CNOOC-Annual-Report-2006

No.25ChaoyangmenbeiDajie,DongchengDistrictBeijing100010,P.R.China(CNOOC)isthethirdlargeststate-ownedoilcompanyandthelargestoffshoreoilandgasproducerinChina.Establishedin1982,theCompanyhasitsheadquarterinBeijing.Itnowhas44,000employeesandaregisteredcapitalofRMB50billion.CNOOChasmaintainedfastandqualitygrowthsinceitsincorporation.Ithasdevelopedfromanupstreamcompanyintoanintegratedenergycompany,whichpossesseswellperformingcorebusinessandrelatedbusinessesalongthevaluechain,withsynergeticbusinessportfoliosincludingoilandgasexplorationanddevelopment,technicalservices,chemicalsandfertilizer,gasandpower,financialservices,andlogisticsservicesandalternativeenergy.Inrecentyears,througheffectivestrategiesoncompanyrestructuring,assetsoperation,overseasacquisitionandthroughexpansionintomidanddownstream,theCompanyhasrealizedaleapfroggrowthwithimprovedoverallcompetitivenessandestablishedanoutstandingimageasanefficientinternationaloilcompany.CNOOCcontinuesitspursuitforaharmoniousdevelopmentamongpeoplecompany,societyandenvironment.DuringtheEleventhFive-yearPlanperiod,CNOOCwillcontinueitsscientificgrowthandfocusonthestrategyofsynergeticdevelopment,cultivationofastrongworkingforce,competitivenessontechnologyresearchanddevelopmentandlowcost.Throughefficientgrowthandinnovation,theCompanyaimstodevelopintoaworld-classinternationalenergycompany.Note:CNOOCistheparentcompanyofagroupofsubsidiariesandaffiliates.“We”,“theGroup”and“theCompany”inthisreportallrefertoCNOOC.CompanyProfileCNOOCAnnualReport200633CNOOCAnnualReport2006CNOOCAnnualReport2006Dearfriends,CNOOCrealizedhealthygrowthin2006.Theencouragingprogressmadeinthepastyearfirmsupourconfidencetodevelopitintoaworld-classinternationalenergycompany.In2006,CNOOCachievedrecordperformanceinoperationsandcontinuouslyenhanceditsintegratedcompetitiveness,steeredbytheEleventhFive-yearPlanoftheGroupandthankstothefavorablemacroeconomiccircumstances.SalesreachedRMB132.4billion,whichincreasedby49%.Incomeincreasedby26%toRMB49billion.TotalassetsreachedRMB250.7billion,increasingby31%andnetassetswasRMB137.1billion,anincreaseof30%.TheGrouppaidtaxandgovernmentshareoiltotalingRMB32.1billion.Itproduced40.33milliontonsofoilequivalent,growingby3.4%comparedwiththepreviousyear.Itsureaproductionreached1.93milliontons,a41.6%rise.Productionofbitumenandfueloilrecorded1.77milliontonsand6.26milliontonsrespectively,increasingby13.3%and10.7%.TheCompanyproduced646,200tonsofethylene,andgeneratedelectricityof3.52billionkilowatt-hours(KWh),up32.2%from2005.Italsoimported745,000tonsofliquefiednaturalgas(LNG).TheGroupmaintainedfastandqualitygrowth.Itscostmarginwas60%andsalesmarginwas37%.TheannualincomegeneratedpercapitareachedRMB1.11millionandthetaxpaymentpercapitawasRMB729,000.Bytheendoftheyear,thetotalmarketcapitalizationofthelistedcompanieshadreachedRMB370billion,whichnotonlycreatedconsiderablereturntotheshareholders,butalsoincreasedthevalueofstate-ownedassets.CNOOCconductedaggressiveexplorationanddevelopmentofoilandgasandmadebreakthroughindeepwaterexploration.TheCompanyhad10commercialdiscoveries,madebreakthroughsinsixareasforexploration,andappraised6oil-bearingstructures,whichlaidasolidfoundationforCNOOCtoproduce48-50milliontonsofoilequivalentin2010.Liwan3-1wasdiscoveredwithgasreservesofatleast100billioncubicmeters(BCM)inSouthChinaSeawithwaterdepthof1,500meters.ThediscoveryisexpectedtofosterexplorationindeepwaterSouthChinaSea.TheCompanyalsowellexpandeditsworldwidebusinessanditsnetproductionfromoverseasisexpectedtoreach20-25milliontonsby2010.TheCompanyaggressivelyexpandeditsoverseasbusiness,bothinexplorationandproduction,aswellasintechnicalservices.In2006,itacquiredequityoffieldsinNigeria,EquatorialGuinea,Australia,thePhilippinesandKenya.Ithasestablishedbusinessin10countrieswith45explorationblocksandanacreageof400,000Km2.ChinaOilfieldServicesLtd.(COSL)recordeda150%riseinsalesandhasdevelopeditsbusinessinRussia,Indonesia,AustraliaandWestAfrica.CNOOCEngineeringLtd.(COOEC)alsoachievedapplaudableresultsinoffshoreoilfieldconstructioninIndonesia.2LetterfromthePresidentLetterfromthePresidentOperationHighlightsAuditor’sReportFinancialStatementsHealth,SafetyandEnvironmentBusinessReviewExploration&ProductionGas&PowerChemicals&RefiningTechnicalServicesLogistics&AlternativeEnergyFinancialServicesResearch&DevelopmentCorporateGovernanceModernCorporateSystemInternalControlSystemComprehensiveBudgetManagementERPHumanResourcesCorporateCitizenshipMajorEventsManagementTeamAffiliates0306111218222327293438424650515152525356606263Contents55CNOOCAnnualReport2006CNOOCAnnualReport2006ItwasanotheryearofsuccessforCNOOCinthecapitalmarket.ChinaBluechemicalLimited(ChinaBlueChem)wassuccessfullylistedinHongKongandrecordedanoversub-scriptionininternationalplacingandHongKonginitialpublicofferingfor53and478timesrespectively,withproceedsofHK$3.02billion.COOECcompletedequitydistributionreform.Bycapturingthefavorabl