Year 2008 was indeed unique and uneasy for Sinopec. We faced with unprecedented situations, esp. natural disasters like history-rare freezing rain and snow catastrophes in southern China and the severe earthquake in Wenchuan, Sichuan Province, complex market environment like international oil price soared and slumped, international financial crisis spread rapidly, domestic oil products market shifted from shortage to surplus in supply. Therefore, we timely adjusted production and operation strategy, strived for expanding resources, optimizing production, exploring market, actively carried forward fine management and technology advancement, substantially strengthened safety awareness, environmental protection, energy-saving and emission-reduction, which ensured stable operation and high spirits of staff. Thus, new achievements and progress were made in various tasks that gave impetus to sustainable development of the Company. Sales Revenue in 2008 exceeded RMB 1.45 trillion, up by 20.5% (year-on-year, hereinafter the same shall apply unless otherwise stipulated). Net profit attributable to shareholders of the Company reached RMB 29.82 billion. RMB 39.64 billion profits were realized by reducing cost and increasing efficiency.

Oil & gas exploration and production made new progress. Increasing funding, intensifying mature blocks and developing frontier areas generated new results. In 2008, the Company added 298 million tons of newly proven oil reserves, 53.9 bcm of newly proven gas reserves. Crude oil output reached 41.69 million tons, up by 1.8%, and natural gas output hit 8.3 bcm, up by 3.7%. Oil & gas development capabilities were further enhanced through optimizing operation and management, practicing production-growth measures, and deeply tapping potential in increasing production and efficiency.

Refining operation maintained safe, stable with long cycle. Crude throughput and oil products output were dramatically raised thanks to overcoming difficulties and challenges, optimizing production plan, emphasizing safety supervision and operating at full capacity. Meanwhile, the Company further rationalized crude procurement, maximized advantages in storage, transportation and potentials in processing units, and made every effort to decrease cost and fees. The Company accumulatively processed 169 million tons of crude, up by 8.5%. The output of refined oil product totaled 105.86 million tons, up by 13.72%. Light yield was 74.80%, up by 0.32%, and commodity yield was 94.07%, up by 0.12%.

Production and marketing of chemical products were linked even closer. In view of the drastic changes in the market, the Company promptly adjusted production structure and products mix, optimized material supply, consolidated production and marketing efforts, improved centralized marketing regime, hence making greater influence in the market. The Company produced 6.289 million tons of ethylene in 2008.

In refined oil products market, our market share was further enhanced through giving full play of the marketing network and the integration of production and marketing, carefully organizing resources, flexibly adjusting business tactics, grasping the pace of sales and perfecting operation structure. In 2008, the Company sold a total of 123 million tons of oil products, up by 3%. Retail volume was increased by 9.8% to 84.1 million tons, in which sales volume at the terminal market was increased by 7.6 percentage point.

International operation developed in good tendency. The Company imported 125.61 million tons of crude during the whole year. The third-party trade volume of crude and oil products totaled 28.7 million tons and 3.6 million tons respectively. Import and export value of petrochemical products, equipments and materials reached US$ 4.8 billion. Export volume of lubricants and catalysts were greatly increased.

Safe production, energy-saving and emission-reduction efforts generated new results. HSE management was deepened. Systems on safety and environmental protection were improved, and HSE duties were delegated and fulfilled. All staff highlighted awareness of work safety and environmental protection. Production in general maintained safe and clean. Measures on energy-saving and emission-reduction were further implemented. The comprehensive energy consumption per 10,000 yuan of industrial output value was 0.73 ton standard coal, down by 5.2%, which was equivalent to saving 3.92 million tons of standard coal. The industrial water intake was down by 3.6%. COD in wastewater drainage fell 4.3%. The rate of the reuse of industrial water stood over 95%.

Conducting fine management, tapping potential and increasing efficiency achieved prominent results. Confronting serious situation in production and operation, the Company persisted in focusing on internal potentials and capabilities, timely transferred work priorities to fine management. The Company held activities on finding gaps, tapping potential and increasing profit by fine management, further materialized a series of measures set before.

Key projects were smoothly progressed. Newly-built crude production capacity amounted to 6.1 million tons, while gas capacity amounted to 1.33 bcm. The Sichuan-to-East China Gas Transmission Project was carried forward as scheduled. Capacity building in Songnan Gasfield was smoothly kicked off. Qingdao refinery was successfully commissioned. Refinery revamping projects in Gaoqiao, Wuhan and Luoyang were put into operation. Large-scale refining projects in Fujian, Tianjin and Zhenhai were proactively advanced, newly-increased refining capacity reached 13.5 million tpa. 300-thousand-ton crude terminal in Qingdao Phase ¢ó, Caofeidian and Tianjin Shihua were put into operation. Commercial crude reserve facilities in Zhenhai Lanshan and Baishawan were completed. Oil products pipelines like Jiangxijiuzhang and east line of Phase¢òProject of Shandong-Anhui pipeline were ready for use. The number of new oil and gas retail stations reached 650.

In addition, the Company further deepened management and reform, making obvious achievements in IT application and staff capacity building as well as giving full play of technology innovation as propeller. The Company applied for 918 domestic patents, of which 572 were granted, and applied for 225 patents overseas, of which 173 were granted.

In 2009, under the spreading impact of international financial crisis, production and operation situation will be more complex and serious to us. We will further implement the scientific outlook on development, seize every opportunity while actively address challenges. We will also carefully organize production and operation, substantially strengthen safe production, energy-saving and emission-reduction, proactively advance innovation in both technology and management, and strive for a new era with the feature of sustainable, efficient and harmonious development.