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Chairman's Address

Year 2018 marked the start of implementing the spirit of the 19th National Congress of CPC and securing a decisive victory in building an all-round sustainable company. Faced with complex international environment and demanding tasks of reform and development, we stuck to our four-pronged strategies and implemented the “reform, management, innovation and development” working principle, pooling all strengths together and achieving satisfying results in sustained and quality growth under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core. The company recorded a revenue of 2.94 trillion yuan, up by 22.5%, generated a profit of 96.74 billion yuan, up by 66.2%, and our tax contribution reached 358.1 billion yuan.

In 2018, we optimized operations with a focus on ensuring steady growth and profit. In China, we were able to maintain oil production, increase gas output and reduce cost in upstream. Oil production was 35.06 million tonnes, gas output was 27.58 billion cubic meters and unit total cost for oil and gas was further lowered. Our overseas operations continued to improve with equity oil and gas production reached 42.5 million tonnes of oil equivalent and cash operating cost per barrel lowered as well. Refining and marketing integration strengthened our business chain competitive edge and market position with crude throughput hitting 246 million tonnes and sales volume of refined products in home market reaching 180 million tonnes. The chemical business saw continued progress in upgrading and profit enhancement with 11.51 million tonnes of ethylene production and 4.76 million tonnes of PX and higher proportion of synthetic materials and other high added value products. Natural gas saw rapid business volume growth, and refinery byproducts sales volume hit historic high. Premium lubricant products sales volume also grew. Market development for oilfield services and petrochemical engineering services was also effective.

We fastened transformation by centering around restructuring. Guided by the strategy of building a world-leading company and its phased goals, we developed action plans matching our strategy. We constantly optimized investment and pushed forward construction of key projects. We made new discoveries through oil and gas exploration in Shunbei, Weirong and other places, reversing the declining of SEC-measured reserve replacement ratio. Phase 2 of the Fuling shale gas project was accelerated and Weirong shale gas field was on track to become another important contributor after Fuling. New progresses were made in integrated refining and chemical sites construction with the projects of Zhenhai ethylene and Zhongke pushed ahead. Pilot service stations of new energy were being developed and breakthrough in overseas oil products retail business were made. We made substantial progress in projects of Tianjin LNG, Erdos-Anping-Cangzhou pipeline, Wen-23 gas storage facilities, etc. New business platforms grew rapidly including EPEC, chememall, Easy Joy, and turnover and profit increased fast for non-fuel business. Clean energy business such as geothermal and heat recovery solutions also developed steadily. Key and critical technologies breakthrough was made while integration of industrialization and informatization was accelerated. Over the year, we won one award for national technology invention and three awards for national technology advance, continuing our leading position for patents applied and granted among central SOEs.

We deepened comprehensive reform to invigorate the company and increase efficiency. Sinopec Capital Co., Ltd. was incorporated in Xiong’an New District and operational, whereas Sinopec Marketing Co., Ltd. was registered. We continued with the three tasks of controlling risks, reducing loss-making subsidiaries and transferring non-core functions. Our debt ratio was lowered by 0.8 percentage point as compared to the beginning of 2018. We completed the target of reducing loss at 39 subsidiaries which were required by SASAC, and all agreements for functions transfer of supplying heat, water, electricity and steam were signed. Transferring other social functions of the independent working and mining areas also started. Human resources policies reform further deepened with organizational and staffing policies for all direct subsidiaries implemented. The reform at selected pilot subsidiaries proved effective. Corporate reform, management hierarchy and legal entity flattening were completed. Integrated shared service was progressed with all domestic subsidiaries connected. Mixed ownership reform for geothermal business was well on track and substantial progress was made in mechanism reform for mining acreages transfer, contracting operations and development of difficult reserves. Fine management was further promoted, the role of planning was constantly strengthened, total cost management further pursued, HSSE management system was in place and corporate governance became more effective.

We deepened strict Party governance to strengthen the company’s root and spirit. Through thorough learning of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era and the spirit of the 19th National Congress of the CPC, all employees further strengthened their awareness for the need to maintain political integrity, think in big-picture terms, follow the leadership core, and keep in alignment, the confidence in the path, theory, system, and culture of socialism with Chinese characteristics, and the need to resolutely uphold General Secretary Xi Jinping’s core position on the Party Central Committee and in the Party as a whole, and resolutely uphold the Party Central Committee’s authority and its centralized, unified leadership. Incorporating Party construction into the articles of associations of companies at various levels was pushed ahead, and the practice of concurrent appointment of Party secretary and chairman or executive director or company representative was put in place, making the Party’s leadership role more systematic and standardized. We unswervingly strengthened anti-corruption, implemented correction measures addressing problems identified by the central inspection and improved total supervision. We carried out the “empowering corporate growth by talents” programme and initiated training and develop programme for young leaders. Grass-root Party construction work was significantly improved. Meanwhile, we strengthened corporate culture and spirit building through showcasing fine traditions and legacies of the oil industry.

We stuck to the principle of growing the company and ben-efiting society. We actively took part in the government’s targeted poverty alleviation programme, shouldered the responsibility of aiding eight counties and 750 villages for which we directly invested 230 million yuan and sent 1,149 people for poverty alleviation. The Yuexi County of Anhui Province was lifted out of poverty. We completed the quality upgrading of GB VI fuels and stressed on work safety responsibility and accountability. In addition, we kicked off the “Green Enterprise Campaign” programme to aid the battle for environmental protection. We also secured gas supply during winter by expanding sources for gas and making gas available for civil use. We continued our contribution in disaster relief, sponsoring education, helping the needed, etc. A total of 200,000 cataract patients have been cured from the Sinopec Lifeline Express programme. We provided free service for environment workers at our stations in 13 provinces and municipalities, and continued the “service station that cares” programme and “Open Day” programme, deepening our communication with communities.

The achievements were not won easily. We credit them to the strong leadership of the Party with Xi Jinping at its core, to the support from all walks of society, to the trust from our clients and customers, and to the cooperation with our partners. On behalf of the Board of Directors and the management team, I’d like to thank all of you for your kindest help and support.

Year 2019 is the 70th anniversary of the founding of the People’s Republic of China. It is also a critical year in building a moderately prosperous society in all respects and securing a decisive victory in the company’s all-round sustainable development. Under the CPC Central Committee leadership with Comrade Xi Jinping at its core and guided by the Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, we will stick to new development concept, focus on development quality, implement growth strategies and working principles, give full play to specialization, market orientation, international operation and integration, and deepen supply-side structural reform. We will seek steady growth while maintaining stability, ensure all strategies and plans are implemented and lay a solid foundation for all-round sustainable growth. To celebrate the 70th anniversary, we are committed to making new and greater contribution to securing a decisive victory in building a moderately prosperous society and socialism with Chinese Characteristics for a New Era.

We look forward to strengthening cooperation and working together with you for a better tomorrow.

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