2007 marked a year of sound achievements and rapid growth for Sinopec Corp.. Faced with complex market environment, the Company adhered to the corporate guidance of "securing safety, market, stability and increasing profitability", reinforced oil and gas exploration and production, optimized refining and chemical production, improved product quality and marketing operation, carefully organized construction of key projects, seriously carried out measures for energy-conservation, emission-reduction, cost-saving and efficiency-improvement, strengthened safety and environmental protection, and achieved all business targets with enhanced operational quality and economic profitability. Sales Revenue of the year exceeded RMB 1.1 trillion, up by 14% (year-on-year, hereinafter the same shall apply unless otherwise stipulated). Net profit reached RMB 80 billion. Benefits from cost-saving and efficiency-improvement reached RMB 8.3 billion.

Oil and gas exploration and production scored substantial achievements. The Company further implemented its strategy of hydrocarbon resources and continued to enlarge reserve scale. Resource base for Sichuan to East China Gas Transmission Project has been further consolidated. Nearly 200 million tonnes of crude reserve was discovered in Block 12 of Tahe Oilfield. Breakthroughs were made in the exploration of Dongpu Mesozoic buried hill reservoir. Key capacity building and reserve utilization were further reinforced, with deepened and focused management. The Company steadily increased oil and gas production and achieved a record high of over 5 million tonnes of crude output in Tahe Oilfield. During the year, total crude output was 41.08 million tonnes, up by 2.3%. Natural gas output reached 8 billion cubic meters, up by 10.2%.

Refining production was maintained at a high and full load. With the processing of inferior crude and thereof increased difficulty in running of facilities, the Company carefully organized production and maintained safe, stable, long-cycle and full-load operation. Crude throughput and refined oil products output scored a new record high with reduced production cost to guarantee the market supply of refined oil products and satisfy the feedstock demand from chemical production. Crude throughput reached 155 million tonnes, up by 6.2%. Refined oil products output reached 92.9 million tonnes, up by 6.6%. Refining yield was 59.8%. Light chemical feedstock output reached 23.6 million tonnes, up by 3.2%.

Chemical production and sales were further optimized. The Company put a premium on technological de-bottlenecking, strengthened coordination of the feedstock intra-supply and consistently improved operational efficiency of facilities. With the endeavor to closely coordinate production and sales and further leverage marketing managerial proficiency, the Company achieved a zero balance between production and sales with increased output and profitability.  Ethylene output was 6.53 million tonnes, up by 6.3%. Ethylene yield reached 30.63%. Ethylene-and-propylene yield reached 45.3%.

In refined oil products marketing, the Company further strengthened its capacity to ensure market supply and increase profitability. Based on the market dynamics, the Company reinforced resource allocation, optimized transportation and distribution, adjusted the pace of marketing so as to guarantee supply and improve profitability. With the acquisition of the refined oil products business from China Resources Enterprise of Hong Kong, the Company's operation volume and capacity in Hong Kong has been rapidly enhanced. Sales of refined oil products reached 119 million tonnes, up by 7%, in which retail volume was 76.4 million tonnes, up by 5.8%. Market share reached 64.3% and direct sales ratio hit 81%.

International trade was consistently expanded. Through diversifying import channels, increasing the ratio of term contracts, optimizing crude procurement and transportation, and expanding the third-party trade, the Company has guaranteed the stable crude supply whilst effectively reduced procurement cost. Meanwhile, the Company proactively expanded international trade of refined oil products and carefully organized the importation of equipments and materials, which efficiently safeguarded the construction of key projects as well as the smooth production and operation.

Energy-saving and emission-reduction work was steadily pushed forward. The Company implemented energy-saving and emission-reduction plans, increased capital input and advocated advanced technologies, which reaped substantial achievements. Energy consumption in terms of per ten-thousand RMB of output value was 0.84 ton of coal equivalent, down by 3.44%. Overall energy consumption of oil and gas production was 106.12 kg coal equivalent per ton, down by 3.54 kg. Overall energy consumption of refining was 66.3 kg oil equivalent per ton, down by 1.6 kg.  Fuel and utilities consumption of ethylene facility was 670 kg oil equivalent per ton, down by 5 kg. Industrial fresh water consumption was 1.12 billion tonnes, down by 4.3%. Chemical oxygen demand (COD) in discharged waste water was controlled within 35,000 tonnes, down by 5.4%. Ratio of waste water up to discharging standard remained above 95.8%.

Investment was further optimized. Focusing on the strategy of development, the Company optimized investment projects, seriously executed investment decision-making procedure and managerial measures, strengthened engineering construction management, and ensured construction of key projects. A bunch of key projects of oil and gas exploration and production were well on track, with newly-built crude capacity of 6.72 million tonnes per annum, and newly-built natural gas capacity of 1.62 billion cubic meters per annum. Yanshan 10 million tonnes per annum refinery revamping project was completed. Maoming ethylene expansion project and a series of chemical fibre and rubber projects were concluded and put into operation. Construction was completed at Qingdao 10 million tonnes per annum refinery project. Key projects including Fujian refinery & ethylene project, Tianjin refinery and ethylene project and Zhenhai ethylene project are progressing smoothly. Wuhai ethylene project kicked off construction. Tianjin-Yanshan crude oil pipeline and several refined oil pipelines including the pipeline around Beijing City were completed smoothly. Constructions of Phase II Project of Shandong-Anhui pipeline and Caofeidian crude jetty were on sound track. Acquisition and building of service stations in key areas scored new achievements.

Science and technology achieved positive progress. The Company focused on improvement of key production technologies and obtained substantial new achievements in the development of core and proprietary technologies.
The Company applied for 905 domestic patents, of which 616 were granted, and applied for 122 patents overseas, of which 61 were granted.

Corporate management and reform was further deepened. Safe Production Regulation was issued and implemented to promote safe and stable production. Examination and evaluation measures of internal control were further improved to enhance the depth and quality of examination, representing the further optimization of the corporate internal control system.  Based on the "separate flows of income and expenditure" and the integrated cash management, the Company strengthened cash monitoring and control whilst enhanced efficiency of cash utilization. Overall budgeting management continued to be deepened to increase quality of the budget. The scale of centralized procurement and on-line procurement kept upgrading. IT construction and application was steadily forged ahead.

2008 represents an important year for Sinopec Corp. to further implement the scientific outlook of development and comprehensively achieve the targets under the guidance of the 11th Five-year Program. Sinopec Corp. will consistently abide by the State laws and regulations as well as the Company's Articles of Association. With market as the foundation and profitability as the core target, the Company will strive to open up a new prospect for production, operation, reform and development, comprehensively achieve all the targets of the year so as to lay a solid foundation to become a multinational energy and chemical company with fairly strong international competitiveness.