The Exploration & Production Department is in charge of the management of oil and gas exploration, production, reserves and assets, as well as the marketing of oil and gas.  A number of oil and gas producers are under its administration, namely, Sinopec Shengli Oilfield Co., Ltd., Sinopec Zhongyuan Oilfield Company, Sinopec Henan Oilfield Company, Sinopec Jiangsu Oilfield Company, Sinopec Jianghan Oilfield Company, Sinopec Northwest Company, Sinopec Southwest Company, Sinopec North China Company, Sinopec Northeast Company, Sinopec East China Company, Sinopec Shanghai Offshore Oil & Gas Company, etc. Most of Sinopec's oil and gas blocks are located in the eastern, western and southern parts of China, covering 26 provinces with 364 exploration licenses covering 1.008 million km2 , and 208 exploitation licenses covering 12000 km2.

By Dec. 31st 2007, the total remaining recoverable reserves amounted to 4,079 mmboe (3,024 mmbbls of crude oil and 6,330.8 bcf of natural gas).

In 2007, the Company made quite a number of achievements in oil and gas exploration and production. In exploration, taking regional-based exploration as key objectives and discovering high quality reserves as major exploration goal, the Company carefully organized exploration activities, optimized exploration design, actively applied new technologies, methods and theories and continuously strengthened exploration efforts. Thus, fruitful results have been achieved. Breakthroughs have been made in the exploration of 3 new blocks, namely Northeast Sichuan Natural Gas, Tahe Oil and Dongpu Depression. For mature blocks, the exploration of East China subtle oil reservoirs, West Sichuan deep-seated reservoirs and Songnan deep-seated reservoirs has been expanded. In 2007, the incremental proved oil reserves in place reached 21 mmbbls while the incremental proved natural gas reserves in place aggregated 3756.7 bcf. In production, through fine development and technical innovation, the Company focused on key projects such as stabilizing the production of mature oilfields in the east, quickly putting new production capacities in the west into operation as well as gas transmission from Sichuan to East China. Sinopec hit a historical high in oil and gas production through further improving the development of oil and gas fields. Last year the Company produced 291.67 mmbbls of crude oil and 282.6 bcf of natural gas. The natural decline rate of oil fields was 16.2% and the comprehensive decline rate was 7.4%.

The Company takes a leading position in China in terms of oilfields E&P technologies and oil recovery technologies, mainly including 3D seismic survey technology, high quality and quick drilling technology, tertiary oil recovery technology, etc. In addition, the Company owns a team of technical professionals with rich E&P experiences.

Shengli Oilfield, the 2nd largest producing oilfield in China, is the most important crude producing field of the Company. In 2007, Shengli Oilfield produced 196.68 mmbbls of crude oil and 27.7 bcf of natural gas.

Summary of Operations of the Exploration and Production Segment:

	2007	2006	2005	2007 changes over 2006(%)
Crude oil production (mmbbls)	291.67	285.19	278.82	2.3
Natural gas production (bcf)	2,826	2,565	2,219	10.2
Newly added proved reserves of crude oil (mmbbls)	21	286	306	(92.7)
Newly added proved reserves of natural gas (bcf)	37,567	1,615	1,406	2,226.1
Year end proved reserves of crude oil (mmbbls)	3,024	3,295	3,294	(8.2)
Year end proved reserves of natural gas (bcf)	63,308	28,567	29,517	121.6
Year end proved reserves of crude oil and natural gas (mmboe)	4,079	3,771	3,786	8.2

1 tonne=7.1 bbl; 1 cubic meter=35.31 cubic feet

In 2007, the segment's operating profit was RMB 48.8 billion, decreased by 22.8 % over the previous year.