Dear Shareholders,

On behalf of the Board of Directors of Sinopec Corp., I would like to extend my sincere gratitude for your support.
 
In 2007, China's economy continued to grow rapidly, leading to an growth in domestic demand for oil and petrochemical products. Under severe market conditions featured by the sharp rise in international crude oil prices and increasing pressure due to domestic price control for refined oil products, we were still able to achieve sound operating results by taking full advantage of our strengths, improving our management skills, accelerating technological development, and implementing safety, energy conservation and effluent control measures. We have consolidated our upstream platform leading to steady increases in oil and gas output. Our natural gas development took shape through our Sichuan-East China Gas project. Our refineries operated at full capacity in 2007, and we witnessed steady growth in sales of refined oil and chemical products. Since the fourth quarter of 2007, the Company took various steps to ensure supply when refined oil products were in short supply in some parts of China. These actions reflected our corporate commitment to social responsibility and supporting stable economic growth in China.
 
During last year, based on PRC Accounting Standards for Business Enterprises operating income was RMB 1,204.843 billion, representing an increase of 13.5% compared with 2006. Net profit attributable to equity shareholders of the Company was RMB 54.947 billion, up by 5.5% over last year. According to International Financial Reporting Standards, turnover, other operating revenues and other income was RMB 1,209.706 billion, representing an increase of 13.4% compared with 2006. Profit attributable to equity shareholders of the Company was RMB 56.533 billion, an increase of 5.5% over 2006. In consideration of the Company’s earnings in 2007 and its prospects for long-term growth, the Board of Directors proposed to declare a dividend of RMB 0.165 per share of 2007 on a full year basis. After deducting an interim dividend of RMB 0.05 that has already been paid, the final dividend for 2007 is RMB 0.115 per share.
 
In 2007, the directors have duly performed their fiduciary and ethical responsibilities. They made timely informed decisions on operational strategy and reforms as well as debt financing. In addition, we conducted a program to improve our corporate governance by implementing and enhancing corporate governance scheme documentation, to meet regulatory requirements as well as our need. We also worked to improve our internal control system with the objective of improving risk management and prevention.
 
During last year, we successfully issued zero-coupon convertible bonds, corporate bonds, and short-term financing debentures in both domestic and foreign capital markets. The intention of such financing was to fulfill capital expenditure requirements for important projects, improve our debt structure, and reduce financial costs. The success of our fund raising during the year of 2007 has increased the proportion of direct financing and strengthened our ability to execute our strategic plans for development.
 
We committed RMB 109.3 billion in capital expenditure during last year, based on our assessment of market trends and our strategic needs. We carried out a number of major projects, including construction of Sichuan-East China Gas Project, and a number of large-scale refinery and chemical projects. These projects started on schedule and have expanded our oil production and refining capacity. We also continued the construction of oil terminals and pipelines for crude and refined oil, and improved our marketing network for refined oil and chemical products. Furthermore, our business was expanded through acquisition of five refineries plants and 63 service stations from Sinopec Group Company in 2007. In addition to our acquisitions in Mainland China, we have expanded our marketing network for refined oil products in Hong Kong by acquiring all of the China Resources oil product business in Hong Kong.
 
In 2007, the Company successfully promoted technological innovation throughout its businesses. In the upstream business, the new technologies were applied such as the technology to enhance the recovery rate for oilfields. In oil refining, our technology for processing low-quality crude oil has made important breakthroughs. We also commercialised technology that ensure the production of gasoline and diesel to meet national standards which are equivalent to the Euro IV standard for emission. We developed proprietary technology for 300 thousand tonnes per annum polypropylene process. In response to the high oil prices, we conducted research on new and alternative fuels and conducted pilot tests of syngas-to-oil and biofuels. Our R&D team featured by research scientist Mr. Min Enze is driving the Company’s technological innovation, and they provide the requisite technology and knowledge for the Company’s sustainable development in production and operation. In 2007, the Company applied for 905 domestic patents and 122 foreign patents and were granted 616 domestic patents and 61 foreign patents.
 
We made remarkable improvements in human resources, focusing on teamwork and corporate identity. We paid special attention to the implementation of code of conduct for employees, in order to guide employee’s conduct and create better working conditions for all members of the corporate family. We have also launched training programs for employees at all levels, as a platform for career and personal development, as well as taken steps to improve the quality of our human resources. We committed our employees to share the corporate growth. We also hold the view that improvements in working conditions will lead to employee’s better performance and a higher degree of loyalty and enthusiasm.
 
Sinopec Corp. takes its commitment to corporate social responsibility and corporate philanthropy very seriously. Over the past year, we continued pushing ahead with our health, safety and environment (HSE) management system, which is an important part of our strategy of sustainable development. During last year, Sinopec Corp. published its first sustainable development report, as a participant of the United Nations Global Compact. The report detailed the measures the Company has taken to meet the UN’s 10 basic principles of sustainable development. In order to provide greater protection to our workforce, we introduced strict safety procedures in production and conducted programs to raise employee awareness of the new procedures to ensure safety in full load operations. we have also improved our standards of energy conservation and effluent reduction to provide greater protection to the environment. We have been able to meet these higher standards through technical advances, organizational restructuring, and effective management. Specifically, our energy intensity has dropped by 6.1%, industrial water consumption fell by 4.3%, and Chemical Oxygen Demand (COD) in discharged waste water decreased by 5.4%. In terms of corporate philanthropy, during the severe weather disaster in South China at the beginning of 2008, the Company made donation to the disaster areas to support rescue and rebuilding. Our “Health Express” programme helped more than 9,000 cataract patients in remote and poverty-stricken areas regain their eyesight. In addition, the Company has been actively supporting the Olympic games to be held in Beijing in 2008, with the aim to facilitate the balanced development between the Corporation and the society.
 
None of these achievements would have been possible without the support and trust of our shareholders and the public. We owe a great debt of gratitude to our Board of Directors as well as to management. They have worked hard to implement management and structural improvements and foster innovation. We deeply appreciate the hard work and motivation of our employees. On behalf of the Board, I would like to express my sincere gratitude to people mentioned above.
 
For the 2008 outlook, we are faced with opportunities provided by the rapid economic growth of China and challenges brought by the slowdown of the global economy, fluctuation of crude oil price at high level, and China’s tight monetary policy and the government’s firm control over the prices of refined oil products. However, we are confident of our ability to cope with these challenges, based on our strengths in upstream oil and gas exploration and development, oil refining and marketing, and international trade. We will take advantage of the strengths of our controlling shareholder, Sinopec Group Company, in its engineering services of oil and petrochemical business and in its overseas assets, which may bring synergy effects for Sinopec Corp.. Our strategy for 2008 is to expensed oil and gas resources, product marketing, integration and globalization, as well as optimise our operations and promote management efficiency. In the meantime, Sinopec Corp. will remain committed to technological innovation, environment protection, energy conservation, and effluent reduction. We believe that this will lead to improvements in our risk management and profitability, in response to market developments. Our reforms will focus on innovation to create a management model tailored to our own features to provide a sustainable platform and for future development.
 
We plan a total capital expenditure of RMB 121.8 billion for 2008, which is based on the market condition and the Company’s overall development goals. Out of the planned capital expenditure we intend to use RMB 60.1 billion for the upstream sector to enhance exploration and development efforts, particularly to facilitate the construction of Sichuan-East China Gas project. We expect these to generate new sources of profit growth. We also plan to promote the geographic positioning of our refineries, improve product structure and increase production volume of high value-added products. We are also working towards a modern logistics system for marketing our refined oil and chemical products.
 
I, together with the other members of the Board, believe that our Company will make greater progress in the coming year. This depends very much, however, on the support of all shareholders as well as the joint efforts of the Board of Directors, the Supervisory Board, management and employees. Our goal is to become a multinational energy and chemical corporation with high competitiveness. We are confident that we will provide employee and society rewards to all our stakeholders customers through our growth and performance.

Su Shulin Chairman Beijing, China 3 April 2008