Chemicals and marketing

PetroChina is one of the major producers and distributors of chemical products in China. Most of its chemical plants are integrated in refining and chemical business, which is beneficial for ensuring raw material supply, improving production efficiency, enhancing production flexibility, and increasing cost-effectiveness. The chemical products, such as ethylene and synthetic resin, have a considerable share in domestic market. By December 31, 2006, the productivity of ethylene amounted to 2.63 million tons, accounting for 26.6% of national total; and the production of ethylene in 2006 totaled 2.068 million tons, accounting for 22.0% of national total. In the first half of 2007, PetroChina produced 1.305 million tons of ethylene.

Production of Major Chemical Products of PetroChina in Recent 3 Years

Unit: 10,000 tons

	2004	2005	2006
1. Primary chemical products
ethylene	184.6	188.8	206.8
propylene	196.9	249.4	267.1
benzene	71.3	70.8	75.0
2. Derivative chemical products
Synthetic resin
Polyethylene	131.0	135.6	153.1
Polypropylene	98.7	114.2	129.1
ABS	22.8	22.3	22.3
Synthetic fiber
Terylene fiber	9.4	8.6	5.3
Nitrilon fiber	10.8	9.7	8.1
Synthetic rubber
Styrene-butadiene rubber	19.0	19.4	21.3
Intermediate products
Alkylbenzene	19.5	20.6	20.8
3. Other chemical products
Urea	365.2	357.8	357.6

Development Plan

PetroChina will continue with organization’s optimization. The new equipment is of high standards and able to produce dominant products. This will ensure long-term safe and stable operations, and will greatly improve technology and profitability. The Company will give full play to resource, refining and chemical integration, optimize the resources, strengthen the regional exchange of resources and improve the resource efficiency. PetroChina plans to further strengthen the construction of marketing networks, enhance the marketing strength, improve the service level, and build up competitiveness, profitability and anti-risk capacity. In addition, the Company will increase the proportion of high-grade, high value-added products and build large-scale ethylene and aromatic hydrocarbon project timely and efficiently, to develop downstream products with emphasis on ethylene, and to develop chemical fibers with emphasis on aromatic hydrocarbon. 　