RMB			RMB			RMB			RMB			RMB
Revenue		505,430			707,804			1,660,456			295,786			2,057			3,171,533
Less: intersegment sales		(409,303	)		(535,515	)		(179,692	)		(30,476	)		(657	)		(1,155,643	)
Revenue from external customers		96,127			172,289			1,480,764			265,310			1,400			2,015,890
Depreciation, depletion and amortization		(169,484	)		(32,319	)		(12,734	)		(21,146	)		(1,692	)		(237,375	)
Including: Impairment losses of property, plant and equipment		(6,565	)		(10,223	)		(7	)		(1,150	)		(2	)		(17,947	)
Profit / (loss) from operations		15,475			39,961			8,279			15,688			(11,681	)		67,722
Finance costs:
Exchange gain																	8,217
Exchange loss																	(9,311	)
Interest income																	2,901
Interest expense																	(22,408	)
Total net finance costs																	(20,601	)
Share of profit / (loss) of associates and joint ventures		1,716			(89	)		1,501			279			2,561			5,968
Profit before income tax expense																	53,089
Income tax expense																	(16,296	)
Profit for the year																	36,793
Segment assets		1,211,912			318,299			397,813			519,249			1,357,803			3,805,076
Other assets																	26,724
Investments in associates and joint ventures		39,517			1,375			11,938			5,534			22,795			81,159
Elimination of intersegment balances (a)																	(1,508,347	)
Total assets																	2,404,612
Capital expenditures		161,997			17,705			10,982			24,529			1,014			216,227
Segment liabilities		525,085			79,989			199,340			120,244			589,460			1,514,118
Other liabilities																	70,091
Elimination of intersegment balances (a)																	(560,916	)
Total liabilities																	1,023,293

	Year Ended December 31, 2016
	Exploration and Production			Refining and Chemicals			Marketing			Natural Gas and Pipeline			Head Office and Other			Total
	RMB			RMB			RMB			RMB			RMB			RMB
Revenue		412,484			582,510			1,301,616			247,477			2,197			2,546,284
Less: intersegment sales		(335,716	)		(438,853	)		(126,344	)		(27,784	)		(684	)		(929,381	)
Revenue from external customers		76,768			143,657			1,175,272			219,693			1,513			1,616,903
Depreciation, depletion and amortization		(155,192	)		(25,475	)		(12,891	)		(22,743	)		(1,846	)		(218,147	)
Including: Impairment losses of property, plant and equipment		(882	)		(3,413	)		(2	)		(4,205	)		—			(8,502	)
Profit / (loss) from operations		3,148			39,026			11,048			17,885			(10,472	)		60,635
Finance costs:
Exchange gain																	12,828
Exchange loss																	(11,571	)
Interest income																	2,491
Interest expense																	(23,348	)
Total net finance costs																	(19,600	)
Share of (loss) / profit of associates and joint ventures		(158	)		13			552			204			3,494			4,105
Profit before income tax expense																	45,140
Income tax expense																	(15,768	)
Profit for the year																	29,372
Segment assets		1,260,009			324,357			384,123			546,485			1,434,141			3,949,115
Other assets																	25,766
Investments in associates and joint ventures		42,398			1,262			10,455			3,305			21,547			78,967
Elimination of intersegment balances(a)																	(1,657,197	)
Total assets																	2,396,651
Capital expenditures		130,248			12,847			7,983			20,340			968			172,386
Segment liabilities		536,284			124,076			183,159			150,855			668,353			1,662,727
Other liabilities																	58,839
Elimination of intersegment balances(a)																	(697,650	)
Total liabilities																	1,023,916

	Year Ended December 31, 2015
	Exploration and Production			Refining and Chemicals			Marketing			Natural Gas and Pipeline			Head Office and Other			Total
	RMB			RMB			RMB			RMB			RMB			RMB
Revenue		475,412			642,428			1,383,426			281,778			2,507			2,785,551
Less: intersegment sales		(384,423	)		(502,007	)		(146,719	)		(26,259	)		(715	)		(1,060,123	)
Revenue from external customers		90,989			140,421			1,236,707			255,519			1,792			1,725,428
Depreciation, depletion and amortization		(148,958	)		(24,400	)		(12,974	)		(14,489	)		(2,054	)		(202,875	)
Including: Impairment losses of property, plant and equipment		(22,922	)		(1,843	)		(191	)		(66	)		—			(25,022	)
Profit/ (loss) from operations		33,961			4,883			(500	)		51,231			(10,323	)		79,252
Finance costs:
Exchange gain																	9,536
Exchange loss																	(10,168	)
Interest income																	2,019
Interest expense																	(24,328	)
Total net finance costs																	(22,941	)
Share of (loss) / profit of associates and joint ventures		(5,599	)		66			(156	)		4,206			2,987			1,504
Profit before income tax expense																	57,815
Income tax expense																	(15,726	)
Profit for the year																	42,089
Segment assets		1,221,942			311,149			343,721			597,240			1,518,486			3,992,538
Other assets																	28,043
Investments in associates and joint ventures		32,413			1,249			9,517			3,424			24,373			70,976
Elimination of intersegment balances (a)																	(1,697,713	)
Total assets																	2,393,844
Capital expenditures		157,822			15,725			7,061			20,360			1,270			202,238
Segment liabilities		511,098			114,888			148,556			206,920			727,579			1,709,041
Other liabilities																	47,261
Elimination of intersegment balances (a)																	(706,492	)
Total liabilities																	1,049,810

Geographical Information

Geographical information

	Revenue						Non-current assets (b)
Year Ended December 31,	2017		2016		2015		2017		2016		2015
	RMB		RMB		RMB		RMB		RMB		RMB
Mainland China		1,294,516		1,101,055		1,185,189		1,711,605		1,739,351		1,796,288
Other		721,374		515,848		540,239		239,204		253,264		228,416
		2,015,890		1,616,903		1,725,428		1,950,809		1,992,615		2,024,704

(a) Elimination of intersegment balances represents elimination of intersegment accounts and investments.

(b) Non-current assets mainly include non-current assets other than financial instruments and deferred tax assets.

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Summary of Principal Accounting Policies - Useful Lives for Depreciation Purposes (Detail)	12 Months Ended
	Dec. 31, 2017
Buildings [member] | Bottom of range [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
Property plant and equipment estimated useful lives for depreciation	8 years
Buildings [member] | Top of range [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
Property plant and equipment estimated useful lives for depreciation	40 years
Equipment and machinery [member] | Bottom of range [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
Property plant and equipment estimated useful lives for depreciation	4 years
Equipment and machinery [member] | Top of range [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
Property plant and equipment estimated useful lives for depreciation	30 years
Motor vehicles [member] | Bottom of range [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
Property plant and equipment estimated useful lives for depreciation	4 years
Motor vehicles [member] | Top of range [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
Property plant and equipment estimated useful lives for depreciation	14 years
Other [member] | Bottom of range [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
Property plant and equipment estimated useful lives for depreciation	5 years
Other [member] | Top of range [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
Property plant and equipment estimated useful lives for depreciation	12 years

XML

Summary of Principal Accounting Policies - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2017
Top of range [member]
Disclosure of detailed information about arrangements involving legal form of lease [Line Items]
Land use rights terms	50 years

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Financial Risk and Capital Management - Additional Information (Detail)	Dec. 31, 2017	Dec. 31, 2016
Disclosure of objectives, policies and processes for managing capital [abstract]
Gearing ratio, which is calculated as interest-bearing borrowings / (interest-bearing borrowings + total equity)	25.20%	27.30%

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Profit Before Income Tax Expense - Summary of Profit Before Income Tax Expense (Detail) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Profit or loss [abstract]
Dividend income from available-for-sale financial assets	¥ 42	¥ 60	¥ 288
Reversal of provision for impairment of receivables	37	62	99
Reversal of write down in inventories	49	75	59
Government grants	9,102	8,509	7,906
Remeasurement to fair value of pre-existing interest in acquiree			22,807
Gain on disposal of investment in subsidiaries	613	24,674	280
Amortization of intangible and other assets	4,495	4,896	4,141
Auditors' remuneration	53	53	53
Cost of inventories recognized as expense	1,560,361	1,217,131	1,282,039
Provision for impairment of receivables	3,291	1,671	173
Loss on disposal of property, plant and equipment	4,939	7,972	4,661
Operating lease expenses	20,073	19,027	16,786
Research and development expenses	12,323	11,227	11,856
Write down in inventories	¥ 1,118	¥ 2,709	¥ 3,394

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Profit Before Income Tax Expense - Summary of Profit Before Income Tax Expense (Parenthetical) (Detail) - CNY (¥) ¥ in Millions		3 Months Ended	12 Months Ended
	Nov. 24, 2015	Jun. 30, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of transactions between related parties [Line Items]
Other(expenses)/ income, net			¥ (745)	¥ 21,620	¥ 27,110
Amount reclassified to profit or loss			36,793	29,372	42,089
Auditors' remuneration, fees paid by subsidiaries			¥ 53	¥ 53	53
Trans-Asia Gas Pipeline Co., Ltd. [member]
Disclosure of transactions between related parties [Line Items]
Equity interest sold			50.00%	50.00%
Amount reclassified to profit or loss			¥ 5,846	¥ 88
Trans-Asia Gas Pipeline Co., Ltd. [member] | CNPC Exploration and Development Company Limited [member]
Disclosure of transactions between related parties [Line Items]
Equity interest sold	50.00%	50.00%
Other(expenses)/ income, net		¥ 24,534
Total consideration received	¥ 14,671	14,671
Fair value of the equity investment		14,527
Net asset value of former subsidiary		4,034
Amount reclassified to profit or loss		¥ 630
Subsidiaries [member]
Disclosure of transactions between related parties [Line Items]
Auditors' remuneration, fees paid by subsidiaries			52	66	36
Auditors' remuneration, fees paid by subsidiaries - audit fees			40	50	29
Auditors' remuneration, fees paid by subsidiaries - audit-related fees			8	8	6
Auditors' remuneration, fees paid by subsidiaries - tax fees			3	7	0
Auditors' remuneration, fees paid by subsidiaries - other service fees			¥ 1	¥ 1	¥ 1

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Employee Compensation Costs - Summary of Employee Compensation Costs (Detail) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Short-term employee benefits expense [abstract]
Wages, salaries and allowances	¥ 82,639	¥ 75,461	¥ 75,651
Social security costs	42,745	42,201	42,431
Employee compensation costs	¥ 125,384	¥ 117,662	¥ 118,082

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Taxes Other Than Income Taxes - Summary of Taxes Other Than Income Taxes (Detail) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure Of Taxes Other Than Income Taxes [Abstract]
Consumption tax	¥ 142,708	¥ 140,268	¥ 149,323
Resource tax	18,000	14,472	18,584
Other	37,314	34,868	37,977
Taxes other than income taxes	¥ 198,022	¥ 189,608	¥ 205,884

XML

Interest Expense - Summary of Interest Expense (Detail) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Interest costs [abstract]
Interest on Bank loans	¥ 1,569	¥ 891	¥ 1,259
Other loans	17,394	19,910	19,892
Accretion expense (Note 31)	5,453	5,126	5,950
Less: Amounts capitalized	(2,008)	(2,579)	(2,773)
Interest expense	¥ 22,408	¥ 23,348	¥ 24,328

XML

Interest Expense - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of detailed information about borrowings [Line Items]
Average interest rate used to capitalize borrowing costs that are attributable to the construction of a qualifying asset	4.28%	4.28%
Bottom of range [member]
Disclosure of detailed information about borrowings [Line Items]
Average interest rate used to capitalize borrowing costs that are attributable to the construction of a qualifying asset			4.28%
Top of range [member]
Disclosure of detailed information about borrowings [Line Items]
Average interest rate used to capitalize borrowing costs that are attributable to the construction of a qualifying asset			5.76%

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Emoluments of Directors and Supervisors - Details of the Emoluments of Directors and Supervisors (Detail) - CNY (¥) ¥ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of transactions between related parties [Line Items]
Salaries, allowances and other benefits	¥ 11,779	¥ 12,549	¥ 11,256
Contribution to retirement benefit scheme	1,645	1,712	1,915
Total	13,424	14,261	13,171
Vice chairman [member] | Mr. Wang Dongjin [member]
Disclosure of transactions between related parties [Line Items]
Salaries, allowances and other benefits	696
Contribution to retirement benefit scheme	127
Total	823	774	734
Executive director [member] | Mr. Zhao Zhengzhang [member]
Disclosure of transactions between related parties [Line Items]
Salaries, allowances and other benefits	118
Contribution to retirement benefit scheme	41
Total	159	759	671
Executive director [member] | Hou Qijun [member]
Disclosure of transactions between related parties [Line Items]
Salaries, allowances and other benefits	572
Contribution to retirement benefit scheme	76
Total	648
Non-executive directors [member]
Disclosure of transactions between related parties [Line Items]
Fee for directors and supervisors	1,159
Total	1,159	1,713	1,650
Non-executive directors [member] | Mr. Liu Hongbin [member]
Disclosure of transactions between related parties [Line Items]
Total		679	699
Non-executive directors [member] | Mr. Chen Zhiwu [member]
Disclosure of transactions between related parties [Line Items]
Total		234	220
Non-executive directors [member] | Mr. Richard H. Matzke [member]
Disclosure of transactions between related parties [Line Items]
Total		241	230
Non-executive directors [member] | Mr. Lin Boqiang [member]
Disclosure of transactions between related parties [Line Items]
Fee for directors and supervisors	250
Total	250	281	249
Non-executive directors [member] | Mr. Zhang Biyi [member]
Disclosure of transactions between related parties [Line Items]
Fee for directors and supervisors	250
Total	250	278	252
Non-executive directors [member] | Ms. Elsie Leung Oi-sie [member]
Disclosure of transactions between related parties [Line Items]
Fee for directors and supervisors	220
Total	220
Non-executive directors [member] | Mr. Tokuchi Tatsuhito [member]
Disclosure of transactions between related parties [Line Items]
Fee for directors and supervisors	226
Total	226
Non-executive directors [member] | Mr. Simon Henry [member]
Disclosure of transactions between related parties [Line Items]
Fee for directors and supervisors	213
Total	213
Supervisors [member]
Disclosure of transactions between related parties [Line Items]
Salaries, allowances and other benefits	2,930
Contribution to retirement benefit scheme	318
Total	3,248	3,588	3,129
Supervisors [member] | Mr. Yao Wei [member]
Disclosure of transactions between related parties [Line Items]
Total		469	796
Supervisors [member] | Mr. Liu Hehe [member]
Disclosure of transactions between related parties [Line Items]
Total		352	724
Supervisors [member] | Mr. Yang Hua [member]
Disclosure of transactions between related parties [Line Items]
Salaries, allowances and other benefits	201
Contribution to retirement benefit scheme	49
Total	250	862	838
Supervisors [member] | Fu Suotang [member]
Disclosure of transactions between related parties [Line Items]
Salaries, allowances and other benefits	525
Contribution to retirement benefit scheme	46
Total	571
Supervisors [member] | Mr. Li Jiamin [member]
Disclosure of transactions between related parties [Line Items]
Salaries, allowances and other benefits	745
Contribution to retirement benefit scheme	65
Total	810	707	771
Supervisors [member] | Mr. Liu Xianhua [member]
Disclosure of transactions between related parties [Line Items]
Salaries, allowances and other benefits	671
Contribution to retirement benefit scheme	62
Total	733	528
Supervisors [member] | Mr. Li Wendong [member]
Disclosure of transactions between related parties [Line Items]
Salaries, allowances and other benefits	788
Contribution to retirement benefit scheme	96
Total	884	670
Directors and supervisors [member]
Disclosure of transactions between related parties [Line Items]
Fee for directors and supervisors	1,159
Salaries, allowances and other benefits	4,316
Contribution to retirement benefit scheme	562
Total	¥ 6,037	¥ 6,834	¥ 6,184

XML

Emoluments of Directors and Supervisors - Details of the Emoluments of Directors and Supervisors (Parenthetical) (Detail) - CNY (¥)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of transactions between related parties [Line Items]
Emoluments received from company	¥ 13,424,000	¥ 14,261,000	¥ 13,171,000
Deferred performance emoluments paid by company		1,640,000	0
Mr. Liao Yongyuan [member]
Disclosure of transactions between related parties [Line Items]
Emoluments received from company	0	¥ 0	¥ 0
Directors [member]
Disclosure of transactions between related parties [Line Items]
Deferred performance emoluments paid by company	¥ 1,640,000

XML

Emoluments of Directors and Supervisors - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2017 CNY (¥) Employee	Dec. 31, 2016 CNY (¥) Employee	Dec. 31, 2015 CNY (¥) Employee
Disclosure of transactions between related parties [Line Items]
Number of highest paid employees | Employee	5	5	5
Salaries, allowances and other benefits	¥ 11,779,000	¥ 12,549,000	¥ 11,256,000
Contribution to retirement benefit scheme	1,645,000	1,712,000	1,915,000
Severance payment	¥ 0	¥ 0	¥ 0
Supervisors [member]
Disclosure of transactions between related parties [Line Items]
Number of highest paid employees | Employee	2	2	3
Salaries, allowances and other benefits	¥ 2,930,000
Contribution to retirement benefit scheme	¥ 318,000
Senior management [member]
Disclosure of transactions between related parties [Line Items]
Number of highest paid employees | Employee	3	3	2
Senior management one [member]
Disclosure of transactions between related parties [Line Items]
Salaries, allowances and other benefits	¥ 823,000	¥ 783,000	¥ 780,000
Contribution to retirement benefit scheme	127,000	122,000	130,000
Senior management two [member]
Disclosure of transactions between related parties [Line Items]
Salaries, allowances and other benefits	823,000	783,000	768,000
Contribution to retirement benefit scheme	127,000	122,000	¥ 132,000
Senior management third [member]
Disclosure of transactions between related parties [Line Items]
Salaries, allowances and other benefits	732,000	775,000
Contribution to retirement benefit scheme	¥ 127,000	¥ 108,000

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Income Tax Expense - Summary of Income Tax Expense (Detail) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Major components of tax expense (income) [abstract]
Current taxes	¥ 23,835	¥ 19,762	¥ 18,998
Deferred taxes (Note 30)	(7,539)	(3,994)	(3,272)
Income tax expense	¥ 16,296	¥ 15,768	¥ 15,726

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Income Tax Expense - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Major components of tax expense (income) [abstract]
Corporate income tax rate	25.00%	25.00%	25.00%
Preferential income tax rate	15.00%

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Income Tax Expense - Reconciliation of Tax on Profit Before Taxation and the Tax using the Corporate Income Tax Rate in the PRC Applicable to the Group (Detail) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Reconciliation of accounting profit multiplied by applicable tax rates [abstract]
Profit before income tax expense	¥ 53,089	¥ 45,140	¥ 57,815
Tax calculated at a tax rate of 25%	13,272	11,285	14,454
Tax return true-up	1,275	1,887	2,008
Effect of income taxes from international operations in excess of taxes at the PRC statutory tax rate	693	1,797	910
Effect of preferential tax rate	(5,058)	(2,418)	(5,436)
Tax effect of income not subject to tax	(3,401)	(4,935)	(2,875)
Tax effect of expenses not deductible for tax purposes	9,515	8,152	6,665
Income tax expense	¥ 16,296	¥ 15,768	¥ 15,726

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Income Tax Expense - Reconciliation of Tax on Profit Before Taxation and the Tax using the Corporate Income Tax Rate in the PRC Applicable to the Group (Parenthetical) (Detail)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Reconciliation of accounting profit multiplied by applicable tax rates [abstract]
Corporate income tax rate	25.00%	25.00%	25.00%

XML

Basic and Diluted Earnings Per Share - Additional Information (Detail) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Basic and diluted earnings per share [abstract]
Profit for the year attributable to owners of the Company	¥ 22,798	¥ 7,857	¥ 35,517
Number of shares issued and outstanding	183,021,000,000	183,021,000,000	183,021,000,000
Number of potentially dilutive ordinary shares	0

XML

Dividends - Summary of Dividends (Detail) - CNY (¥) ¥ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Dividend attributable to owners [Line Items]
Dividends attributable to owners of the Company	¥ 23,793	¥ 10,856	¥ 15,983
Interim dividends [member]
Dividend attributable to owners [Line Items]
Dividends attributable to owners of the Company	12,676	3,899	11,433
Final dividends [member]
Dividend attributable to owners [Line Items]
Dividends attributable to owners of the Company	¥ 11,117	¥ 6,957	¥ 4,550

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Dividends - Summary of Dividends (Parenthetical) (Detail) - CNY (¥) ¥ / shares in Units, ¥ in Millions						12 Months Ended
	Sep. 15, 2017	Jun. 22, 2017	Sep. 21, 2016	Jun. 08, 2016	Sep. 18, 2015	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Dividend attributable to owners [Abstract]
Dividends attributable to owners of the Company, per share	¥ 0.06926	¥ 0.03801	¥ 0.02131	¥ 0.02486	¥ 0.06247	¥ 0.06074
Dividends attributable to owners of the Company, total amount paid	¥ 12,676	¥ 6,957	¥ 3,899	¥ 4,550	¥ 11,433	¥ 30,030	¥ 12,732	¥ 34,520
Dividends attributable to owners of the Company, proposed total						¥ 11,117

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Property, Plant and Equipment - Summary of Property, Plant and Equipment (Detail) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of detailed information about property, plant and equipment [Line Items]
At beginning of the year	¥ 1,739,545
Impairment charge	(17,947)	¥ (8,502)	¥ (25,022)
At end of the year	1,702,813	1,739,545
Cost [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
At beginning of the year	3,395,621	3,245,830
Additions	219,741	174,552
Disposals or write offs	(47,015)	(43,384)
Currency translation differences	(11,406)	18,623
At end of the year	3,556,941	3,395,621	3,245,830
Accumulated depreciation, amortisation and impairment [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
At beginning of the year	(1,656,076)	(1,460,925)
Charge for the year and others	(213,266)	(202,007)
Impairment charge	(17,947)	(8,502)
Disposals or write offs or transfers	26,050	23,661
Currency translation differences	7,111	(8,303)
At end of the year	(1,854,128)	(1,656,076)	(1,460,925)
Buildings [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
At beginning of the year	129,387
At end of the year	132,342	129,387
Buildings [member] | Cost [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
At beginning of the year	214,710	205,204
Additions	1,042	979
Transfers	13,913	10,644
Disposals or write offs	(3,280)	(2,573)
Currency translation differences	(278)	456
At end of the year	226,107	214,710	205,204
Buildings [member] | Accumulated depreciation, amortisation and impairment [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
At beginning of the year	(85,323)	(76,904)
Charge for the year and others	(9,968)	(9,677)
Impairment charge	(659)	(63)
Disposals or write offs or transfers	2,075	1,469
Currency translation differences	110	(148)
At end of the year	(93,765)	(85,323)	(76,904)
Oil and gas properties [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
At beginning of the year	845,713
At end of the year	811,588	845,713
Oil and gas properties [member] | Cost [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
At beginning of the year	1,909,213	1,799,887
Additions	9,193	7,995
Transfers	124,257	109,171
Disposals or write offs	(21,746)	(23,047)
Currency translation differences	(9,588)	15,207
At end of the year	2,011,329	1,909,213	1,799,887
Oil and gas properties [member] | Accumulated depreciation, amortisation and impairment [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
At beginning of the year	(1,063,500)	(929,554)
Charge for the year and others	(150,178)	(141,530)
Impairment charge	(3,961)	(711)
Disposals or write offs or transfers	11,426	15,536
Currency translation differences	6,472	(7,241)
At end of the year	(1,199,741)	(1,063,500)	(929,554)
Equipment and machinery [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
At beginning of the year	521,357
At end of the year	538,922	521,357
Equipment and machinery [member] | Cost [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
At beginning of the year	990,832	953,331
Additions	3,995	3,202
Transfers	75,284	40,216
Disposals or write offs	(11,061)	(6,781)
Currency translation differences	(1,039)	864
At end of the year	1,058,011	990,832	953,331
Equipment and machinery [member] | Accumulated depreciation, amortisation and impairment [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
At beginning of the year	(469,475)	(421,315)
Charge for the year and others	(49,509)	(47,750)
Impairment charge	(10,300)	(5,494)
Disposals or write offs or transfers	9,663	5,501
Currency translation differences	532	(417)
At end of the year	(519,089)	(469,475)	(421,315)
Motor vehicles [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
At beginning of the year	9,760
At end of the year	8,694	9,760
Motor vehicles [member] | Cost [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
At beginning of the year	29,227	29,586
Additions	824	624
Disposals or write offs	(1,032)	(1,027)
Currency translation differences	(29)	44
At end of the year	28,990	29,227	29,586
Motor vehicles [member] | Accumulated depreciation, amortisation and impairment [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
At beginning of the year	(19,467)	(18,619)
Charge for the year and others	(1,754)	(1,753)
Impairment charge	(3)	(1)
Disposals or write offs or transfers	921	930
Currency translation differences	7	(24)
At end of the year	(20,296)	(19,467)	(18,619)
Other [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
At beginning of the year	10,297
At end of the year	14,401	10,297
Other [member] | Cost [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
At beginning of the year	22,268	21,018
Additions	528	416
Transfers	10,506	965
Disposals or write offs	(441)	(267)
Currency translation differences	(230)	136
At end of the year	32,631	22,268	21,018
Other [member] | Accumulated depreciation, amortisation and impairment [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
At beginning of the year	(11,971)	(10,740)
Charge for the year and others	(1,857)	(1,297)
Impairment charge	(2,715)	(15)
Disposals or write offs or transfers	(1,699)	219
Currency translation differences	12	(138)
At end of the year	(18,230)	(11,971)	(10,740)
Construction in progress [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
At beginning of the year	223,031
At end of the year	196,866	223,031
Construction in progress [member] | Cost [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
At beginning of the year	229,371	236,804
Additions	204,159	161,336
Transfers	(223,960)	(160,996)
Disposals or write offs	(9,455)	(9,689)
Currency translation differences	(242)	1,916
At end of the year	199,873	229,371	236,804
Construction in progress [member] | Accumulated depreciation, amortisation and impairment [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
At beginning of the year	(6,340)	(3,793)
Impairment charge	(309)	(2,218)
Disposals or write offs or transfers	3,664	6
Currency translation differences	(22)	(335)
At end of the year	¥ (3,007)	¥ (6,340)	¥ (3,793)

XML

Property, Plant and Equipment - Additional Information (Detail) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of detailed information about property, plant and equipment [Line Items]
Impairment charge	¥ 17,947	¥ 8,502	¥ 25,022
Construction in progress [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
Capitalized exploratory well costs over one year	¥ 7,612	¥ 8,219
Bottom of range [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
After-tax discount rates adopted by most oil blocks	7.60%	7.10%	7.00%
Top of range [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
After-tax discount rates adopted by most oil blocks	11.00%	10.30%	10.00%

XML

Property, Plant and Equipment - Changes to Exploratory Well Costs (Detail) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of detailed information about property, plant and equipment [Line Items]
Capitalized exploratory well costs charged to expense	¥ (9,455)	¥ (9,689)	¥ (9,608)
Construction in progress [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
At beginning of the year	21,421
At end of the year	22,843	21,421
Construction in progress [member] | Exploratory well costs [member]
Disclosure of detailed information about property, plant and equipment [Line Items]
At beginning of the year	21,421	20,177	20,878
Additions to capitalized exploratory well costs pending the determination of proved reserves	25,165	21,847	21,698
Reclassified to wells, facilities, and equipment based on the determination of proved reserves	(14,288)	(10,914)	(12,791)
Capitalized exploratory well costs charged to expense	(9,455)	(9,689)	(9,608)
At end of the year	¥ 22,843	¥ 21,421	¥ 20,177

XML

Property, Plant and Equipment - Aging of Capitalized Exploratory Well Costs (Detail) - Construction in progress [member] - CNY (¥) ¥ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of detailed information about property, plant and equipment [Line Items]
One year or less	¥ 15,231	¥ 13,202
Over one year	7,612	8,219
Capitalized Exploratory Well Costs	¥ 22,843	¥ 21,421

XML

Investments in Associates and Joint Ventures - Summarized Financial Information of the Group's Principal Associates and Joint Ventures (Detail) ¥ in Millions, $ in Millions	1 Months Ended	12 Months Ended
	Aug. 31, 2016 CNY (¥)	Dec. 31, 2017 CNY (¥)	Dec. 31, 2016 CNY (¥)	Dec. 31, 2015 CNY (¥)	Dec. 31, 2017 AUD ($)	Dec. 31, 2017 USD ($)
Disclosure of associates and joint ventures [Line Items]
Registered Capital		¥ 183,021	¥ 183,021
China Petroleum Finance Co., Ltd. [member]
Disclosure of associates and joint ventures [Line Items]
Associate, Country of Incorporation		PRC
Registered Capital	¥ 8,331	¥ 8,331	¥ 8,331	¥ 5,441
Principal Activities		Deposits, loans, settlement, lending, bills acceptance discounting, guarantee and other banking business
Associate, Interest Direct %	32.00%	32.00%	32.00%	49.00%
CNPC Captive Insurance Co., Ltd. [member]
Disclosure of associates and joint ventures [Line Items]
Associate, Country of Incorporation		PRC
Registered Capital		¥ 5,000
Principal Activities		Property loss insurance, liability insurance, credit insurance and deposit insurance; as well as the application of the above insurance reinsurance and insurance capital business
Associate, Interest Direct %		49.00%	49.00%
Dalian West Pacific Petrochemical Co., Ltd. [member]
Disclosure of associates and joint ventures [Line Items]
Associate, Country of Incorporation		PRC
Registered Capital | $						$ 258
Principal Activities		Production and sale of petroleum and petrochemical products
Associate, Interest Direct %		28.44%	28.44%
Arrow Energy Holdings Pty Ltd. [member]
Disclosure of associates and joint ventures [Line Items]
Registered Capital | $					$ 2
Principal Activities		Exploration, development and sale of coal seam gas
Joint Venture, Interest Indirect %		50.00%	50.00%
Joint Venture, Country of Incorporation		Australia
China Marine Bunker (PetroChina) Co., Ltd. [member]
Disclosure of associates and joint ventures [Line Items]
Associate, Country of Incorporation		PRC
Registered Capital		¥ 1,000
Principal Activities		Oil import and export trade and transportation, sale and storage
Joint Venture, Interest Indirect %		50.00%	50.00%
Trans-Asia Gas Pipeline Co., Ltd. [member]
Disclosure of associates and joint ventures [Line Items]
Associate, Country of Incorporation		PRC
Registered Capital		¥ 5,000	¥ 5,000
Principal Activities		Main contractor, investment holding, investment management, investment consulting, enterprise management advisory, technology development, promotion and technology consulting
Joint Venture, Interest Indirect %		50.00%	50.00%

XML

Investments in Associates and Joint Ventures - Summarized Financial Information of the Group's Principal Associates and Joint Ventures (Parenthetical) (Detail) - CNY (¥) ¥ in Millions		1 Months Ended	3 Months Ended	12 Months Ended
	Nov. 24, 2015	Aug. 31, 2016	Jun. 30, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of associates and joint ventures [Line Items]
Registered Capital				¥ 183,021	¥ 183,021
China Petroleum Finance Co., Ltd. [member]
Disclosure of associates and joint ventures [Line Items]
Cash injected by China National Petroleum Corporation		¥ 19,471
Registered Capital		¥ 8,331		¥ 8,331	¥ 8,331	¥ 5,441
Associate, Interest Direct %		32.00%		32.00%	32.00%	49.00%
Increase in net assets		¥ 307
CNPC Exploration and Development Company Limited [member]
Disclosure of associates and joint ventures [Line Items]
Registered Capital				¥ 16,100
Trans-Asia Gas Pipeline Co., Ltd. [member]
Disclosure of associates and joint ventures [Line Items]
Registered Capital				¥ 5,000	¥ 5,000
Equity interest sold				50.00%	50.00%
Trans-Asia Gas Pipeline Co., Ltd. [member] | CNPC Exploration and Development Company Limited [member]
Disclosure of associates and joint ventures [Line Items]
Equity interest sold	50.00%		50.00%
Total consideration received	¥ 14,671		¥ 14,671
Share Capital [member] | China Petroleum Finance Co., Ltd. [member]
Disclosure of associates and joint ventures [Line Items]
Cash injected by China National Petroleum Corporation		2,890
Capital reserve [member] | China Petroleum Finance Co., Ltd. [member]
Disclosure of associates and joint ventures [Line Items]
Cash injected by China National Petroleum Corporation		¥ 16,581

XML

Investments in Associates and Joint Ventures - Additional Information (Detail) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of associates and joint ventures [Line Items]
Share of profit accounted for using equity method	¥ 5,968	¥ 4,105	¥ 1,504
Associates and joint ventures [member]
Disclosure of associates and joint ventures [Line Items]
Dividends received and receivable from associates and joint ventures	7,034	10,172	9,489
Associates and joint ventures disposal [member]
Disclosure of associates and joint ventures [Line Items]
Investments in associates and joint ventures that were disposed of	96	101	55
Investments in associates and joint ventures that were disposed of, gain (loss)	6	(40)	1,258
Individually immaterial associates and joint ventures accounted for using equity method [member]
Disclosure of associates and joint ventures [Line Items]
Share of profit accounted for using equity method	3,235	2,738	3,846
Share of other comprehensive income accounted for using equity method	¥ (845)	¥ (204)	¥ 1,042

XML

Investments in Associates and Joint Ventures - Summarized Financial Information of the Group's Principal Associates and Reconciliation to Carrying Amount (Detail) - CNY (¥) ¥ in Millions	1 Months Ended	12 Months Ended
	Aug. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of associates [Line Items]
Current assets		¥ 425,162	¥ 381,665
Non-current assets		1,979,450	2,014,986
Current liabilities		576,667	499,263
Non-current liabilities		446,626	524,653
REVENUE		2,015,890	1,616,903	¥ 1,725,428
Profit for the year		36,793	29,372	42,089
Other comprehensive (loss) / income		(1,365)	9,589	(20,239)
Total comprehensive income / (loss)		¥ 35,428	¥ 38,961	21,850
Dalian West Pacific Petrochemical Co., Ltd. [member]
Disclosure of associates [Line Items]
Percentage ownership interest (%)		28.44%	28.44%
Current assets		¥ 5,326	¥ 3,597
Non-current assets		4,141	4,373
Current liabilities		12,108	8,329
Non-current liabilities		333	5,217
Net (liabilities) / assets		(2,974)	(5,576)
REVENUE		27,716	19,029	18,170
Profit for the year		2,602	1,475	(984)
Total comprehensive income / (loss)		¥ 2,602	¥ 1,475	¥ (984)
China Petroleum Finance Co., Ltd. [member]
Disclosure of associates [Line Items]
Percentage ownership interest (%)	32.00%	32.00%	32.00%	49.00%
Current assets		¥ 169,389	¥ 148,916
Non-current assets		309,481	270,507
Current liabilities		394,064	332,923
Non-current liabilities		24,977	29,998
Net (liabilities) / assets		59,829	56,502
Group's share of net assets		19,145	18,080
Goodwill		349	349
Carrying amount of interest in associates		19,494	18,429
REVENUE		8,520	8,555	¥ 10,335
Profit for the year		7,286	7,524	5,839
Other comprehensive (loss) / income		(1,395)	655	294
Total comprehensive income / (loss)		5,891	8,179	6,133
Group's share of total comprehensive income		1,885	3,628	3,005
Dividends received by the Group		¥ 815	¥ 7,203	631
CNPC Captive Insurance Co., Ltd. [member]
Disclosure of associates [Line Items]
Percentage ownership interest (%)		49.00%	49.00%
Current assets		¥ 9,386	¥ 9,192
Non-current assets		2,764	2,166
Current liabilities		6,097	5,594
Non-current liabilities		1	1
Net (liabilities) / assets		6,052	5,763
Group's share of net assets		2,965	2,824
Carrying amount of interest in associates		2,965	2,824
REVENUE		654	563	480
Profit for the year		364	302	286
Other comprehensive (loss) / income		1	2	1
Total comprehensive income / (loss)		365	304	287
Group's share of total comprehensive income		179	¥ 149	¥ 141
Dividends received by the Group		¥ 27

XML

Investments in Associates and Joint Ventures - Summarized Balance Sheet and Reconciliation to Carrying Amount and Statement of Comprehensive Income and Dividends Received of the Group's Principal Joint Ventures (Detail) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Disclosure of joint ventures [Line Items]
Non-current assets	¥ 1,979,450	¥ 2,014,986
Current assets	425,162	381,665
Including: cash and cash equivalents	122,777	97,931	¥ 72,773	¥ 73,778
Non-current liabilities	446,626	524,653
Current liabilities	576,667	499,263
REVENUE	2,015,890	1,616,903	1,725,428
Depreciation, depletion and amortization	(237,375)	(218,147)	(202,875)
Interest expense	(22,408)	(23,348)	(24,328)
Income tax expense	(16,296)	(15,768)	(15,726)
Net profit / (loss)	36,793	29,372	42,089
Total comprehensive income / (loss)	¥ 35,428	¥ 38,961	21,850
China Marine Bunker (PetroChina) Co., Ltd. [member]
Disclosure of joint ventures [Line Items]
Percentage ownership interest (%)	50.00%	50.00%
Non-current assets	¥ 1,942	¥ 1,974
Current assets	6,449	6,453
Including: cash and cash equivalents	1,277	1,461
Non-current liabilities	232	749
Including: Non-current financial liabilities excluding trade and other payables and provisions		500
Current liabilities	5,309	4,902
Including: Current financial liabilities excluding trade and other payables and provisions	1,894	1,188
Net assets	2,850	2,776
Net assets attributable to owners of the Company	2,630	2,528
Group's share of net assets	1,315	1,264
Elimination of unrealized profit	0	0
Carrying amount of interest in joint ventures	1,315	1,264
REVENUE	31,770	23,336	27,587
Depreciation, depletion and amortization	(93)	(92)	(88)
Interest income	12	9	35
Interest expense	(39)	(45)	(56)
Income tax expense	(44)	(47)	(33)
Net profit / (loss)	116	101	93
Total comprehensive income / (loss)	87	171	176
Total comprehensive income / (loss) by share	43	68	67
Group's share of total comprehensive income / (loss)	¥ 43	68	67
Dividends received by the Group		¥ 9	18
Arrow Energy Holdings Pty Ltd. [member]
Disclosure of joint ventures [Line Items]
Percentage ownership interest (%)	50.00%	50.00%
Non-current assets	¥ 25,429	¥ 32,733
Current assets	540	708
Including: cash and cash equivalents	91	368
Non-current liabilities	21,569	25,308
Including: Non-current financial liabilities excluding trade and other payables and provisions	17,890	16,304
Current liabilities	583	690
Including: Current financial liabilities excluding trade and other payables and provisions	192	316
Net assets	3,817	7,443
Net assets attributable to owners of the Company	3,817	7,443
Group's share of net assets	1,909	3,722
Elimination of unrealized profit	0	0
Elimination of transactions with the Group	(52)	(45)
Carrying amount of interest in joint ventures	1,857	3,677
REVENUE	1,449	1,135	971
Depreciation, depletion and amortization	(883)	(624)	(484)
Interest income	2	5	6
Interest expense	(1,300)	(1,307)	(1,189)
Net profit / (loss)	(5,518)	(3,718)	(10,753)
Total comprehensive income / (loss)	(3,445)	(3,402)	(12,934)
Total comprehensive income / (loss) by share	(1,723)	(1,701)	(6,467)
Group's share of total comprehensive income / (loss)	¥ (1,723)	¥ (1,701)	¥ (6,467)
Trans-Asia Gas Pipeline Co., Ltd. [member]
Disclosure of joint ventures [Line Items]
Percentage ownership interest (%)	50.00%	50.00%
Non-current assets	¥ 31,527	¥ 27,009
Current assets	3,957	4,045
Including: cash and cash equivalents	3,955	4,025
Non-current liabilities	2,100	2,100
Including: Non-current financial liabilities excluding trade and other payables and provisions	2,100	2,100
Current liabilities	343	414
Net assets	33,041	28,540
Net assets attributable to owners of the Company	33,041	28,540
Group's share of net assets	16,521	14,270
Elimination of unrealized profit	0	0
Carrying amount of interest in joint ventures	16,521	14,270
REVENUE	16	84
Depreciation, depletion and amortization	(3)	(3)
Interest income	65	55
Interest expense	(43)	(32)
Income tax expense		(1)
Net profit / (loss)	5,846	88
Total comprehensive income / (loss)	5,736	194
Total comprehensive income / (loss) by share	2,868	97
Elimination of unrealized profit	(617)	(354)
Group's share of total comprehensive income / (loss)	¥ 2,251	¥ (257)

XML

Available-for-sale Financial Assets - Summary of Available-for-sale Financial Assets (Detail) - CNY (¥) ¥ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of financial assets [Line Items]
Available-for-sale financial assets	¥ 1,917	¥ 2,011
Cost [member]
Disclosure of financial assets [Line Items]
Available-for-sale financial assets	2,251	2,348
Accumulated impairment [member]
Disclosure of financial assets [Line Items]
Available-for-sale financial assets	¥ (334)	¥ (337)

XML

Available-for-sale Financial Assets - Additional Information (Detail) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of financial assets [Line Items]
Available-for-sale financial assets that were disposed of	¥ 1,917	¥ 2,011
Gain on disposal of available-for-sale financial assets	11	184	¥ 177
Disposals of financial assets [member]
Disclosure of financial assets [Line Items]
Available-for-sale financial assets that were disposed of	¥ 12	¥ 176	¥ 381

XML

Subsidiaries - Principal Subsidiaries of the Group (Detail) ¥ in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2017 CNY (¥)	Dec. 31, 2016 CNY (¥)	Dec. 31, 2017 HKD ($)
Disclosure of subsidiaries [Line Items]
Issued Capital	¥ 183,021	¥ 183,021
Daqing Oilfield Company Limited [member]
Disclosure of subsidiaries [Line Items]
Country of Incorporation	PRC
Issued Capital	¥ 47,500
Type of Legal Entity	Limited liability company
Attributable Equity Interest %	100.00%
Voting Rights %	100.00%
Principal Activities	Exploration, production and sale of crude oil and natural gas
CNPC Exploration and Development Company Limited [member]
Disclosure of subsidiaries [Line Items]
Country of Incorporation	PRC
Issued Capital	¥ 16,100
Type of Legal Entity	Limited liability company
Attributable Equity Interest %	50.00%	50.00%
Voting Rights %	57.14%
Principal Activities	Exploration, production and sale of crude oil and natural gas in and outside the PRC
PetroChina Hong Kong Limited [member]
Disclosure of subsidiaries [Line Items]
Country of Incorporation	Hong Kong
Issued Capital | $			$ 7,592
Type of Legal Entity	Limited liability company
Attributable Equity Interest %	100.00%
Voting Rights %	100.00%
Principal Activities	Investment holding. The principal activities of its subsidiaries, associates and joint ventures are the exploration, production and sale of crude oil in and outside the PRC as well as natural gas sale and transmission in the PRC
PetroChina International Investment Company Limited [member]
Disclosure of subsidiaries [Line Items]
Country of Incorporation	PRC
Issued Capital	¥ 31,314
Type of Legal Entity	Limited liability company
Attributable Equity Interest %	100.00%
Voting Rights %	100.00%
Principal Activities	Investment holding. The principal activities of its subsidiaries and joint ventures are the exploration, development and production of crude oil, natural gas, oil sands and coalbed methane outside the PRC
PetroChina International Company Limited [member]
Disclosure of subsidiaries [Line Items]
Country of Incorporation	PRC
Issued Capital	¥ 18,096
Type of Legal Entity	Limited liability company
Attributable Equity Interest %	100.00%
Voting Rights %	100.00%
Principal Activities	Marketing of refined products and trading of crude oil and petrochemical products, storage, investment in refining, chemical engineering, storage facilities, service station, and transportation facilities and related business in and outside the PRC
PetroChina Pipelines Co., Ltd. [member]
Disclosure of subsidiaries [Line Items]
Country of Incorporation	PRC
Issued Capital	¥ 80,000
Type of Legal Entity	Limited liability company
Attributable Equity Interest %	72.26%	72.26%
Voting Rights %	72.26%
Principal Activities	Oil and gas pipeline transportation, investment holding, import and export of goods, agency of import and export, import and export of technology, technology promotion service, professional contractor, main contractor

XML

Subsidiaries - Summarized Financial Information of the Group's Principal Subsidiaries with Significant Non-controlling Interests (Detail) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of subsidiaries [Line Items]
Current assets	¥ 425,162	¥ 381,665
Non-current assets	1,979,450	2,014,986
Current liabilities	576,667	499,263
Non-current liabilities	446,626	524,653
REVENUE	2,015,890	1,616,903	¥ 1,725,428
Total comprehensive (loss) / income	35,428	38,961	21,850
Profit attributable to non-controlling interests	13,995	21,515	6,572
Net cash inflow from operating activities	366,655	265,179	261,312
Net cash (outflow) / inflow from investing activities	(243,546)	(175,887)	(215,879)
Net cash (outflow) / inflow from financing activities	(94,725)	(67,007)	(45,439)
Effect of foreign exchange rate changes on cash and cash equivalents	(3,538)	2,873	(999)
Net (decrease) / increase in cash and cash equivalents	24,846	25,158	(1,005)
Cash and cash equivalents at beginning of the year	97,931	72,773	73,778
Cash and cash equivalents at end of the year	¥ 122,777	¥ 97,931	72,773
CNPC Exploration and Development Company Limited [member]
Disclosure of subsidiaries [Line Items]
Percentage ownership interest (%)	50.00%	50.00%
Current assets	¥ 24,722	¥ 26,489
Non-current assets	133,328	134,510
Current liabilities	13,273	15,504
Non-current liabilities	13,211	11,648
Net assets	131,566	133,847
REVENUE	37,304	28,196	33,541
Profit from continuing operations	3,696	24,153	2,448
Total comprehensive (loss) / income	(1,050)	30,391	(7,889)
Profit attributable to non-controlling interests	2,390	12,414	1,292
Dividends paid to non-controlling interests	1,420	444	775
Net cash inflow from operating activities	18,545	9,053	8,293
Net cash (outflow) / inflow from investing activities	(12,304)	(18,036)	(2,762)
Net cash (outflow) / inflow from financing activities	(4,296)	(2,248)	(4,284)
Effect of foreign exchange rate changes on cash and cash equivalents	(2,183)	748	586
Net (decrease) / increase in cash and cash equivalents	(238)	(10,483)	1,833
Cash and cash equivalents at beginning of the year	18,220	28,703	26,870
Cash and cash equivalents at end of the year	¥ 17,982	¥ 18,220	28,703
PetroChina Pipelines Co., Ltd. [member]
Disclosure of subsidiaries [Line Items]
Percentage ownership interest (%)	72.26%	72.26%
Current assets	¥ 2,882	¥ 19,193
Non-current assets	232,842	235,023
Current liabilities	6,059	26,186
Non-current liabilities	8,408	12,344
Net assets	221,257	215,686
REVENUE	43,627	41,794	2,796
Profit from continuing operations	17,891	20,420	1,015
Total comprehensive (loss) / income	17,891	20,420	1,015
Profit attributable to non-controlling interests	4,963	5,664	282
Dividends paid to non-controlling interests	3,569		720
Net cash inflow from operating activities	31,160	30,270	2,554
Net cash (outflow) / inflow from investing activities	2,869	14,799	(19,434)
Net cash (outflow) / inflow from financing activities	(36,190)	(47,624)	21,744
Net (decrease) / increase in cash and cash equivalents	(2,161)	(2,555)	4,864
Cash and cash equivalents at beginning of the year	2,309	4,864
Cash and cash equivalents at end of the year	¥ 148	¥ 2,309	¥ 4,864

XML

Advance Operating Lease Payments - Summary of Advance Operating Lease Payments (Detail) - CNY (¥) ¥ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of Operating Lease by Lessee [Abstract]
Land use rights	¥ 55,095	¥ 53,653
Advance lease payments	18,801	17,700
Total	¥ 73,896	¥ 71,353

XML

Intangible and Other Non-current Assets - Summary of Intangible and Other Non-current Assets (Detail) - CNY (¥) ¥ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of detailed information about intangible assets [Line Items]
Intangible assets	¥ 59,600	¥ 63,779
Other assets	33,341	38,971
Total intangible and other non-current assets	92,941	102,750
Patents and technical know-how [member]
Disclosure of detailed information about intangible assets [Line Items]
Intangible assets	1,856	2,018
Computer software [member]
Disclosure of detailed information about intangible assets [Line Items]
Intangible assets	2,889	2,824
Goodwill [member]
Disclosure of detailed information about intangible assets [Line Items]
Intangible assets	41,934	46,097
Other [member]
Disclosure of detailed information about intangible assets [Line Items]
Intangible assets	12,921	12,840
Cost [member]
Disclosure of detailed information about intangible assets [Line Items]
Intangible assets	83,885	82,082
Cost [member] | Patents and technical know-how [member]
Disclosure of detailed information about intangible assets [Line Items]
Intangible assets	7,476	7,237
Cost [member] | Computer software [member]
Disclosure of detailed information about intangible assets [Line Items]
Intangible assets	10,638	9,614
Cost [member] | Goodwill [member]
Disclosure of detailed information about intangible assets [Line Items]
Intangible assets	45,643	46,097
Cost [member] | Other [member]
Disclosure of detailed information about intangible assets [Line Items]
Intangible assets	20,128	19,134
Accumulated amortisation [member]
Disclosure of detailed information about intangible assets [Line Items]
Intangible assets	(24,285)	(18,303)
Accumulated amortisation [member] | Patents and technical know-how [member]
Disclosure of detailed information about intangible assets [Line Items]
Intangible assets	(5,620)	(5,219)
Accumulated amortisation [member] | Computer software [member]
Disclosure of detailed information about intangible assets [Line Items]
Intangible assets	(7,749)	(6,790)
Accumulated amortisation [member] | Goodwill [member]
Disclosure of detailed information about intangible assets [Line Items]
Intangible assets	(3,709)
Accumulated amortisation [member] | Other [member]
Disclosure of detailed information about intangible assets [Line Items]
Intangible assets	¥ (7,207)	¥ (6,294)

XML

Intangible and Other Non-current Assets - Summary of Intangible and Other Non-current Assets (Parenthetical) (Detail) - PetroChina United Pipelines Co., Ltd [member] - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of detailed information about intangible assets [Line Items]
Impairment charge	¥ 3,709	¥ 0
Bottom of range [member]
Disclosure of detailed information about intangible assets [Line Items]
Post-tax discount rates	8.90%
Top of range [member]
Disclosure of detailed information about intangible assets [Line Items]
Post-tax discount rates	10.50%

XML

Inventories - Summary of Inventories (Detail) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of inventories [Line Items]
Inventories	¥ 144,669	¥ 146,865
Write down in inventories	(1,118)	(2,709)	¥ (3,394)
Cost [member]
Disclosure of inventories [Line Items]
Crude oil and other raw materials	48,936	55,371
Work in progress	12,811	10,336
Finished goods	83,908	84,473
Spare parts and consumables	170	51
Inventories	145,825	150,231
Write down in inventories	¥ (1,156)	¥ (3,366)

XML

Accounts Receivable - Summary of Accounts Receivable (Detail) - CNY (¥) ¥ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of financial assets [Line Items]
Accounts receivable	¥ 53,143	¥ 47,315
Cost [member]
Disclosure of financial assets [Line Items]
Accounts receivable	57,914	49,338
Accumulated impairment [member]
Disclosure of financial assets [Line Items]
Accounts receivable	¥ (4,771)	¥ (2,023)

XML

Accounts Receivable - Aging Analysis of Accounts Receivable (Net of Impairment of Accounts Receivable) (Detail) - CNY (¥) ¥ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of financial assets [Line Items]
Accounts receivable	¥ 53,143	¥ 47,315
Within 1 year [member]
Disclosure of financial assets [Line Items]
Accounts receivable	51,051	43,686
Between 1 and 2 years [member]
Disclosure of financial assets [Line Items]
Accounts receivable	1,203	2,744
Between 2 and 3 years [member]
Disclosure of financial assets [Line Items]
Accounts receivable	379	437
Over 3 years [member]
Disclosure of financial assets [Line Items]
Accounts receivable	¥ 510	¥ 448

XML

Accounts Receivable - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2017
Disclosure of financial assets [abstract]
Customers credit term	180 days

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Accounts Receivable - Movements in Provision for Impairment of Accounts Receivable (Detail) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of financial assets [abstract]
At beginning of the year	¥ 2,023	¥ 523	¥ 516
Provision for impairment of accounts receivable	2,813	1,633	32
Receivables written off as uncollectible	(58)	(97)	(12)
Reversal of provision for impairment of accounts receivable	(7)	(36)	(13)
At end of the year	¥ 4,771	¥ 2,023	¥ 523

XML

Prepayments and Other Current Assets - Summary of Prepayments and Other Current Assets (Detail) - CNY (¥) ¥ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of detailed information about prepayments and other current assets [Line Items]
Other receivables and advances to suppliers	¥ 24,095	¥ 27,325
Value-added tax to be deducted	39,203	36,010
Prepaid expenses	951	954
Prepaid income taxes		5,406
Other current assets	7,765	7,888
Prepayments and other current assets	72,014	77,583
Cost [member]
Disclosure of detailed information about prepayments and other current assets [Line Items]
Other receivables	16,535	13,206
Advances to suppliers	10,384	16,505
Other receivables and advances to suppliers	26,919	29,711
Accumulated impairment [member]
Disclosure of detailed information about prepayments and other current assets [Line Items]
Other receivables and advances to suppliers	¥ (2,824)	¥ (2,386)

XML

Cash and Cash Equivalents - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Cash and cash equivalents [abstract]
Weighted average effective interest rate on bank deposits	2.18%	1.36%	1.31%

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Accounts Payable and Accrued Liabilities - Summary of Accounts Payable and Accrued Liabilities (Detail) - CNY (¥) ¥ in Millions	Dec. 31, 2017	Dec. 31, 2016
Trade and other current payables [abstract]
Trade payables	¥ 103,201	¥ 80,606
Advances from customers	67,176	60,590
Salaries and welfare payable	6,955	5,396
Accrued expenses	213	123
Dividends payable by subsidiaries to non-controlling shareholders	139	2,356
Interest payable	3,910	4,536
Construction fee and equipment cost payables	121,313	118,011
Loans borrowed from related parties		1,432
Other	40,912	37,630
Accounts payable and accrued liabilities	¥ 343,819	¥ 310,680

XML

Accounts Payable and Accrued Liabilities - Aging Analysis of Trade Payables (Detail) - CNY (¥) ¥ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of financial liabilities [Line Items]
Trade payables	¥ 103,201	¥ 80,606
Within 1 year [member]
Disclosure of financial liabilities [Line Items]
Trade payables	94,996	74,450
Between 1 and 2 years [member]
Disclosure of financial liabilities [Line Items]
Trade payables	4,241	3,293
Between 2 and 3 years [member]
Disclosure of financial liabilities [Line Items]
Trade payables	1,894	944
Over 3 years [member]
Disclosure of financial liabilities [Line Items]
Trade payables	¥ 2,070	¥ 1,919

XML

Borrowings - Summary of Borrowings (Detail) - CNY (¥) ¥ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of detailed information about borrowings [abstract]
Short-term borrowings excluding current portion of long-term borrowings	¥ 93,881	¥ 71,969
Current portion of long-term borrowings	81,536	71,415
Short-term borrowings	175,417	143,384
Long-term borrowings	289,858	372,887
Total borrowings	¥ 465,275	¥ 516,271

XML

Borrowings - Additional Information (Detail) - CNY (¥) ¥ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of detailed information about borrowings [Line Items]
Borrowings	¥ 465,275	¥ 516,271
Borrowings, secured liabilities	¥ 2,829	¥ 251
Bottom of range [member]
Disclosure of detailed information about borrowings [Line Items]
Discount rates	(0.24%)	(0.09%)
Top of range [member]
Disclosure of detailed information about borrowings [Line Items]
Discount rates	6.04%	4.90%
At fair value [member]
Disclosure of detailed information about borrowings [Line Items]
Borrowings	¥ 343,707	¥ 438,805
Guaranteed by CNPC, its fellow subsidiaries and a third party [member]
Disclosure of detailed information about borrowings [Line Items]
Borrowings	¥ 45,463	¥ 65,692

XML

Borrowings - Borrowings by Interest Rate (Detail) - CNY (¥) ¥ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of detailed information about borrowings [Line Items]
Total borrowings	¥ 465,275	¥ 516,271
Bank loans [member] | Weighted average [member]
Disclosure of detailed information about borrowings [Line Items]
Weighted average effective interest rates	2.42%	1.86%
Corporate debentures [member] | Weighted average [member]
Disclosure of detailed information about borrowings [Line Items]
Weighted average effective interest rates	3.62%	3.81%
Medium-term notes [member] | Weighted average [member]
Disclosure of detailed information about borrowings [Line Items]
Weighted average effective interest rates	3.81%	3.86%
Other loans [member] | Weighted average [member]
Disclosure of detailed information about borrowings [Line Items]
Weighted average effective interest rates	3.87%	3.77%
Interest free [member]
Disclosure of detailed information about borrowings [Line Items]
Total borrowings	¥ 130	¥ 145
At fixed rates [member]
Disclosure of detailed information about borrowings [Line Items]
Total borrowings	253,369	282,822
At floating rates [member]
Disclosure of detailed information about borrowings [Line Items]
Total borrowings	¥ 211,776	¥ 233,304

XML

Borrowings - Borrowings by Major Currency (Detail) - CNY (¥) ¥ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of detailed information about borrowings [Line Items]
Total borrowings	¥ 465,275	¥ 516,271
RMB [member]
Disclosure of detailed information about borrowings [Line Items]
Total borrowings	332,383	372,111
US Dollar [member]
Disclosure of detailed information about borrowings [Line Items]
Total borrowings	124,312	136,829
Other currency [member]
Disclosure of detailed information about borrowings [Line Items]
Total borrowings	¥ 8,580	¥ 7,331

XML

Borrowings - Borrowings' Remaining Contractual Maturities (Detail) - CNY (¥) ¥ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of detailed information about borrowings [Line Items]
Remaining contractual maturities of borrowings	¥ 520,267	¥ 579,200
Within 1 year [member]
Disclosure of detailed information about borrowings [Line Items]
Remaining contractual maturities of borrowings	189,050	160,572
Between 1 and 2 years [member]
Disclosure of detailed information about borrowings [Line Items]
Remaining contractual maturities of borrowings	69,159	102,096
Between 2 and 5 years [member]
Disclosure of detailed information about borrowings [Line Items]
Remaining contractual maturities of borrowings	191,879	209,653
After 5 years [member]
Disclosure of detailed information about borrowings [Line Items]
Remaining contractual maturities of borrowings	¥ 70,179	¥ 106,879

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Borrowings - Summary of Reconciliation of Movements of Borrowings to Cash Flows Arising from Financing Activities (Detail) ¥ in Millions	12 Months Ended
	Dec. 31, 2017 CNY (¥)
Disclosure of reconciliation of liabilities arising from financing activities [abstract]
Beginning balance	¥ 516,271
Increase in borrowings	730,252
Repayments of borrowings	(773,940)
Other borrowing costs paid	(173)
Total changes from financing cash flows	(43,861)
Exchange adjustments	(7,135)
Ending balance	¥ 465,275

XML

Share Capital - Summary of Share Capital (Detail) - CNY (¥) ¥ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of classes of share capital [Line Items]
Share capital	¥ 183,021	¥ 183,021
A shares [member]
Disclosure of classes of share capital [Line Items]
Share capital	161,922	161,922
H shares [member]
Disclosure of classes of share capital [Line Items]
Share capital	¥ 21,099	¥ 21,099

XML

Share Capital - Additional Information (Detail) ¥ / shares in Units, ¥ in Millions						1 Months Ended
	Sep. 01, 2005 CNY (¥) shares	Sep. 01, 2005 $ / shares	Apr. 07, 2000 CNY (¥) shares	Apr. 07, 2000 $ / shares	Apr. 06, 2000 $ / shares	Oct. 31, 2007 CNY (¥) ¥ / shares shares	Nov. 05, 1999 ¥ / shares shares
Disclosure of classes of share capital [Line Items]
Number of state-owned shares issued							160,000,000,000
Number of state-owned shares issued, par value per share | ¥ / shares							¥ 1.00
Number of shares issued			17,582,418,000
Number of shares issued, net proceeds | ¥			¥ 20,000
A shares [member]
Disclosure of classes of share capital [Line Items]
Number of shares issued						4,000,000,000
Number of shares issued, price | ¥ / shares						¥ 16.70
Number of shares issued, net proceeds | ¥						¥ 66,243
H shares [member]
Disclosure of classes of share capital [Line Items]
Number of shares issued	3,196,801,818		13,447,897,000
Number of ordinary shares represented by 1 ADS			100
Number of shares issued, price | $ / shares		$ 6.00		$ 1.28
Number of shares issued, net proceeds | ¥	¥ 19,692
Number of state-owned shares converted for sale in the Global Offering			1,758,242,000
Number of shares sold	319,680,182
American depositary shares [member]
Disclosure of classes of share capital [Line Items]
Number of shares issued			41,345,210
Number of shares issued, price | $ / shares					$ 16.44

XML

Reserves - Summary of Reserves (Detail) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of reserves within equity [Line Items]
Beginning balance	¥ 1,372,735	¥ 1,344,034	¥ 1,317,781
Ending balance	1,381,319	1,372,735	1,344,034
Safety fund reserve	327	1,614	1,434
Currency translation differences	(431)	9,404	(20,965)
Equity transaction with non-controlling interests	2,584	1,087	2,040
Acquisition of subsidiaries			36,285
Fair value loss on available-for-sale financial assets	(608)	(128)	596
Share of the other comprehensive (loss) / income of associates and joint ventures accounted for using the equity method	(326)	313	130
Capital reserve [member]
Disclosure of reserves within equity [Line Items]
Beginning balance	133,308	133,308
Ending balance	133,308	133,308	133,308
Statutory common reserve fund [member]
Disclosure of reserves within equity [Line Items]
Beginning balance	186,840	186,840
Ending balance	188,769	186,840	186,840
Transfer from retained earnings	1,929
Special reserve-safety fund reserve [member]
Disclosure of reserves within equity [Line Items]
Beginning balance	13,188	11,648
Ending balance	13,366	13,188	11,648
Safety fund reserve	178	1,540
Currency translation differences [member]
Disclosure of reserves within equity [Line Items]
Beginning balance	(29,294)	(37,066)
Ending balance	(28,045)	(29,294)	(37,066)
Currency translation differences	1,249	7,772
Other reserves [member]
Disclosure of reserves within equity [Line Items]
Beginning balance	(9,236)	(9,790)
Ending balance	(9,336)	(9,236)	(9,790)
Equity transaction with non-controlling interests	289	224
Acquisition of subsidiaries	(1)	(259)
Fair value loss on available-for-sale financial assets	(36)	(128)
Share of the other comprehensive (loss) / income of associates and joint ventures accounted for using the equity method	(326)	313
Other	(26)	404
Reserves [member]
Disclosure of reserves within equity [Line Items]
Beginning balance	294,806	284,940	285,570
Ending balance	298,062	294,806	284,940
Transfer from retained earnings	1,929		2,103
Safety fund reserve	¥ 178	¥ 1,540	1,303
Acquisition of subsidiaries			¥ 12,530

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Reserves - Summary of Reserves (Parenthetical) (Detail) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of reserves within equity [abstract]
Percentage of net profit the Company is required to transfer to a Statutory Common Reserve Fund	10.00%
Percentage of registered capital when the appropriation to the Reserve Fund may cease	50.00%
Minimum percentage of Reserve Fund to registered capital, after bonus share issuance, that must be maintained	25.00%
Distributable reserve amount	¥ 572,252	¥ 574,536

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Deferred Taxation - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Deferred tax assets and liabilities [abstract]
Principal tax rate	25.00%	25.00%	25.00%

XML

Deferred Taxation - Movements in Deferred Taxation (Detail) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Deferred tax assets and liabilities [abstract]
At beginning of the year	¥ (6,720)	¥ (3,807)	¥ 905
Transfer to profit and loss (Note 12)	(7,539)	(3,994)	(3,272)
Credit to other comprehensive income	195	1,081	(1,449)
Acquisition of subsidiaries			9
At end of the year	¥ (14,064)	¥ (6,720)	¥ (3,807)

XML

Deferred Taxation - Deferred Tax Balances Before Offset (Detail) - CNY (¥) ¥ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Disclosure of temporary difference, unused tax losses and unused tax credits [Line Items]
Deferred tax assets	¥ (26,724)	¥ (20,360)
Net deferred tax assets	14,064	6,720	¥ 3,807	¥ (905)
Deferred tax liabilities	12,660	13,640
Cost [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [Line Items]
Deferred tax assets	55,623	52,959
Deferred tax liabilities	41,559	46,239
Cost [member] | Receivables and inventories [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [Line Items]
Deferred tax assets	10,387	7,786
Cost [member] | Unused tax losses [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [Line Items]
Deferred tax assets	27,911	30,438
Cost [member] | Accumulated impairment [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [Line Items]
Deferred tax assets	9,712	7,551
Cost [member] | Other [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [Line Items]
Deferred tax assets	7,613	7,184
Deferred tax liabilities	14,020	13,600
Cost [member] | Accelerated tax depreciation [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [Line Items]
Deferred tax liabilities	¥ 27,539	¥ 32,639

XML

Deferred Taxation - Deferred Tax Balances After Offset (Detail) - CNY (¥) ¥ in Millions	Dec. 31, 2017	Dec. 31, 2016
Deferred tax assets and liabilities [abstract]
Deferred tax assets	¥ 26,724	¥ 20,360
Deferred tax liabilities	¥ 12,660	¥ 13,640

XML

Asset Retirement Obligations - Summary of Asset Retirement Obligations (Detail) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disposals and retirements, property, plant and equipment [abstract]
At beginning of the year	¥ 125,392	¥ 117,996	¥ 109,154
Liabilities incurred	2,981	2,942	4,266
Liabilities settled	(2,012)	(843)	(677)
Accretion expense (Note 10)	5,453	5,126	5,950
Currency translation differences	(268)	171	(697)
At end of the year	¥ 131,546	¥ 125,392	¥ 117,996

XML

Pensions - Additional Information (Detail) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Statement of changes in net assets available for benefits [abstract]
Expenses incurred in connection with employee retirement benefit plans	¥ 16,010	¥ 16,184	¥ 16,357

XML

Contingent Liabilities - Additional Information (Detail)	Dec. 31, 2017 CNY (¥)
Environment liabilities [member]
Disclosure of contingent liabilities [Line Items]
Contingent liabilities	¥ 0

XML

Commitments - Additional Information (Detail) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of finance lease and operating lease by lessee [Line Items]
Capital commitments relating to property, plant and equipment	¥ 70,563	¥ 59,664
Exploration and production licenses [member]
Disclosure of finance lease and operating lease by lessee [Line Items]
Payments incurred to exploration and production licenses	¥ 609	¥ 639	¥ 643
Bottom of range [member]
Disclosure of finance lease and operating lease by lessee [Line Items]
Lease term	1 year
Top of range [member]
Disclosure of finance lease and operating lease by lessee [Line Items]
Lease term	50 years

XML

Commitments - Future Minimum Lease Payments Under Non-cancellable Operating Leases (Detail) - CNY (¥) ¥ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of finance lease and operating lease by lessee [Line Items]
Minimum lease payments payable under non-cancellable operating lease	¥ 229,385	¥ 189,826
Within 1 year [member]
Disclosure of finance lease and operating lease by lessee [Line Items]
Minimum lease payments payable under non-cancellable operating lease	11,519	10,108
Later than 1 year and no later than 5 years [member]
Disclosure of finance lease and operating lease by lessee [Line Items]
Minimum lease payments payable under non-cancellable operating lease	37,033	30,757
After 5 years [member]
Disclosure of finance lease and operating lease by lessee [Line Items]
Minimum lease payments payable under non-cancellable operating lease	¥ 180,833	¥ 148,961

XML

Commitments - Exploration and Production Licenses Estimated Annual Payments (Detail) - CNY (¥) ¥ in Millions	Dec. 31, 2017	Dec. 31, 2016
Within 1 year [member]
Commitments and contingencies [Line Items]
Estimated annual payments	¥ 800	¥ 800
Between 1 and 2 years [member]
Commitments and contingencies [Line Items]
Estimated annual payments	800	800
Between 2 and 3 years [member]
Commitments and contingencies [Line Items]
Estimated annual payments	800	800
Between 3 and 4 years [member]
Commitments and contingencies [Line Items]
Estimated annual payments	800	800
Between 4 and 5 years [member]
Commitments and contingencies [Line Items]
Estimated annual payments	¥ 800	¥ 800

XML

Major Customers - Group's Major Customers (Detail) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of major customers [Line Items]
REVENUE	¥ 2,015,890	¥ 1,616,903	¥ 1,725,428
China Petroleum & Chemical Corporation [member]
Disclosure of major customers [Line Items]
REVENUE	¥ 65,767	¥ 39,481	¥ 33,482
Percentage of Total revenue	3.00%	2.00%	2.00%
China National Petroleum Corporation [member]
Disclosure of major customers [Line Items]
REVENUE	¥ 92,173	¥ 91,094	¥ 80,045
Percentage of Total revenue	5.00%	6.00%	5.00%
Customers [member]
Disclosure of major customers [Line Items]
REVENUE	¥ 157,940	¥ 130,575	¥ 113,527
Percentage of Total revenue	8.00%	8.00%	7.00%

XML

Related Party Transactions - Additional Information (Detail)						12 Months Ended
	Aug. 24, 2017 CNY (¥) m²	Jan. 01, 2015	Aug. 28, 2014 CNY (¥) m²	Jan. 01, 2012	Aug. 25, 2011 CNY (¥) m²	Dec. 31, 2017 CNY (¥)	Dec. 31, 2016 CNY (¥)	Dec. 31, 2015 CNY (¥)
Disclosure of transactions between related parties [Line Items]
Comprehensive products and services agreement effective Period				3 years
New comprehensive products and services agreement effective Period	3 years	3 years
Borrowings						¥ 465,275,000,000	¥ 516,271,000,000
Deferred performance emoluments paid by company							1,640,000	¥ 0
Property, plant and equipment subject to operating leases [member] | Land [member]
Disclosure of transactions between related parties [Line Items]
Supplemental Land Use Rights Leasing Contract, aggregate area of land | m²	1,773,000,000		1,777,000,000		1,783,000,000
Annual fee	¥ 5,783,000,000		¥ 4,831,000,000		¥ 3,892,000,000
Lease term					3 years
Property, plant and equipment subject to operating leases [member] | Buildings [member]
Disclosure of transactions between related parties [Line Items]
Annual fee	¥ 730,000,000		¥ 708,000,000		¥ 1,049,000,000
Lease term	3 years				3 years
Revised Building Leasing Contract, aggregate area of building | m²	1,152,968		1,179,586		734,316
Leasing contract expiration date	Dec. 31, 2037
China National Petroleum Corporation and its fellow subsidiaries, associates and joint ventures [member]
Disclosure of transactions between related parties [Line Items]
Sales of goods						113,306,000,000	104,034,000,000	106,304,000,000
Sales of services						6,160,000,000	5,053,000,000	6,919,000,000
Purchases of goods and services						338,178,000,000	292,168,000,000	322,028,000,000
Purchases of assets						1,643,000,000	1,058,000,000	1,141,000,000
Interest income						424,000,000	224,000,000	304,000,000
Deposits						25,903,000,000	32,626,000,000
Purchases of financial service						11,021,000,000	12,139,000,000	14,739,000,000
Borrowings						208,395,000,000	255,285,000,000
Rents and other payments made under financial leasing						¥ 835,000,000	¥ 819,000,000	¥ 238,000,000

XML

Related Party Transactions - Amounts Due From and To CNPC and its Fellow Subsidiaries, Associates and Joint Ventures of the Group (Detail) - CNY (¥) ¥ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of transactions between related parties [Line Items]
Accounts receivable	¥ 53,143	¥ 47,315
Prepayments and other receivables	72,014	77,583
Other current assets	7,765	7,888
Other non-current assets	33,341	38,971
Accounts payable and accrued liabilities	343,819	310,680
Other non-current liabilities	12,562	12,734
China National Petroleum Corporation and its fellow subsidiaries, associates and joint ventures [member]
Disclosure of transactions between related parties [Line Items]
Accounts receivable	10,219	6,657
Prepayments and other receivables	8,987	9,123
Other current assets	5,794	4,486
Other non-current assets	14,848	11,084
Accounts payable and accrued liabilities	66,001	64,772
Other non-current liabilities	¥ 3,053	¥ 3,755

XML

Related Party Transactions - Key Management Compensation (Detail) - CNY (¥) ¥ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of transactions between related parties [abstract]
Salaries, allowances and other benefits	¥ 11,779	¥ 12,549	¥ 11,256
Contribution to retirement benefit scheme	1,645	1,712	1,915
Key management compensation	¥ 13,424	¥ 14,261	¥ 13,171

XML

Segment Information - Segment Information for the Operating Segments (Detail) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of operating segments [Line Items]
REVENUE	¥ 2,015,890	¥ 1,616,903	¥ 1,725,428
Depreciation, depletion and amortization	(237,375)	(218,147)	(202,875)
Including: Impairment losses of property, plant and equipment	(17,947)	(8,502)	(25,022)
Profit / (loss) from operations	67,722	60,635	79,252
Finance costs:
Exchange gain	8,217	12,828	9,536
Exchange loss	(9,311)	(11,571)	(10,168)
Interest income	2,901	2,491	2,019
Interest expense	(22,408)	(23,348)	(24,328)
Total net finance costs	(20,601)	(19,600)	(22,941)
Share of profit / (loss) of associates and joint ventures	5,968	4,105	1,504
Profit before income tax expense	53,089	45,140	57,815
Income tax expense	(16,296)	(15,768)	(15,726)
Profit for the year	36,793	29,372	42,089
Other assets	26,724	25,766	28,043
Investments in associates and joint ventures	81,159	78,967	70,976
Assets	2,404,612	2,396,651	2,393,844
Capital expenditures	216,227	172,386	202,238
Liabilities	1,023,293	1,023,916	1,049,810
Other liabilities	70,091	58,839	47,261
Exploration and Production [member]
Disclosure of operating segments [Line Items]
REVENUE	96,127	76,768	90,989
Depreciation, depletion and amortization	(169,484)	(155,192)	(148,958)
Including: Impairment losses of property, plant and equipment	(6,565)	(882)	(22,922)
Profit / (loss) from operations	15,475	3,148	33,961
Finance costs:
Share of profit / (loss) of associates and joint ventures	1,716	(158)	(5,599)
Investments in associates and joint ventures	39,517	42,398	32,413
Capital expenditures	161,997	130,248	157,822
Refining and chemicals [member]
Disclosure of operating segments [Line Items]
REVENUE	172,289	143,657	140,421
Depreciation, depletion and amortization	(32,319)	(25,475)	(24,400)
Including: Impairment losses of property, plant and equipment	(10,223)	(3,413)	(1,843)
Profit / (loss) from operations	39,961	39,026	4,883
Finance costs:
Share of profit / (loss) of associates and joint ventures	(89)	13	66
Investments in associates and joint ventures	1,375	1,262	1,249
Capital expenditures	17,705	12,847	15,725
Marketing [member]
Disclosure of operating segments [Line Items]
REVENUE	1,480,764	1,175,272	1,236,707
Depreciation, depletion and amortization	(12,734)	(12,891)	(12,974)
Including: Impairment losses of property, plant and equipment	(7)	(2)	(191)
Profit / (loss) from operations	8,279	11,048	(500)
Finance costs:
Share of profit / (loss) of associates and joint ventures	1,501	552	(156)
Investments in associates and joint ventures	11,938	10,455	9,517
Capital expenditures	10,982	7,983	7,061
Natural gas and pipeline [member]
Disclosure of operating segments [Line Items]
REVENUE	265,310	219,693	255,519
Depreciation, depletion and amortization	(21,146)	(22,743)	(14,489)
Including: Impairment losses of property, plant and equipment	(1,150)	(4,205)	(66)
Profit / (loss) from operations	15,688	17,885	51,231
Finance costs:
Share of profit / (loss) of associates and joint ventures	279	204	4,206
Investments in associates and joint ventures	5,534	3,305	3,424
Capital expenditures	24,529	20,340	20,360
Head office and other [member]
Disclosure of operating segments [Line Items]
REVENUE	1,400	1,513	1,792
Depreciation, depletion and amortization	(1,692)	(1,846)	(2,054)
Including: Impairment losses of property, plant and equipment	(2)
Profit / (loss) from operations	(11,681)	(10,472)	(10,323)
Finance costs:
Share of profit / (loss) of associates and joint ventures	2,561	3,494	2,987
Investments in associates and joint ventures	22,795	21,547	24,373
Capital expenditures	1,014	968	1,270
Operating segments [member]
Disclosure of operating segments [Line Items]
REVENUE	3,171,533	2,546,284	2,785,551
Finance costs:
Assets	3,805,076	3,949,115	3,992,538
Liabilities	1,514,118	1,662,727	1,709,041
Operating segments [member] | Exploration and Production [member]
Disclosure of operating segments [Line Items]
REVENUE	505,430	412,484	475,412
Finance costs:
Assets	1,211,912	1,260,009	1,221,942
Liabilities	525,085	536,284	511,098
Operating segments [member] | Refining and chemicals [member]
Disclosure of operating segments [Line Items]
REVENUE	707,804	582,510	642,428
Finance costs:
Assets	318,299	324,357	311,149
Liabilities	79,989	124,076	114,888
Operating segments [member] | Marketing [member]
Disclosure of operating segments [Line Items]
REVENUE	1,660,456	1,301,616	1,383,426
Finance costs:
Assets	397,813	384,123	343,721
Liabilities	199,340	183,159	148,556
Operating segments [member] | Natural gas and pipeline [member]
Disclosure of operating segments [Line Items]
REVENUE	295,786	247,477	281,778
Finance costs:
Assets	519,249	546,485	597,240
Liabilities	120,244	150,855	206,920
Operating segments [member] | Head office and other [member]
Disclosure of operating segments [Line Items]
REVENUE	2,057	2,197	2,507
Finance costs:
Assets	1,357,803	1,434,141	1,518,486
Liabilities	589,460	668,353	727,579
Elimination of intersegment amounts [member]
Disclosure of operating segments [Line Items]
REVENUE	(1,155,643)	(929,381)	(1,060,123)
Finance costs:
Assets	(1,508,347)	(1,657,197)	(1,697,713)
Liabilities	(560,916)	(697,650)	(706,492)
Elimination of intersegment amounts [member] | Exploration and Production [member]
Disclosure of operating segments [Line Items]
REVENUE	(409,303)	(335,716)	(384,423)
Elimination of intersegment amounts [member] | Refining and chemicals [member]
Disclosure of operating segments [Line Items]
REVENUE	(535,515)	(438,853)	(502,007)
Elimination of intersegment amounts [member] | Marketing [member]
Disclosure of operating segments [Line Items]
REVENUE	(179,692)	(126,344)	(146,719)
Elimination of intersegment amounts [member] | Natural gas and pipeline [member]
Disclosure of operating segments [Line Items]
REVENUE	(30,476)	(27,784)	(26,259)
Elimination of intersegment amounts [member] | Head office and other [member]
Disclosure of operating segments [Line Items]
REVENUE	¥ (657)	¥ (684)	¥ (715)

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Segment Information - Geographical Information (Detail) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of geographical areas [Line Items]
REVENUE	¥ 2,015,890	¥ 1,616,903	¥ 1,725,428
Non-current assets	1,950,809	1,992,615	2,024,704
Mainland China [member]
Disclosure of geographical areas [Line Items]
REVENUE	1,294,516	1,101,055	1,185,189
Non-current assets	1,711,605	1,739,351	1,796,288
Other countries [member]
Disclosure of geographical areas [Line Items]
REVENUE	721,374	515,848	540,239
Non-current assets	¥ 239,204	¥ 253,264	¥ 228,416

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Supplementary Information on Oil and Gas Exploration and Production Activities (Unaudited) - Proved Oil and Gas Reserve Estimates (Detail) MMBoe in Millions, MMBbls in Millions, Bcfe in Billions	12 Months Ended
	Dec. 31, 2017 MMBoe Bcfe MMBbls	Dec. 31, 2016 MMBoe Bcfe MMBbls	Dec. 31, 2015 MMBoe Bcfe MMBbls
Reserve Quantities [Line Items]
Proved developed and undeveloped reserves, Beginning balance | MMBoe	21,118	22,005
Proved developed and undeveloped reserves, Ending balance | MMBoe	20,753	21,118	22,005
Natural gas [member]
Reserve Quantities [Line Items]
Proved developed and undeveloped reserves, Beginning balance | Bcfe	79,060	77,879
Proved developed and undeveloped reserves, Ending balance | Bcfe	77,260	79,060	77,879
Crude oil and condensate [member]
Reserve Quantities [Line Items]
Proved developed and undeveloped reserves, Beginning balance | MMBbls	7,942	9,025
Proved developed and undeveloped reserves, Ending balance | MMBbls	7,876	7,942	9,025
Consolidated entities [member]
Reserve Quantities [Line Items]
Proved developed and undeveloped reserves, Beginning balance | MMBoe	20,556	21,442	22,443
Revisions of previous estimates | MMBoe	195	(799)	(1,697)
Improved recovery | MMBoe	98	93	106
Extensions and discoveries | MMBoe	905	1,287	2,084
Production | MMBoe	(1,458)	(1,467)	(1,494)
Proved developed and undeveloped reserves, Ending balance | MMBoe	20,296	20,556	21,442
Proved developed reserves | MMBoe	12,133	11,953	12,930
Proved undeveloped reserves | MMBoe	8,163	8,603	8,512
Consolidated entities [member] | Natural gas [member]
Reserve Quantities [Line Items]
Proved developed and undeveloped reserves, Beginning balance | Bcfe	78,712	77,525	71,098
Revisions of previous estimates | Bcfe	(1,751)	(308)	(206)
Extensions and discoveries | Bcfe	3,350	4,770	9,764
Production | Bcfe	(3,423)	(3,275)	(3,131)
Proved developed and undeveloped reserves, Ending balance | Bcfe	76,888	78,712	77,525
Proved developed reserves | Bcfe	39,243	40,664	40,406
Proved undeveloped reserves | Bcfe	37,645	38,048	37,119
Consolidated entities [member] | Crude oil and condensate [member]
Reserve Quantities [Line Items]
Proved developed and undeveloped reserves, Beginning balance | MMBbls	7,438	8,521	10,593
Revisions of previous estimates | MMBbls	486	(747)	(1,663)
Improved recovery | MMBbls	98	93	106
Extensions and discoveries | MMBbls	346	492	457
Production | MMBbls	(887)	(921)	(972)
Proved developed and undeveloped reserves, Ending balance | MMBbls	7,481	7,438	8,521
Proved developed reserves | MMBbls	5,593	5,176	6,196
Proved undeveloped reserves | MMBbls	1,888	2,262	2,325
Equity method investments [member]
Reserve Quantities [Line Items]
Proved developed and undeveloped reserves, Beginning balance | MMBoe	562	563
Proved developed and undeveloped reserves, Ending balance | MMBoe	457	562	563
Equity method investments [member] | Natural gas [member]
Reserve Quantities [Line Items]
Proved developed and undeveloped reserves, Beginning balance | Bcfe	348	354
Proved developed and undeveloped reserves, Ending balance | Bcfe	372	348	354
Equity method investments [member] | Crude oil and condensate [member]
Reserve Quantities [Line Items]
Proved developed and undeveloped reserves, Beginning balance | MMBbls	504	504
Proved developed and undeveloped reserves, Ending balance | MMBbls	395	504	504

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Supplementary Information on Oil and Gas Exploration and Production Activities (Unaudited) - Proved Oil and Gas Reserve Estimates - Additional Information (Detail) MMBoe in Millions, MMBbls in Millions, Bcfe in Billions	Dec. 31, 2017 MMBoe Bcfe MMBbls	Dec. 31, 2016 MMBoe Bcfe MMBbls	Dec. 31, 2015 MMBoe Bcfe MMBbls	Dec. 31, 2014 MMBoe Bcfe MMBbls
Schedule of Proved Oil and Gas Reserve Estimates [Line Items]
Proved developed and undeveloped reserves | MMBoe	20,753	21,118	22,005
Crude oil and condensate [member]
Schedule of Proved Oil and Gas Reserve Estimates [Line Items]
Proved developed and undeveloped reserves | MMBbls	7,876	7,942	9,025
Natural gas [member]
Schedule of Proved Oil and Gas Reserve Estimates [Line Items]
Proved developed and undeveloped reserves | Bcfe	77,260	79,060	77,879
Consolidated entities [member]
Schedule of Proved Oil and Gas Reserve Estimates [Line Items]
Proved developed and undeveloped reserves | MMBoe	20,296	20,556	21,442	22,443
Consolidated entities [member] | Crude oil and condensate [member]
Schedule of Proved Oil and Gas Reserve Estimates [Line Items]
Proved developed and undeveloped reserves | MMBbls	7,481	7,438	8,521	10,593
Consolidated entities [member] | Crude oil and condensate [member] | Mainland China [member]
Schedule of Proved Oil and Gas Reserve Estimates [Line Items]
Proved developed and undeveloped reserves | MMBbls	6,622	6,341	7,650
Consolidated entities [member] | Crude oil and condensate [member] | Other countries [member]
Schedule of Proved Oil and Gas Reserve Estimates [Line Items]
Proved developed and undeveloped reserves | MMBbls	859	1,097	871
Consolidated entities [member] | Natural gas [member]
Schedule of Proved Oil and Gas Reserve Estimates [Line Items]
Proved developed and undeveloped reserves | Bcfe	76,888	78,712	77,525	71,098
Consolidated entities [member] | Natural gas [member] | Mainland China [member]
Schedule of Proved Oil and Gas Reserve Estimates [Line Items]
Proved developed and undeveloped reserves | Bcfe	74,702	76,245	75,858
Consolidated entities [member] | Natural gas [member] | Other countries [member]
Schedule of Proved Oil and Gas Reserve Estimates [Line Items]
Proved developed and undeveloped reserves | Bcfe	2,186	2,467	1,667

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Supplementary Information on Oil and Gas Exploration and Production Activities (Unaudited) - Capitalized Costs (Detail) - CNY (¥) ¥ in Millions	Dec. 31, 2017	Dec. 31, 2016
Consolidated entities [member]
Capitalized Costs Relating to Oil and Gas Producing Activities, by Geographic Area [Line Items]
Property costs and producing assets	¥ 1,604,141	¥ 1,519,124
Support facilities	407,188	390,089
Construction-in-progress	101,067	100,114
Total capitalized costs	2,112,396	2,009,327
Accumulated depreciation, depletion and amortization	(1,199,741)	(1,063,500)
Net capitalized costs	912,655	945,827
Equity method investments [member]
Capitalized Costs Relating to Oil and Gas Producing Activities, by Geographic Area [Line Items]
Net capitalized costs	¥ 25,837	¥ 28,999

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Supplementary Information on Oil and Gas Exploration and Production Activities (Unaudited) - Costs Incurred for Property Acquisitions, Exploration and Development Activities (Detail) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Consolidated entities [member]
Costs Incurred, Oil and Gas Property Acquisition, Exploration, and Development Activities [Line Items]
Property acquisition costs			¥ 456
Exploration costs	¥ 32,569	¥ 29,098	29,553
Development costs	128,700	97,655	118,939
Total	161,269	126,753	148,948
Consolidated entities [member] | Mainland China [member]
Costs Incurred, Oil and Gas Property Acquisition, Exploration, and Development Activities [Line Items]
Exploration costs	31,585	28,413	28,542
Development costs	110,104	83,785	100,328
Total	141,689	112,198	128,870
Consolidated entities [member] | Other countries [member]
Costs Incurred, Oil and Gas Property Acquisition, Exploration, and Development Activities [Line Items]
Property acquisition costs			456
Exploration costs	984	685	1,011
Development costs	18,596	13,870	18,611
Total	19,580	14,555	20,078
Equity method investments [member]
Costs Incurred, Oil and Gas Property Acquisition, Exploration, and Development Activities [Line Items]
Total	2,503	1,990	2,798
Equity method investments [member] | Other countries [member]
Costs Incurred, Oil and Gas Property Acquisition, Exploration, and Development Activities [Line Items]
Total	¥ 2,503	¥ 1,990	¥ 2,798

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Supplementary Information on Oil and Gas Exploration and Production Activities (Unaudited) - Results of Operations for Oil and Gas Producing Activities (Detail) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Revenue
Results of operations from producing activities	¥ 47,975	¥ 7,692	¥ 41,757
Mainland China [member]
Revenue
Results of operations from producing activities	42,373	2,432	45,101
Other countries [member]
Revenue
Results of operations from producing activities	5,602	5,260	(3,344)
Consolidated entities [member]
Revenue
Sales to third parties	78,918	65,707	77,963
Inter-segment sales	310,418	247,989	297,352
Revenue	389,336	313,696	375,315
Production costs excluding taxes	(120,012)	(118,210)	(124,025)
Exploration expenses	(23,884)	(18,576)	(18,380)
Depreciation, depletion and amortization	(154,139)	(142,241)	(135,319)
Taxes other than income taxes	(24,158)	(19,189)	(28,777)
Accretion expense	(5,453)	(5,126)	(5,950)
Income taxes	(15,765)	(3,311)	(16,919)
Results of operations from producing activities	45,925	7,043	45,945
Consolidated entities [member] | Mainland China [member]
Revenue
Sales to third parties	39,588	32,674	41,980
Inter-segment sales	305,336	245,091	292,656
Revenue	344,924	277,765	334,636
Production costs excluding taxes	(112,182)	(110,977)	(114,848)
Exploration expenses	(16,732)	(17,952)	(17,045)
Depreciation, depletion and amortization	(135,703)	(123,268)	(112,566)
Taxes other than income taxes	(20,624)	(16,056)	(23,727)
Accretion expense	(5,212)	(4,930)	(5,720)
Income taxes	(12,098)	(2,150)	(15,629)
Results of operations from producing activities	42,373	2,432	45,101
Consolidated entities [member] | Other countries [member]
Revenue
Sales to third parties	39,330	33,033	35,983
Inter-segment sales	5,082	2,898	4,696
Revenue	44,412	35,931	40,679
Production costs excluding taxes	(7,830)	(7,233)	(9,177)
Exploration expenses	(7,152)	(624)	(1,335)
Depreciation, depletion and amortization	(18,436)	(18,973)	(22,753)
Taxes other than income taxes	(3,534)	(3,133)	(5,050)
Accretion expense	(241)	(196)	(230)
Income taxes	(3,667)	(1,161)	(1,290)
Results of operations from producing activities	3,552	4,611	844
Equity method investments [member]
Revenue
Results of operations from producing activities	2,050	649	(4,188)
Equity method investments [member] | Other countries [member]
Revenue
Results of operations from producing activities	¥ 2,050	¥ 649	¥ (4,188)

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Supplementary Information on Oil and Gas Exploration and Production Activities (Unaudited) - Standardized Measure of Discounted Future Net Cash Flows (Detail) - CNY (¥) ¥ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Consolidated entities [member]
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items]
Future cash inflows	¥ 5,287,272	¥ 4,585,822	¥ 5,443,534
Future production costs	(1,909,890)	(1,896,044)	(2,181,423)
Future development costs	(571,125)	(553,558)	(444,553)
Future income tax expense	(594,085)	(447,997)	(567,946)
Future net cash flows	2,212,172	1,688,223	2,249,612
Discount at 10% for estimated timing of cash flows	(1,187,646)	(931,412)	(1,188,237)
Standardized measure of discounted future net cash flows	1,024,526	756,811	1,061,375	¥ 1,595,704
Equity method investments [member]
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items]
Standardized measure of discounted future net cash flows	¥ 17,345	¥ 13,550	¥ 19,712

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Supplementary Information on Oil and Gas Exploration and Production Activities (Unaudited) - Standardized Measure of Discounted Future Net Cash Flows - Additional Information (Detail) - Consolidated entities [member] - CNY (¥) ¥ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Schedule of Proved Oil and Gas Reserve Estimates [Line Items]
Standardized measure of discounted future net cash flows	¥ 1,024,526	¥ 756,811	¥ 1,061,375	¥ 1,595,704
Mainland China [member]
Schedule of Proved Oil and Gas Reserve Estimates [Line Items]
Standardized measure of discounted future net cash flows	979,330	731,206	1,023,933
Other countries [member]
Schedule of Proved Oil and Gas Reserve Estimates [Line Items]
Standardized measure of discounted future net cash flows	¥ 45,196	¥ 25,605	¥ 37,442

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Supplementary Information on Oil and Gas Exploration and Production Activities (Unaudited) - Changes in Standardized Measure of Discounted Future Net Cash Flows (Detail) - Consolidated entities [member] - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items]
Beginning of the year	¥ 756,811	¥ 1,061,375	¥ 1,595,704
Sales and transfers of oil and gas produced, net of production costs	(232,387)	(167,108)	(209,600)
Net changes in prices and production costs and other	367,132	(370,257)	(716,150)
Extensions, discoveries and improved recovery	77,249	81,248	157,220
Development costs incurred	38,613	32,918	49,064
Revisions of previous quantity estimates	14,555	(61,816)	(121,809)
Accretion of discount	76,860	113,324	172,090
Net change in income taxes	(74,307)	67,127	134,856
End of the year	¥ 1,024,526	¥ 756,811	¥ 1,061,375