Faced with the slow global economic recovery and sluggish growth in energy demand growth in 2012, we exemplified our corporate mission of "Energize, Harmonize and Realize" and worked towards becoming a "Green, International and Sustainable PetroChina", accelerated the implementation of strategies of "Resources, Market and Internationalization", by picking up pace in our structural reforms and changing our growth model. This resulted in rapid growth that could be effectively sustained.
Structural adjustment: Optimized business portfolio and value chain
Resources are fundamental to our business sustainability. We understand that fossil energy is non-renewable and therefore define sustainability as maintaining society well-being with finite resources, through optimized allocation and utilization of energy resources. To this end, we focus on oil and gas exploration activities to optimize the reserve-production structure. In 2012, the reserve replacement ratio of the Company stood above 100%, ensuring a strong reserve base for growth in China. Our gas production increased rapidly, accounting for more than a third of the Company's total output. The Company promoted large-scale intensive refining and petrochemical operations with seven 10Mt/a refining bases and five ethylene production bases taking shape in the year. We developed high-end and clean products to upgrade our product line, improved our marketing network and oil products sales structure, upgraded our domestic pipeline networks and imported a large amount of natural gas. We also further developed our town gas, CNG (Compressed Natural Gas) and LNG (Liquefied Natural Gas) businesses, which resulted in a new gas marketing structure with a higher market share. The Company took a big leap forward in our international operations by stepping up efforts abroad, with major overseas cooperation zones and operation centers taking shape. In sum, 2012 was a year that saw steady increases in oil and gas production output, crude processing volumes, and sales of oil products and natural gas. Our business portfolio and value chain have been further streamlined to facilitate coordinated growth and enhanced supply security.
Shifting development pattern: Strengthening technological and managerial innovation
As innovation is one of our strategic approaches in driving our sustainable development, we will vigorously strengthen innovation and accelerate the transformation of the Company's development pattern. We believe that only innovation can sustain the scale, growth rate and efficiency of our business success. In 2012, we continued to invest in R&D, enhance innovation, and focus on major scientific and special technological research projects and major field test projects so as to enhance our independent innovation capabilities. We then apply the findings of our research and the fruits of our R&D work into our production and operations activities. For example, multi-stage fracturing for horizontal well is now widely used in our development activities, and we have achieved continuous improvements in exploration and development technology for low pressure and low permeability oil and gas reservoirs. Our proprietary 600Kt/a ethylene package solution has been successfully applied to expand and upgrade existing units. We also achieved major progress in fundamental research projects such as the use of nano agents for oil displacement. As part of the Digital PetroChina initiative, we launched three IT projects: an ERP-based Information System, the Internet of Things, and a Cloud-based Data Center. Meanwhile, corporate governance was stepped up through overall budget management, benchmarking, meticulous management as well as risk control in key areas, key aspects and key processes. Joint ventures and cooperation with social capital, financial capital and international capital were encouraged to play an active role in our operation. The innovations we have achieved in technology and management have contributed to the steady improvement in the quality and business growth.
Sustainability: Green and low-carbon development
Safety, conservation of resources and environmentally friendly practices are three important aspects of sustainability. It is our unwavering goal to strike a balance between the Company's development and resources, the environment, society and people. In 2012, we continued to implement and improve our HSE system, focusing on raising awareness on safety and environmental protection, managing hidden hazards and sharing experiences. Energy conservation demonstration projects and emissions reduction projects were carried out to further improve our HSE performance. We implemented a series of medical examination programs and occupational disease countermeasures for the sake of our employees' physical and mental health, and a multi-tier medical insurance scheme was established for better health management. Meanwhile, we accelerated the exploration and development of unconventional resources such as CBM and shale gas, pushed ahead in the production of fuel ethanol, biodiesel and aviation bio-kerosene in an orderly manner, and strove to increase the supply of natural gas, high grade gasoline and jet fuels, in order to do our part in creating a cleaner environment. We actively worked for the public good in the countries and regions in which we operate, supported socio-economic development in the local communities, and shared our achievements with our partners. Our CSR activities are widely recognized by local governments, our business partners, the media and local residents.
With multi-polarity and economic globalization prevailing in today's world, we have continued to enhance cultural diversity and social informatization, we have made new breakthroughs in scientific and technological developments, and we have been engaging in global co-operation at all levels and in all dimensions. The global economy is undergoing a transition and is growing at a slower pace. New trends and transformations are emerging in the global energy landscape, particularly with the balance in global oil supply-demand, which will see little change, while natural gas will experience major growth at the same time. In China, we will see a robust increase in energy demand in light of China's boundless development potential, especially with the goal set during the 18th CPC National Congress of transforming China into a moderately prosperous society through rapid industrialization, IT revolution, urbanization and modernization of agricultural production, which all present tremendous opportunities for the oil and gas industry.
We will adhere to our business strategy "Resources, Market and Internationalization", enhance quality and efficiency, and focus on oil and gas operations and sustainable growth. We will accelerate the transformation of our development pattern, strengthen scientific management and enhance safety and environmental protection. Human resources have always been our top priority as we continue to protect and improve people's livelihoods. PetroChina will strive to create a green, international and sustainable corporation, one that is loyal, responsible and respectable, to achieve better returns for our shareholders, employees and society.