6-K - PCCYF - Equibles

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OFFOREIGN ISSUER

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

For the month of August 2020

Commission File Number: 001-15006

PETROCHINA COMPANY LIMITED

9 DongzhimenNorth Street, Dongcheng District

Beijing, The People’s Republic of China, 100007

(Address of Principal Executive Offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒ Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ☐ No ☒

(If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- )

EXHIBITS

Exhibit Number
99.1 Announcement of the interim results of the Company for the six months ended<br>June 30, 2020;
99.2 A press release regarding the interim results of the Company;
99.3 An announcement regarding renewal of continuing connected transactions with CNPC and<br>Beijing Gas, respectively.

FORWARD-LOOKING STATEMENTS

This announcement contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance. Actual results may differ materially from information contained in these forward-looking statements as a result of a number of factors.

We do not intend to update or otherwise revise the forward-looking statements in this announcement, whether as a result of new information, future events or otherwise. Because of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this announcement might not occur in the way we expect, or at all.

You should not place undue reliance on any of these forward-looking statements.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this announcement to be signed on its behalf by the undersigned, thereunto duly authorized.

	PetroChina Company Limited
Dated: August 27, 2020	By:	/s/ WU Enlai
	Name:	WU Enlai
	Title:	Company Secretary

EX-99.1

Exhibit 99.1

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make norepresentation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

LOGO

中國石油天然氣股份有限公司

PETROCHINA COMPANY LIMITED

(a joint stock limited company incorporated in the People’s Republic of China with limited liability)

(Hong Kong Stock Exchange Stock Code: 857

Shanghai Stock Exchange Stock Code: 601857)

Announcement of the interim results for the six months ended June 30, 2020

(Summary of the 2020 Interim Report)

1 Important Notice

1.1 This announcement of interim results is a summary of the 2020 Interim Report of PetroChina Company Limited (the “Company”). Investors who wish to get a full idea of the operating results, financial position and future development plan of the Company should carefully read the full version of the 2020 Interim Report, which is published on the websites of the Shanghai Stock Exchange (website: http://www.sse.com.cn), “HKExnews” of The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”) (website: http://www.hkexnews.com.hk) and the Company (website: http://www.petrochina.com.cn ).

1.2 The board of directors of the Company (the “Board” or “Board of Directors”), supervisory committee (“Supervisory Committee”) and all directors (“Directors”), supervisors (“Supervisors”) and senior management (“Senior Management”) of the Company warrant the truthfulness, accuracy and completeness of the information contained in the 2020 Interim Report and that there are no misrepresentation, misleading statements contained in, or material omissions from the 2020 Interim Report, and severally and jointly accept full responsibility thereof.

1.3 Except for Mr. Jiao Fangzheng, a non-executive director and Mr. Simon Henry, an independent non-executive director, who were absent due to certain reasons, other members of the Board have attended the seventh meeting of the Board in 2020.

1.4 The financial statements of the Company and its subsidiaries (the “Group”) have been prepared in accordance with China Accounting Standards (“CAS”) and International Financial Reporting Standards (“IFRS”), respectively. The financial statements in this announcement are unaudited.

1.5 Basic Information of the Company

Stock Name	PETROCHINA	PetroChina	PetroChina
Stock Code	857	PTR	601857
Places of Listing	Hong Kong Stock Exchange	The New York Stock Exchange	Shanghai Stock Exchange
Contact Persons	Secretary to the Board of Directors	Representative on Securities Matters	Chief Representative of the Hong Kong Representative Office
---	---	---	---
Name	Wu Enlai	Liang Gang	Wei Fang
Address	No. 9 Dongzhimen North Street, Dongcheng District, Beijing, the PRC		Suite 3705, Tower 2, Lippo Centre, 89 Queensway, Hong Kong
Postal Code	100007
Telephone	86 (10) 5998 2622	86 (10) 5998 6959	(852) 2899 2010
Fax	86 (10) 6209 9557	86 (10) 6209 9559	(852) 2899 2390
Email Address	sunbo05@petrochina.com.cn	liangg@petrochina.com.cn	hko@petrochina.com.hk

1.6 In overall consideration of situations such as the operating results, financial position, cash flow and expected gains from pipeline assets restructuring of the Company, to provide returns to the shareholders, the Board has resolved to declare an interim dividend of RMB0.08742 yuan per share (inclusive of applicable tax) for 2020 on the basis of a total of 183,020,977,818 shares of the Company as at June 30, 2020. The total amount of the interim dividends payable is RMB16,000 million.

2 Key Financial Data and Change of Shareholders

2.1 Key Financial Data and Financial Indicators

2.1.1 Key Financial Data and Financial Indicators Prepared under IFRS

	Unit: RMB million
Items	As at the end<br>of the reportingperiod		As at the end<br>of the preceding<br>year		Changes from the endof the preceding yearto the end of thereporting period (%)
Total assets		2,677,347		2,732,910		(2.0	)
Equity attributable to owners of the Company		1,188,747		1,230,156		(3.4	)
Items	The reporting<br>period			Same period ofthe precedingyear		Changes over the<br>same period of thepreceding year (%)
---	---	---	---	---	---	---	---	---
Revenue		929,045			1,196,259		(22.3	)
Net (loss)/profit attributable to owners of the Company		(29,983	)		28,423		(205.5	)
Net cash flows from operating activities		79,080			134,425		(41.2	)
Basic (loss)/earnings per share (RMB Yuan)		(0.164	)		0.155		(205.5	)
Diluted (loss)/earnings per share (RMB Yuan)		(0.164	)		0.155		(205.5	)
Return on net assets (%)		(2.52	)		2.32		(4.84) percentage<br> <br>points

2.1.2 Key Financial Data and Financial Indicators Prepared under CAS

	Unit: RMB million
Items	As at the end<br>of the reportingperiod		As at the end<br>of the preceding<br>year		Changes from the endof the preceding yearto the end of thereporting period (%)
Total assets		2,677,624		2,733,190		(2.0	)
Equity attributable to equity holders of the Company		1,189,016		1,230,428		(3.4	)
Items	The reporting<br>period			Same period ofthe precedingyear		Changes over the<br>same period of thepreceding year (%)
---	---	---	---	---	---	---	---	---
Operating income		929,045			1,196,259		(22.3	)
Net (loss)/profit attributable to equity holders of the Company		(29,986	)		28,420		(205.5	)
Net (loss)/profit after deducting non-recurring profit<br>items attributable to equity holders of the Company		(31,790	)		30,386		(204.6	)
Basic (loss)/earnings per share (RMB Yuan)		(0.164	)		0.155		(205.5	)
Diluted (loss)/earnings per share (RMB Yuan)		(0.164	)		0.155		(205.5	)
Weighted average return on net assets (%)		(2.48	)		2.33		(4.81) percentage<br> <br>points
Net cash flows from operating activities		79,080			134,425		(41.2	)

2.2 Shareholdings of the Top Ten Shareholders

The total number of shareholders of the Company as at June 30, 2020 was 751,689, including 745,316 holders of A shares and 6,373 holders of H shares (including 151 holders of American Depositary Shares).

	Unit: Shares
Name of shareholders	Nature ofshareholders	Percentageof<br>shareholding<br>(%)		Number of<br>shares held			Increase/decreaseduring thereportingperiod (+,-)		Number ofshareswithsellingrestrictions		Number ofsharespledged orsubject tolock-ups
CNPC	State-owned legal person		80.25		146,882,339,136	^(1)^		0		0		0
HKSCC Nominees Limited ^(2)^	Overseas legal person		11.42		20,898,081,998	^(3)^		1,809,709		0		0
CNPC-CSC-17 CNPC<br>E2 Pledge and Trust Special Account	State-owned legal person		2.09		3,819,980,834			-6,791		0		3,819,980,834
CNPC-CSC-17 CNPC<br>EB Pledge and Trust Special Account	State-owned legal person		1.12		2,051,488,603			0		0		2,051,488,603
China Securities Finance Corporation Limited	State-owned legal person		0.62		1,139,138,704			0		0		0
China Baowu Steel Group Corporation Limited	State-owned legal person		0.34		624,000,000			0		0		0
China Metallurgical Group Corporation	State-owned legal person		0.31		560,000,000			0		0		0
Hong Kong Securities Clearing Company<br>Limited^(4)^	Overseas legal person		0.15		274,697,556			65,020,517		0		0
Ansteel Group Corporation	State-owned legal person		0.12		220,000,000			0		0		0
Central Huijin Asset Management Ltd.	State-owned legal person		0.11		206,109,200			0		0		0
Notes:
---
(1)	Such figure excludes the H shares indirectly held by CNPC through Fairy King Investments Limited, an overseas<br>wholly-owned subsidiary of CNPC.
---	---
(2)	HKSCC Nominees Limited is a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited and acts as the<br>nominee on behalf of other corporate or individual shareholders to hold the H shares of the Company.
---	---
(3)	291,518,000 H shares were indirectly held by CNPC through Fairy King Investments Limited, an overseas<br>wholly-owned subsidiary of CNPC, representing 0.16% of the total share capital of the Company. These shares were held in the name of HKSCC Nominees Limited.
---	---
(4)	Hong Kong Securities Clearing Company Limited is a wholly-owned subsidiary of Hong Kong Exchanges and Clearing<br>Limited and acts as the nominee on behalf of investors of Hong Kong Stock Exchange to hold the A shares of the Company listed on Shanghai Stock Exchange.
---	---

Statement on related parties or parties acting in concert among the above-mentioned shareholders: Except for the fact that HKSCC Nominees Limited and Hong Kong Securities Clearing Company Limited are subsidiaries of Hong Kong Exchanges and Clearing Limited, the Company is not aware of any connection among or between the above top ten shareholders or that they are parties acting in concert as provided for in the Measures for the Administration of Acquisitions by Listed Companies.

2.3 Disclosure of Substantial Shareholders under the Securities and Futures Ordinance ofHong Kong

As at June 30, 2020, so far as the Directors are aware, the persons other than a Director, Supervisor or Senior Management of the Company who had interests or short positions in the shares or underlying shares of the Company which are discloseable under Divisions 2 and 3 of Part XV of the Securities and Futures Ordinance were as follows:

Name of shareholders	Natureof<br><br><br>shareholding	Number of shares	Capacity
CNPC	A Shares	146,882,339,136 (L)	Beneficial Owner	90.71	80.25
	H Shares	291,518,000 (L) ^(1)^	Interest of Corporation Controlled by the Substantial Shareholder	1.38	0.16
BlackRock, Inc.^(2)^	H Shares	1,452,314,708 (L)	Interest of Corporation Controlled by the Substantial Shareholder	6.88	0.79
		6,704,000 (S)		0.03	0.004
Citigroup Inc.^(3)^	H Shares	1,165,526,558 (L)	Interest of Corporation Controlled by the Substantial Shareholder /	5.52	0.64
		115,848,909 (S)	Approved	0.54	0.06
		1,008,925,130 (LP)	Lending Agent	4.78	0.55

(L) Long position (S) Short position (LP) Lending pool

Notes:

(1)	291,518,000 H shares (long position) were held by Fairy King Investments Limited, an overseas wholly-owned<br>subsidiary of CNPC. CNPC is deemed to be interested in the H shares held by Fairy King Investments Limited.
(2)	BlackRock, Inc., through various subsidiaries, had an interest in the H shares of the Company, of which<br>1,452,314,708 H shares (long position) and 6,704,000 H Shares (short position) were held in the capacity as interest of corporation controlled by the substantial shareholder.
---	---
(3)	Citigroup Inc., through various subsidiaries, had an interest in the H shares of the Company, of which<br>156,601,428 H shares (long position) and 115,848,909 H Shares (short position) were held in its capacity as interest in corporation controlled by the substantial shareholder, and 1,008,925,130 H shares (long position) were held in its capacity as<br>approved lending agent.
---	---

As at June 30, 2020, so far as the Directors are aware, save for disclosed above, no person (other than a Director, Supervisor or Senior Management of the Company) had an interest or short position in the shares of the Company according to the register of interests in shares and short positions kept by the Company pursuant to Section 336 of the Securities and Futures Ordinance.

2.4 Information on Changes of Controlling Shareholder and the De FactoController

☐ Applicable Ö Not applicable

2.5 Corporate Bonds Not Yet Overdue

Unit: RMB100 million

Bond Name	Abbreviation
2012 Corporate Bonds (First Tranche) (10-year<br>term)	12 PetroChina 02	122210.SH	2012-11-22	2022-11-22	20	4.90
2012 Corporate Bonds (First Tranche) (15-year<br>term)	12 PetroChina 03	122211.SH	2012-11-22	2027-11-22	20	5.04
2013 Corporate Bonds (First Tranche) (10-year<br>term)	13 PetroChina 02	122240.SH	2013-03-15	2023-03-15	40	4.88
2016 Corporate Bonds (First Tranche) (5-year<br>term)	16 PetroChina 01	136164.SH	2016-01-19	2021-01-19	88	3.03
2016 Corporate Bonds (First Tranche) (10-year<br>term)	16 PetroChina 02	136165.SH	2016-01-19	2026-01-19	47	3.50
2016 Corporate Bonds (Second Tranche) (5-year<br>term)	16 PetroChina 03	136253.SH	2016-03-03	2021-03-03	127	3.15
2016 Corporate Bonds (Second Tranche) (10-year<br>term)	16 PetroChina 04	136254.SH	2016-03-03	2026-03-03	23	3.70
2016 Corporate Bonds (Third Tranche) (5-year<br>term)	16 PetroChina 05	136318.SH	2016-03-24	2021-03-24	95	3.08
2016 Corporate Bonds (Third Tranche) (10-year<br>term)	16 PetroChina 06	136319.SH	2016-03-24	2026-03-24	20	3.60
2017 Corporate Bonds (First Tranche)	17 PetroChina 01	143255.SH	2017-08-18	2020-08-18	20	4.30

Indicators Reflecting the Solvency of the Issuer

Main Indicator	As at June 30, 2020		As at December 31, 2019
Asset-liability ratio (%)		47.69		47.15
Main Indicator	The First Half of 2020		The First Half of 2019
EBITDA Interest Protection Multiples		12.26		19.47
Note:	EBITDA Interest Protection Multiples in the first half of 2020 decreased by 37.0% year-on-year, mainly due to a decrease in profits.
---	---

Note on Overdue Debt

☐ Applicable Ö Not applicable

3 Directors’ Report

3.1 Discussion and Analysis of Operations

In the first half of 2020, the Coronavirus Disease 2019 (“COVID-19”) had a tremendous impact on the global economy, and major economies of the world experienced recessions to varying degrees; China’s economy has also been hit significantly. In the first quarter, China’s gross domestic product (GDP) decreased by 6.8% year-on-year. However, with effective control over COVID-19 in China, its economy is showing a trend of stable recovery. In the second quarter, GDP grew by 11.5% quarter-on-quarter and 3.2% year-on-year. In the first half of the year, GDP fell by 1.6% year-on-year. Affected by the macro economy and COVID-19, the supply and demand in the global oil market became even more eased up, and the average international crude oil prices significantly decreased as compared with the same period of last year.

Adversely affected by the sharp drop in international oil prices and a severe contraction of domestic oil and gas demand, the Group’s production and operations have experienced unprecedented shocks and challenges. Facing the complex and severe situation, the Group engaged in a series of work in a centralized way, including promotion of COVID-19 prevention and control, resumption of work and production, production and operation, as well as reform and development. At the same time, we vigorously improved quality and profitability, strictly controlled costs and capital expenditures, and strived to reduce losses caused by COVID-19 and low oil prices, thereby maintaining overall smooth operation of the oil and gas industrial chain. Under the influence of both COVID-19 and oil prices, the Group’s operating performance and free cash flow in the first half of the year dropped significantly, and by means of effective measures to improve quality and profitability, the financial position was overall stable.

3.1.1 Market Review

(1) Crude Oil Market

In the first half of 2020, the spread of COVID-19 resulted in a historical decline in demand for petroleum in the world, severe oversupply in the global petroleum market and a sharp drop in international oil prices. During the period, the negotiation on production reduction among members of “Production Reduction Alliance” broke down, followed by a price war. Later, the largest production reduction agreement in history was reached, which has an important impact on the international oil price trend. In the first half of the year, the average spot price for North Sea Brent crude oil was US$39.95 per barrel, representing a decrease of 39.4% as compared with the same period of last year, and the average spot price for West Texas Intermediate (“WTI”) crude oil was US$36.59 per barrel, representing a decrease of 36.3% as compared with the same period of last year.

According to data from the National Development and Reform Commission (“NDRC”), the domestic output of crude oil in the first half of 2020 was 96.50 million tons, representing an increase of 1.5% as compared with the same period of last year.

(2) Refined Products Market

In the first half of 2020, domestic consumption of refined products has dropped significantly, with gasoline, diesel and kerosene all showing negative growth. During this period, domestic oil refining capacity continued to grow, and the quantity of crude oil processing grew at a basically stable rate. However, the output of refined products declined, and the net export of refined products continued to grow. According to NDRC data, in the first half of 2020, the quantity of processed crude oil amounted to 312.66 million tons, representing an increase of 2.4% as compared with the same period of last year; the output of refined products amounted to 184.24 million tons, representing a decrease of 2.5% as compared with the same period of last year; the apparent consumption of refined products amounted to 153.86 million tons, representing a decrease of 6.0% as compared with the same period of last year, among which, the consumption of gasoline decreased by 3.3% and the consumption of diesel increased by 0.1%. In the first half of 2020, the PRC government made four adjustments to the prices of domestic gasoline and diesel products, and the prices of reference gasoline and diesel products decreased, in aggregate, by RMB1,730 yuan per ton and RMB1,670 yuan per ton, respectively.

(3) Chemical Products Market

In the first half of 2020, affected by factors such as macro economy, supply and demand, and international oil prices, the overall domestic chemical products market went downwards. Except for chemical products related to COVID-19 prevention and control, demands and prices for most chemicals dropped. Since the second quarter, with acceleration in resumption of work and production in the PRC, the chemical market demand has gradually recovered.

(4) Natural Gas Market

In the first half of 2020, under the influence of COVID-19 and the macroeconomic downturn, global natural gas market demand declined with an even more eased up supply and demand, while the international natural gas prices dropped across the world and liquefied natural gas (“LNG”) spot prices in Europe, America and Northeast Asia hit record lows. The growth of demand for domestic natural gas slowed down and output of natural gas continued to increase relatively rapidly, while the growth of import of natural gas declined substantially. According to NDRC data, in the first half of 2020, the domestic apparent consumption of natural gas amounted to 155.6 billion cubic metres, representing an increase of 4.2% as compared with the same period of last year. The domestic natural gas output amounted to 95.0 billion cubic metres, representing an increase of 9.9% as compared with the same period of last year. The imports of natural gas amounted to 66.7 billion cubic metres, representing an increase of 3.3% as compared with the same period of last year.

3.1.2 Business Review

(1) Exploration and Production

Domestic Exploration and Development Operations

In the first half of 2020, the Group continued to optimize the exploration programs, and made important discoveries and progress in risk exploration and concentrated exploration. High-yield oil and gas flow was discovered from Tarim Manshen No.1 well, representing a major breakthrough in ultra-deep oil and gas exploration in the hinterland of the basin. In addition, a batch of risk exploration wells such as Sichuan Pengtan No.1, Tarim Luntan No.1, and Junggar Shatan No.2, etc. achieved new breakthroughs and opened up a new area of oil and gas exploration. We also optimized and adjusted production capacity, and organized oil and gas development and production in a scientific way. In the first half of 2020, the crude oil output amounted to 372.7 million barrels, representing an increase of 0.8% as compared with the same period of last year. The marketable natural gas output amounted to 2,024.4 billion cubic feet, representing an increase of 10.9% as compared with the same period of last year. The oil and natural gas equivalent output amounted to 710.2 million barrels, representing an increase of 5.4% as compared with the same period of last year.

Overseas Oil and Gas Operations

In the first half of 2020, the Group’s overseas oil and gas business made steady progress, and the risk exploration of the Chad project and the rolling exploration of the Kazakhstan PK project made new breakthroughs and new progress. We optimized and adjusted oil and gas field development strategies with the focus on benefits and improved profitability of new wells and operations to enhance the level of oil and gas field development. In the first half of the year, the oil and natural gas equivalent output amounted to 123.5 million barrels, representing an increase of 17.3% as compared with the same period of last year and accounting for 14.8% of the total oil and natural gas equivalent output of the Group.

In the first half of 2020, the Group recorded the crude oil output of 475.4 million barrels, representing an increase of 5.2% as compared with the same period of last year, the marketable natural gas output of 2,149.1 billion cubic feet, representing an increase of 9.4% as compared with the same period of last year, and the oil and natural gas equivalent output of 833.7 million barrels, representing an increase of 7.0% as compared with the same period of last year.

Summary of Operations of the Exploration and Production Segment

	Unit
Crude oil output	Million barrels	475.4	451.9	5.2
Of which: Domestic	Million barrels	372.7	369.8	0.8
Overseas	Million barrels	102.7	82.1	25.1
Marketable natural gas output	Billion cubic feet	2,149.1	1,964.3	9.4
Of which: Domestic	Billion cubic feet	2,024.4	1,825.1	10.9
Overseas	Billion cubic feet	124.7	139.2	(10.4	)
Oil and natural gas equivalent output	Million barrels	833.7	779.4	7.0
Of which: Domestic	Million barrels	710.2	674.1	5.4
Overseas	Million barrels	123.5	105.3	17.3
Note:	Figures have been converted at the rate of 1 ton of crude oil = 7.389 barrels and 1 cubic metre of naturalgas = 35.315 cubic feet.
---	---

(2) Refining and Chemicals

In the first half of 2020, we steadily promoted structural adjustment in the Group’s refining and chemicals business through optimizing the allocation of crude oil resources in line with changes in market demand and profitability and adjusting processing loads in a timely manner, and made great efforts to achieve “reduction of refining and increase of chemicals”. We also continued to optimize product structure, adjusted diesel-gasoline ratio in a flexible way, and strived to increase production of high value-added products. In the first half of the year, 568.2 million barrels of crude oil were processed, representing a decrease of 4.9% as compared with the same period of last year; 52.085 million tons of refined products were produced, representing a decrease of 8.2% as compared with the same period of last year. The output of chemical products was 13.847 million tons, representing an increase of 9.5% over the same period of last year. The output of ethylene increased by 4.0% over the same period of last year. The output of synthetic resin and synthetic rubber increased by 3.7% and 4.7%, respectively, over the same period of last year.

In the first half of 2020, the integration project of refining and chemicals of Guangdong Petrochemical, Tarim and Changqing ethane to ethylene projects and other key projects progressed in an orderly manner.

Summary of Operations of the Refining and Chemicals Segment

	Unit
Processed crude oil	Million barrels	568.2	597.4	(4.9	)
Gasoline, kerosene and diesel output	’000 ton	52,085	56,716	(8.2	)
Of which: Gasoline	’000 ton	21,931	24,588	(10.8	)
Kerosene	’000 ton	4,264	6,038	(29.4	)
Diesel	’000 ton	25,890	26,090	(0.8	)
Refining yield	%	93.43	93.26	0.17 percentage<br> <br>point
Ethylene	’000 ton	3,103	2,983	4.0
Synthetic resin	’000 ton	5,024	4,845	3.7
Synthetic fibre raw materials and polymers	’000 ton	656	674	(2.7	)
Synthetic rubber	’000 ton	489	467	4.7
Urea	’000 ton	948	459	106.5

Note: Figures have been converted at the rate of 1 ton of crude oil = 7.389 barrels.

(3) Marketing

Domestic Operations

In the first half of 2020, the Group actively took measures to address severe situation of shrinking consumption in the refined products market and high inventories, and made every effort to strengthen the connection between production and sales, and strived to ensure smooth operation and sales channel of refineries and overall stable operation of the crude oil industry chain. In addition, we actively seized favorable opportunities of resumption of work and production and spring ploughing, improved customer service quality, and, in light of the impact of COVID-19, actively launched “in the car” refuelling and “no contact” payment. Further, we increased product marketing effort, strived to increase retail sales and optimized wholesale sales, so as to improve sales efficiency.

International TradingOperations

In the first half of 2020, the Group enhanced its effort to expand overseas share of oil sales and optimized the pace of refined products exports to promote the coordination for integration of domestic and international markets.

10 -

The Group sold a total of 76.569 million tons of gasoline, kerosene and diesel in the first half of 2020, representing a decrease of 14.8% as compared with the same period of last year, among which the domestic sales of gasoline, kerosene and diesel were 48.572 million tons, representing a decrease of 15.6% as compared with the same period of last year.

(4) Natural Gas and Pipeline

In the first half of 2020, the Group implemented precise measures to develop the natural gas terminal market, and significantly increased terminal sales. In line with changes in market demand, we comprehensively upgraded the “labelling” management, coordinated and optimized resource allocation and sales structure. In addition, we continued to strengthen the upgrade of pipeline safety management to ensure safe and stable operation of the oil and gas pipeline network.

3.1.3 Review of Operating Results

The financial data set out below is extracted from the Group’s interim condensed consolidated financial statements preparedunder IFRS

(1) Consolidated Operating Results

In the first half of 2020, the Group achieved a revenue of RMB929,045 million, representing a decrease of 22.3% as compared with the same period of last year. Net loss attributable to owners of the Company was RMB29,983 million, representing a decrease of 205.5% from the RMB28,423 million of net profit attributable to owners of the Company as compared with the same period of last year. There was a basic loss per share of RMB0.164 yuan, representing a decrease of RMB0.319 yuan as compared with a basic earnings per share of RMB0.155 yuan over the same period of last year.

Revenue Revenue decreased by 22.3% to RMB929,045 million for the first half of 2020 from RMB1,196,259 million for the first half of 2019. This was primarily due to the impact of the drop in the sales volume of refined products and natural gas as well as the decrease in the prices of oil and gas products. The table below sets out the external sales volume and average realised prices of the major products sold by the Group in the first half of 2020 and 2019 and their respective percentages of change during these periods:

	Sales Volume (’000 ton)							Average Realised Price (RMB/ton)
	First half of2020		First half of2019		Percentageof change(%)			First half of2020		First half of2019		Percentageof change(%)
Crude oil^*^		85,950		65,395		31.4			1,998		3,170		(37.0	)
Natural gas (100 million cubic metres, RMB/’000 cubic metres)		1,197.67		1,252.67		(4.4	)		1,175		1,391		(15.5	)
Gasoline		31,569		36,496		(13.5	)		5,600		6,594		(15.1	)
Diesel		38,437		43,285		(11.2	)		4,350		5,216		(16.6	)
Kerosene		6,563		10,131		(35.2	)		3,133		4,254		(26.4	)
Heavy oil		10,196		9,467		7.7			2,616		3,122		(16.2	)
Polyethylene		2,636		2,485		6.1			6,349		7,836		(19.0	)
Lubricant		569		571		(0.4	)		7,534		8,299		(9.2	)
^*^	The crude oil listed above represents all the external sales volume of crude oil of the Group. The sales volume<br>of crude oil increased as compared with the same period of last year, primarily due to the increase in the international trading volume of crude oil.
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Operating Expenses Operating expenses decreased by 16.9% to RMB935,088 million for the first half of 2020 from RMB1,125,596 million for the first half of 2019, of which:

Purchases, Services and Other Purchases, services and other decreased by 21.2% to RMB627,188 million for the first half of 2020 from RMB796,103 million for the first half of 2019. This was primarily due to the reduction in the Group’s purchase costs of oil and gas products.

Employee Compensation Costs Employee compensation costs (including various types of wages, various types of insurance, housing provident fund, training costs and other relevant additional costs) for the first half of 2020 were RMB60,746 million, representing a decrease of 6.6% from RMB65,028 million for the first half of 2019. This was primarily due to the reinforcement of linkage between the employee’s remuneration and operating results.

Exploration Expenses Exploration expenses decreased by 13.8% to RMB10,569 million for the first half of 2020 from RMB12,267 million for the first half of 2019. This was primarily due to the fact that the Group controlled its exploration expenses by optimising its exploration plan based on the change in oil prices.

Depreciation, Depletion and Amortisation Depreciation, depletion and amortisation increased by 5.3% to RMB114,388 million for the first half of 2020 from RMB108,607 million for the first half of 2019. This was primarily due to the change in the volume of oil and gas reserves caused by the drop in oil price, which resulted in increasing the depreciation and depletion of the Group’s oil and gas assets.

Selling, General andAdministrative Expenses Selling, general and administrative expenses decreased by 8.6% to RMB29,883 million for the first half of 2020 from RMB32,695 million for the first half of 2019. This was primarily due to the vigorous advancement of the quality and profitability improvement and the continuous effort in controlling the non-production costs by the Group.

Taxes other than Income Taxes Taxes other than income taxes decreased by 12.5% to RMB98,931 million for the first half of 2020 from RMB113,088 million for the first half of 2019, of which the consumption tax decreased by RMB7,760 million from RMB81,137 million for the first half of 2019 to RMB73,377 million for the first half of 2020; the resource tax decreased by RMB2,695 million from RMB12,088 million for the first half of 2019 to RMB9,393 million for the first half of 2020; the crude oil special gain levy decreased by RMB621 million from RMB799 million for the first half of 2019 to RMB178 million for the first half of 2020.

Other Income, Net Other income, net of the Group for the first half of 2020 was RMB6,617 million, representing an increase of RMB4,425 million from RMB2,192 million for the first half of 2019. This was primarily due to the combined effect from the increase in the gains on asset disposal and the change in asset retirement obligation, etc.

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(Loss)/Profit from Operations There was a loss from operations of RMB6,043 million for the Group in the first half of 2020, representing a decrease of 108.6% from the profit from operation of RMB70,663 million for the first half of 2019.

Net Exchange Gain/(Loss) Net exchange gain of the Group for the first half of 2020 was RMB443 million while net exchange loss for the first half of 2019 was RMB290 million. This was mainly due to the change of average exchange rate of US dollar against Renminbi.

Net Interest Expense Net interest expense increased by 1.4% to RMB13,490 million for the first half of 2020 from RMB13,304 million for the first half of 2019. This was mainly due to decrease in the balance of deposits with a higher interest rate, including those with a tenor of one year or above, as compared to the same period last year, which in turn led to a reduction of interest income.

(Loss)/Profit before Income Tax Expense Loss before income tax expense was RMB18,520 million for the Group in the first half of 2020, representing a decrease of 130.0% from the profit before income tax expense of RMB61,776 million for the first half of 2019.

Income Tax Expense Income tax expense decreased by 78.8% to RMB4,804 million for the first half of 2020 from RMB22,638 million for the first half of 2019. This was primarily due to a drastic decrease in the profit before income tax expenses of the Group.

(Loss)/Profit for the period Net loss amounted to RMB23,324 million for the Group in the first half of 2020, representing a decrease of 159.6% from net profit of RMB39,138 million for the first half of 2019.

Profit attributable to non-controlling interests Profit attributable to non-controlling interests was RMB6,659 million for the first half of 2020, representing a decrease of 37.9% from RMB10,715 million for the first half of 2019. This was primarily due to the significant decrease in the profits of the subsidiaries of the Group over the same period last year.

(Loss)/Profit attributable to owners of the Company Loss attributable to owners of the Company amounting to RMB29,983 million for the first half of 2020, representing a decrease of 205.5% from the profit attributable to owners of the Company of RMB28,423 million for the first half of 2019.

(2) Segment Results

Exploration and Production

Revenue The revenue of the Exploration and Production segment for the first half of 2020 was RMB255,450 million, representing a decrease of 21.7% from RMB326,339 million for the first half of 2019. This was primarily due to the decrease in the sales volume, and also a reduction in the prices, of oil and gas products such as crude oil and natural gas. For the first half of 2020, the oil imported from countries such as Russia and Kazakhstan by the Group amounted to 17.98 million tons, representing a decrease of 9.4% from 19.85 million tons for the first half of 2019. The revenue from the sales of imported oil from Russia and Kazakhstan was RMB39,830 million for the first half of 2020, representing a decrease of 39.5% from RMB65,813 million for the first half of 2019. In the first half of 2020, the average realised crude oil price was US$39.02 per barrel, representing a decrease of 37.9% from US$62.85 per barrel for the first half of 2019, and the average realised crude oil price decreased by 35.6% as compared to the same period of last year after excluding the effects of exchange rates.

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Operating Expenses Operating expenses of the Exploration and Production segment decreased by 10.1% to RMB245,099 million for the first half of 2020 from RMB272,711 million for the first half of 2019. This was primarily due to the decrease in the purchase costs, employee remuneration and exploration expenses. The procurement cost from importing oil from countries such as Russia and Kazakhstan was RMB43,906 million for the first half of 2020, representing a decrease of 32.0% from RMB64,523 million for the first half of 2019.

The Group continued to tighten cost controls. In the first half of 2020, the oil and gas lifting cost was US$9.64 per barrel, representing a decrease of 14.0% or US$1.57 per barrel from US$11.21 per barrel for the same period of last year.

Profit from Operations In the first half of 2020, by optimising the deployment of exploration activities, the Group’s domestic exploration and production business focused on sizable and profitable exploration and enhanced its integrated administration covering matters in respect of investment, reserve and costs, which resulted in achieving an increase in profitable reserve. While the Group insisted on attaching equal importance to both quantity and efficiency and placed special focus on sizeable and profitable production, it also strictly controlled its operating costs and used its best efforts to increase its production volume to achieve profitability. Through better coordinating the measures in connection with the prevention and control of COVID-19 and the production and operation, the Group’s overseas exploration and production business was able to steadily roll out the development of new projects, rationalise asset structure on a continuous basis, adopt a range of measures to improve quality and profitability, using its best effort to control or even reduce the investment expenditure, cost and expenses, which in turn strengthened the management over the security of funds and effectively prevented operation risks. However, due to the impact of sharp drop in oil and gas prices, in the first half of 2020, the Exploration and Production segment achieved an operating profit of RMB10,351 million, representing a decrease of 80.7% in operating profit as compared with RMB53,628 million for the first half of 2019.

Refining and Chemicals

Revenue The revenue of the Refining and Chemicals segment for the first half of 2020 was RMB369,811 million, representing a decrease of 24.0% from RMB486,366 million for the first half of 2019. This was primarily due to the reduction in the sales volumes, and also a drop in the price, of refining and chemical products, especially gasoline, diesel and kerosene.

Operating Expenses Operating expenses of the Refining and Chemicals segment decreased by 20.8% to RMB380,351 million for the first half of 2020 from RMB479,996 million for the first half of 2019. This was primarily due to the decrease in the procurement costs of crude oil and raw material oil, and also a reduction in taxes, labour costs together with selling and administrative expenses.

In the first half of 2020, the cash processing cost of refineries was RMB161.43 yuan per ton, representing a decrease of 1.2% as compared with RMB163.47 yuan per ton for the same period of last year. This was primarily due to the combined effects of the decrease in power cost, ancillary material costs and labour cost together with the reduction in processing volume.

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(Loss)/Profit from Operations In the first half of 2020, the Refining and Chemicals segment actively responded to unfavourable conditions arising from a drop-in market demand and a decrease in the facility loads and devoted its full efforts to optimize production operations. Based on the market-oriented approach, the Group took a firm stance in implementing measures relating to the reduction of refinery operation and the increase in chemical operation, and also closely linked production with sales to create synergies. It adjusted in a timely manner its product structure and strived to increase its production of profitable products, while improving the direct selling rate of chemical products. Nevertheless, due to the impact of the decrease in the domestic market demand, the price drop, the decline in profit from inventories and other factors, the Refining and Chemicals segment recorded a loss from operations of RMB10,540 million for the first half of 2020, representing a decrease of RMB16,910 million as compared with the profit from operations of RMB6,370 million for the first half of 2019, among which, the refining operations recorded a loss from operations of RMB13,644 million, representing a decrease of RMB16,424 million as compared with the profit from operations of RMB2,780 million for the same period of last year; the chemical operations generated an operating profit of RMB3,104 million, representing a decrease of 13.5% as compared with RMB3,590 million for the same period of last year.

Note:

In 2020, in order to optimize production, operation and management, the Group shifted PetroChina Fuel Oil Company Limited and PetroChina Lubricant Company from the Marketing segment to the Refining and Chemicals segment. Accordingly, the comparative data in respect of Refining and Chemicals segment and also the Marketing segment against those of the same period of last year have been restated, which implies that the two companies mentioned above shall be deemed to have been incorporated in the Refining and Chemical segment since the earliest financial reporting period presented.

Marketing

Revenue The revenue of the Marketing segment for the first half of 2020 was RMB749,203 million, representing a decrease of 23.8% as compared with RMB982,656 million for the first half of 2019, which was primarily due to the decrease in both the sales volume and price of refined oil in China.

Operating Expenses Operating expenses of the Marketing segment decreased by 22.4% to RMB762,095 million for the first half of 2020 from RMB982,162 million for the first half of 2019. This was primarily due to a decrease in the expenditure relating to the purchase of refined products from external suppliers.

(Loss)/Profit from Operations In the first half of 2020, the Marketing segment intensified the efforts in market analysis and research and adjusted marketing tactics in a flexible manner. By capturing the favourable timing for resumption of work and production, the Group used its best endeavour to increase the sales volume and output in key areas, to increase the retail sale of refined products, strengthened refined marketing and precision marketing and improved the price realization rate. Based on the profitability projection, the Group strengthened the interaction between the domestic and international markets, coordinated the optimisation of the refined oil export plan, which led to an improvement in the overall profitability of the value chain. However, due to the impact of the decline in demand prevailing in the domestic refined oil market, the decrease in profit from inventories and other factors, in the first half of 2020, the Marketing segment recorded a loss from operations of RMB12,892 million, representing a decrease of RMB13,386 million from the profit from operations of RMB494 million for the first half of 2019.

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Natural Gas and Pipeline

Revenue The revenue of the Natural Gas and Pipeline segment decreased by 8.6% to RMB179,341 million for the first half of 2020 from RMB196,163 million for the first half of 2019, which was primarily due to the drop in the sales volume and also the decrease in sales price of natural gas domestically.

Operating Expenses Operating expenses of the Natural Gas and Pipeline segment decreased by 7.2% to RMB164,969 million for the first half of 2020 from RMB177,861 million for the first half of 2019. This was primarily due to the reduction in the expenditure for purchasing gas.

Profit from Operations In the first half of 2020, the Natural Gas and Pipeline segment continued to optimize its gas resource structure and strived to lower its procurement costs. Through proactively developing the profitable markets and further optimizing the customer structure, the Group intensively enhanced its sales capability in respect of retail sales to end users. Due to the impact brought by the decrease in both the sales volume and price of natural gas within China and other factors, in the first half of 2020, the Natural Gas and Pipeline segment achieved an operating profit of RMB14,372 million, representing a decrease of 21.5% from RMB18,302 million for the first half of 2019, of which the sales volume of imported natural gas and LNG recorded a net loss of RMB11,832 million, representing an increase in loss of RMB631 million as compared with the same period of last year.

In the first half of 2020, the Group’s international operations^(note)^ achieved a revenue of RMB368,632 million, accounting for 39.7% of the total revenue of the Group. Profit before income tax expense of overseas operations was RMB2,380 million.

Note: The four operating segments of the Group consist of Exploration and Production, Refining and Chemicals, Marketing as well as Natural Gas and Pipeline. International operations do not constitute a separate operating segment of the Group. The financial data of international operations is included in the financial data of the respective operating segments mentioned above.

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(3) Assets, Liabilities and Equity

The following table sets out the key items in the consolidated balance sheet of the Group:

	As at June<br>30, 2020		As at December<br>31, 2019		Percentage of Change
	RMB million		RMB million		%
Total assets		2,677,347		2,732,910		(2.0	)
Current assets		472,127		466,913		1.1
Non-current assets		2,205,220		2,265,997		(2.7	)
Total liabilities		1,276,952		1,288,605		(0.9	)
Current liabilities		664,123		661,419		0.4
Non-current liabilities		612,829		627,186		(2.3	)
Equity attributable to owners of the Company		1,188,747		1,230,156		(3.4	)
Share capital		183,021		183,021		—
Reserves		304,674		304,011		0.2
Retained earnings		701,052		743,124		(5.7	)
Total equity		1,400,395		1,444,305		(3.0	)

Total assets amounted to RMB2,677,347 million, representing a decrease of 2.0% as compared with that as at the end of 2019, of which:

Current assets amounted to RMB472,127 million, representing an increase of 1.1% from that as at the end of 2019, primarily due to the increase in monetary assets and prepayments.

Non-current assets amounted to RMB2,205,220 million, representing a decrease of 2.7% from that as at the end of 2019, primarily due to the asset structure optimization initiatives of the Group, which resulted in the disposal of low-profitability or unprofitable assets and the reduction of property, plant and equipment and also the decrease in the right-of-use assets.

Total liabilities amounted to RMB1,276,952 million, representing a decrease of 0.9% from that as at the end of 2019, of which:

Current liabilities amounted to RMB664,123 million, representing an increase of 0.4% from that as at the end of 2019, primarily due to the increase of short-term borrowings and contract liabilities.

Non-current liabilities amounted to RMB612,829 million, representing a decrease of 2.3% from that as at the end of 2019, primarily due to the decrease in lease liabilities and asset retirement obligations.

Equity attributable to owners of the Company amounted to RMB1,188,747 million, representing a decrease of 3.4% from that as at the end of 2019, primarily due to the decrease in retained earnings.

(4) Cash Flows

As at June 30, 2020, the primary sources of funds of the Group were cash from operating activities and short-term and long-term borrowings. The funds of the Group were mainly used for operating activities, capital expenditures, repayment of short-term and long-term borrowings and distribution of dividends to the owners of the Company.

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The table below sets out the cash flows of the Group for the first half of 2020 and 2019, respectively, and the amount of cash and cash equivalents as at the end of each period:

	Six months ended June 30
	2020			2019
	RMB million			RMB million
Net cash flows from operating activities		79,080			134,425
Net cash flows used for investing activities		(110,776	)		(129,973	)
Net cash flows from financing activities		34,629			33
Translation of foreign currency		993			201
Cash and cash equivalents at end of the period		90,335			90,640

Net Cash Flows From Operating Activities

The net cash flows of the Group from operating activities for the first half of 2020 amounted to RMB79,080 million, representing a decrease of 41.2% from the net cash flows of RMB134,425 million for the first half of 2019. This was mainly due to a significant decrease in profit over the same period last year. As at June 30, 2020, the Group had cash and cash equivalents of RMB90,335 million, of which, approximately 55.0% were denominated in Renminbi, approximately 37.6% were denominated in US Dollars, approximately 6.2% were denominated in Hong Kong Dollars and approximately 1.2% were denominated in other currencies.

Net Cash Flows Used For Investing Activities

The net cash flows of the Group used for investing activities for the first half of 2020 amounted to RMB110,776 million, representing a decrease of 14.8% from RMB129,973 million for the first half of 2019. This was primarily due to the decrease in the capital expenditures of the Group in the first half of 2020 as compared with the same period of last year.

Net Cash Flows From Financing Activities

The net cash flows of the Group from financing activities for the first half of 2020 amounted to RMB34,629 million, representing an increase of RMB34,596 million from RMB33 million as recorded in the first half of 2019, primarily due to the increase of new long-term and short-term borrowings of the Group in the first half of 2020 as compared with the same period of last year.

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The net borrowings of the Group as at June 30, 2020 and December 31, 2019, respectively, were as follows:

	As at June 30, 2020		As at December 31, 2019
	RMB million		RMB million
Short-term borrowings (including current portion of long-term borrowings)		213,528		175,840
Long-term borrowings		314,963		290,882
Total borrowings		528,491		466,722
Less: Cash and cash equivalents		90,335		86,409
Net borrowings		438,156		380,313

The following table sets out the remaining contractual maturities of borrowings as at June 30, 2020 and December 31, 2019, respectively, which are based on contractual undiscounted cash flows including principal and interest, and the earliest contractual maturity date:

	As at June 30, 2020		As at December 31, 2019
	RMB million		RMB million
Within 1 year		226,754		188,771
Between 1 and 2 years		65,320		30,090
Between 2 and 5 years		243,012		253,918
After 5 years		33,315		31,576
	568,401		504,355

Of the total borrowings of the Group as at June 30, 2020, approximately 56.6% were fixed-rate loans and approximately 43.4% were floating-rate loans; approximately 75.0% were denominated in Renminbi, approximately 22.7% were denominated in US Dollars and approximately 2.3% were denominated in other currencies.

As at June 30, 2020, the gearing ratio of the Group (gearing ratio = interest-bearing debts/(interest-bearing debts + total equity)) was 27.4% (December 31, 2019: 24.4%).

(5) Capital Expenditures

For the first half of 2020, the Group adopted a dynamic approach in optimizing the adjustment towards its scale of investment and also its investment structure, and coordinated the promotion efforts in respect of the construction of key projects based on the change in oil price, operation results and cash flow and, as such, its capital expenditures amounted to RMB74,761 million, representing a decrease of 11.0% from RMB83,954 million for the first half of 2019, which was mainly due to an enhancement in the management and control over investments. The estimated capital expenditure for the whole year of 2020 is RMB228,500 million, representing a decrease of 23.0% from RMB296,776 million for the year of 2019. The following table sets out the capital expenditures incurred by the Group for the first half of 2020 and for the first half of 2019 and the estimated capital expenditures for each of the business segments of the Group for the whole year of 2020.

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	First half of 2020				First half of 2019				Estimates for 2020
	RMB million		(%)		RMB million		(%)		RMB million		(%)
Exploration and Production*		54,366		72.72		69,383		82.64		180,200		78.86
Refining and Chemicals		6,418		8.58		5,948		7.09		23,900		10.46
Marketing		6,491		8.68		3,266		3.89		9,400		4.11
Natural Gas and Pipeline		7,279		9.74		5,083		6.05		14,000		6.13
Head Office and Other		207		0.28		274		0.33		1,000		0.44
Total		74,761		100.00		83,954		100.00		228,500		100.00
*	If investments related to geological and geophysical exploration expenses were included, the capital<br>expenditures and investments for the Exploration and Production segment for the first half of 2020 and the first half of 2019, and the estimates for the same for the year of 2020 would be RMB60,205 million, RMB75,383 million and<br>RMB192,200 million, respectively.
---	---

Exploration and Production

Capital expenditures for the Exploration and Production segment of the Group amounted to RMB54,366 million for the first half of 2020. The expenditures were primarily used for the continuous exploration and development of key basins such as Songliao, Ordos, Tarim, Sichuan and Bohai Bay, for devoting greater efforts in the development of unconventional resources such as shale gas and for continuing to better the overseas operation of the existing projects in the Middle East, Central Asia, America, Asia Pacific and other cooperation areas so as to ensure development in a quality and profitable manner.

The Group anticipates that capital expenditures for the Exploration and Production segment throughout 2020 would amount to RMB180,200 million.

Refining and Chemicals

Capital expenditures for the Refining and Chemicals segment of the Group amounted to RMB6,418 million for the first half of 2020, primarily used for the construction of integration project of refining and chemicals of Guangdong Petrochemical, Daqing petrochemical structure adjustment, projects in relation to the ethylene production out of ethane, including those in Changqing and Tarim, and other large-scale refining and chemical projects, as well as refining and chemicals transformation and upgrading projects.

The Group anticipates that capital expenditures for the Refining and Chemicals segment throughout 2020 will amount to RMB23,900 million.

Marketing

Capital expenditures for the Marketing segment of the Group amounted to RMB6,491 million for the first half of 2020, which were used primarily for the construction and expansion of the domestic end sales networks for refined products markets, and the construction of overseas oil and gas storage, transportation and sales facilities.

The Group anticipates that capital expenditures for the Marketing segment throughout 2020 will amount to RMB9,400 million.

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Natural Gas and Pipeline

Capital expenditures for the Natural Gas and Pipeline segment of the Group amounted to RMB7,279 million for the first half of 2020, which were primarily used for the construction of key natural gas transmission pipelines such as the China-Russia East-route Natural Gas Pipeline Project, Shenzhen LNG and other facilities for peak shaving and storage and transportation as well as the construction of gas branches and sales terminals.

The Group anticipates that capital expenditures for the Natural Gas and Pipeline segment throughout 2020 will amount to RMB14,000 million.

Head Office and Other

Capital expenditures for the Head Office and Other segment for the first half of 2020 amounted to RMB207 million, which were primarily used for improvements of scientific research facilities and construction of the IT system.

The Group anticipates that capital expenditures for the Head Office and Other segment throughout 2020 will amount to RMB1,000 million.

3.1.4 Business Prospects forthe Second Half of the Year

In the second half of 2020, the situations of global prevention and control of COVID-19 are still severe, the cycles of international industrial chain and supply chain are obstructed, and the recovery of world economy is facing greater risks and challenges. The international crude oil market is expected to remain in excess of demand, and the rebound of international oil prices is still facing great uncertainty. China’s economic development is expected to remain generally stable, but with greater instability and uncertainty. The excessive domestic supply of refined oil is intensifying, the growth of demand for natural gas is falling, and the market players in the whole industrial chain of oil and gas are more diverse with the competition being more intense. Faced by such complex and severe situations, the Group will maintain the strategic strength, strengthen the bottom-line thinking, adhere to high-quality development, while sticking to law-abiding and compliant corporate governance following the governance principles of professional development, market-oriented operation, lean management and integrated planning. We will also continue to further implement the construction of the oil and gas production, supply, storage and sales system, deepen reform and innovation, pay more attention to green and low-carbon development, digital transformation, intelligent development and value creation to promote quality and profitability improvement, and spare no efforts to fulfill annual production and operation objectives and tasks.

In respect of exploration and production business, the Group will adhere to the strategy of stabilizing oil and improving gas exploration and production, promote the profitable exploration and development. We will effectively implement oil and gas exploration (in particular risk exploration), deepen comprehensive geological research and earthquake preparedness in key basins and fields, speed up the implementation of the deployed exploration of risk wells, and strive to achieve strategic discovery and breakthrough. Focusing on oil and gas exploration areas including Chang 7 shale oil, central Sichuan paleo-uplift, Ordovician and Kuqa piedmont of Tarim Basin and Mahu, we will highlight centralized large-scale and profitable exploration to consolidate the resource foundation for sustainable development of the Company. We will adhere to profitable development, stabilize the production of old oil and gas fields and speed up profitable production in new oil and gas fields. By deepening fine water injection and strengthening the management of long-time shut-down wells and profitability improvement of low-yield wells, while reinforcing the major development experiments on enhancing recovery rate at Sulige and Keshen, we effectively focus on the scale and concentrated production building of key projects.

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In respect of refining and chemicals business, the Group will adhere to structure adjustment and continue to deepen business transformation and upgrading. We will strengthen our control and management over production, allocate more resources to enterprises of sound operating results, and properly manage unplanned equipment shutdown and abnormal fluctuations so as to ensure safe, stable and long-term optimized operation and strive to increase income and enhance profitability. We will uphold the idea of molecular oil refining, optimize cost-effective oil types, select appropriate process route and realize efficient utilization of resources. We will adhere to the strategy of reducing oil and increasing chemicals production, strictly control the output of gasoline and diesel, flexibly adjust the proportion of diesel to gasoline according to the market demand and increase the products of profitability and distinctive features including high-grade gasoline, lubricating base oil and low-sulfur marine fuel oil. We will also increase the load of chemical equipment of ethylene and aromatics, develop and produce profitable and marketable new chemical products and special materials and ensure the stable supply of medical materials. We will strengthen chemical sales channels and customer management and improve the percentage of direct sales and price realization rate. We will strengthen the overall planning for the supply, production, research and marketing of oil-refining by-products and lubricating oil, promote their integrated and coordinated development together with the distribution system of chemical products to respond to market competition as on combined business. We will promote the construction of key projects including Guangdong Petrochemical.

In respect of sales of refined products, the Group will focus on both quantity and efficiency, strive to improve the quality of refined oil in the market. We will actively respond to market changes and oil price fluctuations, strengthen regional coordination, achieve mutual facilitation between oil and non-oil products, refine marketing practices, emphasize the solution of securing room for maneuver, market expansion, increase the sales volume of retail and increase profitability to ensure integration of sales volume, market shares and profitability. It is imperative to give full play to our overall advantages, vigorously promote the development of high-quality network, solidify the markets within business zones, expand the markets outside the business zones, expand the terminal markets adopting such methods as joint venture lease, cooperative operation and combination of production and finance to and make our best endeavor to increase the sales volume of retail. We will optimize and adjust marketing tactics, establish benefit evaluation models by variety, region, time period and customer type to promote differentiated and precise marketing, and improve the price realization rate and profitability level. We will further promote the governance of stations of low sales volume and profitability and cultivation of stations of high sales volume and profitability and enhance the capability of single station to generate profits and customer service level. We will deeply tap the potential of non-oil business and solidify the situation of achieving operating profits from different channels.

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In respect of natural gas and pipeline operations, the Group will adhere to the overall optimization and make every effort to increase the sales and profitability of natural gas. We will optimize the allocation of resources, make overall plans for proprietary production and import, long-term trade and spot resources, maintain the balance among production imports and sales, to ensure the smoothness of sales channel and safe operation of industrial chains. We will comprehensively enhance marketing capabilities, adhere to the principle of market orientation and the supremacy of customers, deepen “labelling” sales, plan wholesale and retail as a whole, go all out to explore the market, accurately implement policies for different regions and users, solidify market shares to achieve the increase of both quantity and profitability. We will optimize sales structure, promote the development of diversified terminal markets, steadily participate in natural gas power generation and distributed energy projects, increase the sales of LNG and increase the proportion of direct supply and terminal retail to improve sales and profit.

In respect of international operations, the Group will stick to high quality and profitability operation and strive to improve its international operation capacity and level. We adhere to profitable exploration and focus on guaranteeing the risk exploration in the strategic alternative areas and zones where the Group plays a leading role, optimizing rolling exploration in mature areas, solidly implementing reserves evaluation and solidifying resources foundation. We will emphasize fine development, dynamically adjust project production according to oil price, project phase and contract mode, continuously make fine water injection and take measures for increasing production, improve capacity construction as planned and close blocks with no marginal contribution. We will strengthen the development of new projects and strive to find quality resources. We will strengthen risk control and effectively prevent policy risks of the exchange rate and tax rate in the country with resources. In respect of international trade, we will conscientiously cut costs and enhance profitability through reducing resource procurement costs, optimizing refined oil exports to comprehensively improve services. We will also adopt innovative trade methods, strictly control transaction risks and strive to improve bargaining power and cross-market transaction level.

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3.2 Other Financial Information

3.2.1 Principal Operations by Segment under CAS

	Income from<br>principal<br>operations for<br>the first half of<br>2020			Cost of<br>principal<br>operations<br>for the first<br>half of 2020			Grossmargin*		Changes inincome fromprincipaloperations overthe same periodof the precedingyear			Changes in<br>cost of<br>principal<br>operations<br>over the same<br>period of the<br>precedingyear			Increase/<br>(decrease)<br>in gross<br>margin
	RMB million			RMB million			(%)		(%)			(%)			(Percentage <br>points)
Exploration and Production		247,833			208,119			11.3		(21.9	)		(9.6	)		(11.1	)
Refining and Chemicals		366,807			277,062			1.8		(24.0	)		(23.7	)		(3.8	)
Marketing		737,540			722,120			2.0		(24.1	)		(23.6	)		(0.6	)
Natural Gas and Pipeline		176,881			161,338			8.6		(8.7	)		(8.0	)		(0.7	)
Head Office and Other		83			67			—		23.9			42.6			—
Inter-segment Elimination		(623,971	)		(623,573	)		—		—			—			—
Total		905,173			745,133			7.1		(22.7	)		(19.1	)		(4.9	)
*	Gross margin = Profit from principal operations / Income from principal operations
---	---

3.2.2 Principal Operations by Region under CAS

	First half of 2020		First half of 2019		Changes over<br>the same period of the<br>preceding year
Operating income	RMB million		RMB million		(%)
Mainland China		560,413		711,359		(21.2	)
Other		368,632		484,900		(24.0	)
Total		929,045		1,196,259		(22.3	)

3.2.3 Final Dividend for the Year Ended December 31, 2019

The final dividend in respect of 2019 of RMB0.06601 yuan per share (inclusive of applicable tax), amounting to a total of RMB12,081 million, was approved by the shareholders at the 2019 annual general meeting of the Company on June 11, 2020 and was paid on June 30, 2020 (for A shares) and July 31, 2020 (for H shares), respectively.

3.2.4 Interim Dividend for 2020 and Closure of Register of Members

The Board was authorised by the shareholders to approve the distribution of an interim dividend for 2020 at the 2019 annual general meeting of the Company on June 11, 2020. Affected by the outbreak of COIVD-19 and low oil price, the Company suffered substantial loss in the first half of 2020. Despite of difficulties, the Company still attaches great importance to shareholders’ returns. In overall consideration of the situations such as the operating results, financial position, cash flow and expected gains from pipeline assets restructuring of the Company, to provide returns to the shareholders, the Board has resolved to declare an interim dividend of RMB0.08742 yuan per share (inclusive of applicable tax) for 2020 on the basis of a total of 183,020,977,818 shares of the Company as at June 30, 2020. The total amount of the interim dividends payable is RMB16,000 million.

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The interim dividend of the Company will be paid to shareholders whose names appear on the register of members of the Company at the close of trading on September 21, 2020. The register of members of H shares will be closed from September 16, 2020 to September 21, 2020 (both days inclusive) during which period no transfer of H shares will be registered. In order to qualify for the interim dividend, holders of H shares must lodge all transfer documents together with the relevant share certificates at Hong Kong Registrars Limited on or before 4:30 p.m., September 15, 2020. Holders of A shares whose names appear on the register of members of the Company maintained at China Securities Depository and Clearing Corporation Limited (“CSDC”) at the close of trading on the Shanghai Stock Exchange in the afternoon of September 21, 2020 will be eligible for the interim dividend.

In accordance with the relevant provisions of the Articles of Association of PetroChina Company Limited and relevant laws and regulations, dividends payable to the shareholders of the Company shall be declared in Renminbi. Dividends payable to the holders of A shares shall be paid in Renminbi, and for the A shares of the Company listed on the Shanghai Stock Exchange and invested by the investors through the Hong Kong Stock Exchange, dividends shall be paid in Renminbi to the accounts of the nominal shareholders through CSDC. Save for the H shares of the Company listed on the Hong Kong Stock Exchange and invested by the investors through the Shanghai Stock Exchange and Shenzhen Stock Exchange (the “H Shares under the Southbound Trading Link”), dividends payable to the holders of H shares shall be paid in Hong Kong Dollars. The applicable exchange rate shall be the average of the medium exchange rate for Renminbi to Hong Kong Dollar as announced by the People’s Bank of China for the week prior to the declaration of the dividends by the Board. Dividends payable to the holders of H Shares under the Southbound Trading Link shall be paid in Renminbi. In accordance with the Agreement on Payment of Cash Dividends on the H Shares under the Southbound Trading Link (《港股通 H 股股票現金紅利派發協議》) between the Company and CSDC, CSDC will receive the dividends payable by the Company to holders of the H Shares under the Southbound Trading Link as a nominal holder of the H Shares under the Southbound Trading Link on behalf of investors and assist the payment of dividends on the H Shares under the Southbound Trading Link to investors thereof. The average of the medium exchange rate for Renminbi to Hong Kong Dollar as announced by the People’s Bank of China for the week prior to the declaration of the 2020 interim dividend by the Board is RMB0.89269 to 1.00 Hong Kong Dollar. Accordingly, the interim dividend will be 0.09793 Hong Kong Dollar per H share (inclusive of applicable tax).

The Company has appointed Bank of China (Hong Kong) Trustees Limited as the receiving agent in Hong Kong (the “Receiving Agent”), and will pay the declared interim dividend to the Receiving Agent for its onward payment to the holders of H shares. The interim dividend will be paid by the Receiving Agent around October 30, 2020 to the holders of H shares by ordinary mail at their own risks.

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According to the Law on Corporate Income Tax of the People’s Republic of China (《中華人民共和國企業所得稅法》) and the relevant implementing rules which came into effect on January 1, 2008 and was amended on February 24, 2017 and December 29, 2018, the Company is required to withhold corporate income tax at the rate of 10% before distributing dividends to non-resident enterprise shareholders whose names appear on the H share register of members of the Company. Any H shares registered in the name of non-individual shareholders, including HKSCC Nominees Limited, other nominees, trustees or other groups and organisations, will be treated as being held by non-resident enterprise shareholders and therefore will be subject to the withholding of the corporate income tax. Any holders of H shares wishing to change their shareholder status should consult their agents or trust institutions on the relevant procedures. The Company will withhold and pay the corporate income tax strictly in accordance with the relevant laws or requirements of the relevant governmental departments based on the information that will have been registered on the Company’s H share register of members on September 21, 2020.

According to the Notice on Issues Concerning the Collection and Management of Individual Income Tax after the Abolishment of Guo Shui Fa [1993] No.045 promulgated by the State Taxation Administration of the PRC (Guo Shui Han [2011] No.348) （《關於國稅發〔1993〕045 號文件廢止後有關個人所得稅征管問題的通知》（國稅函〔2011〕348 號））, the Company is required to withhold and pay the individual income tax for individual holders of H shares and individual holders of H shares are entitled to certain tax preferential treatments according to the tax agreements between those countries where the individual holders of H shares are resident and China and the provisions in respect of tax arrangements between mainland China and Hong Kong (Macau). The Company will withhold and pay the individual income tax at the tax rate of 10% on behalf of the individual H shareholders who are Hong Kong residents, Macau residents or residents of those countries having agreements with China for individual income tax rate in respect of dividend of 10%. For individual H shareholders who are residents of those countries having agreements with China for individual income tax rates in respect of dividend of lower than 10%, the Company would make applications on their behalf to seek entitlement of the relevant agreed preferential treatments pursuant to the Circular on Issuing Administrative Measures on Preferential Treatment Entitled by Non-residents Taxpayers under Treaties (SAT Circular [2019] No.35) (《關於發布<非居民納稅人享受協定待遇管理辦法>的公告》(國家稅務總局公告 2019 年第35 號)) issued by the State Administration of Taxation. For individual H shareholders who are residents of those countries having agreements with China for individual income tax rates in respect of dividend of higher than 10% but lower than 20%, the Company would withhold the individual income tax at the agreed-upon effective tax rate. For individual H shareholders who are residents of those countries without any taxation agreements with China or having agreements with China for individual income tax in respect of dividend of 20% or other situations, the Company would withhold the individual income tax at a tax rate of 20%.

The Company will determine the country of domicile of the individual H shareholders based on the registered address as recorded in the register of members of the Company (the “Registered Address”) on September 21, 2020 and will accordingly withhold and pay the individual income tax. If the country of domicile of an individual H shareholder is not the same as the Registered Address, the individual H shareholder shall notify the share registrar of the Company’s H shares and provide relevant supporting documents on or before 4:30 p.m., September 15, 2020 (address: Hong Kong Registrars Limited, Shops 1712-1716, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong). If the individual H shareholder does not provide the relevant supporting documents to the share registrar of the Company’s H shares within the time period stated above, the Company will determine the country of domicile of the individual H shareholder based on the recorded Registered Address on September 21, 2020.

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The Company will not entertain any claims arising from and assumes no liability whatsoever in respect of any delay in, or inaccurate determination of, the status of the shareholders of the Company or any disputes over the withholding and payment of tax.

In accordance with the Notice of Ministry of Finance, the State Administration of Taxation, and the China Securities Regulatory Commission on Taxation Policies concerning the Pilot Program of an Interconnection Mechanism for Transactions in the Shanghai and Hong Kong Stock Markets (Cai Shui [2014] No.81) (《財政部、國家稅務總局、證監會關於滬港股票市場交易互聯互通机制試點有關稅收政策的通知》(財稅[2014]81號)), which became effective on November 17, 2014, and the Notice of the Ministry of Finance, the State Administration of Taxation, and the China Securities Regulatory Commission on Taxation Policies concerning the Pilot Program of an Interconnection Mechanism for Transactions in the Shenzhen and Hong Kong Stock Markets (Cai Shui [2016] No. 127) (《財政部、國家稅務總局、證監會關於深港股票市場交易互聯互通机制試點有關稅收政策的通知》(財稅[2016]127 號)), which became effective on December 5, 2016, with regard to the dividends obtained by individual mainland investors from investment in the H shares of the Company listed on the Hong Kong Stock Exchange through the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, the Company will withhold their individual income tax at the tax rate of 20% in accordance with the register of individual mainland investors provided by CSDC. As to the withholding tax having been paid abroad, an individual investor may file an application for tax credit with the competent tax authority of CSDC with an effective credit document. With respect to the dividends obtained by mainland securities investment funds from investment in the H shares of the Company listed on the Hong Kong Stock Exchange through the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, the Company will levy tax with reference to the provisions concerning the collection of tax on individual investors. The Company will not withhold income tax on dividends obtained by mainland enterprise investors, and mainland enterprise investors shall file their income tax returns and pay tax themselves instead.

With regard to the dividends obtained by the investors (including enterprises and individuals) from investment in the A shares of the Company listed on Shanghai Stock Exchange through the Hong Kong Stock Exchange, the Company will withhold income tax at the tax rate of 10%, and file tax withholding returns with the competent tax authority. Where any Hong Kong investor is a tax resident of a foreign country and the rate of income tax on dividends is less than 10%, as provided for in the tax treaty between the country and the PRC, the enterprise or individual may directly, or entrust a withholding agent to, file an application for the tax treatment under the tax treaty with the competent tax authority of the Company. Upon review, the competent tax authority will refund tax based on the difference between the amount of tax having been collected and the amount of tax payable calculated at the tax rate as set out in the tax treaty.

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4 Significant Events

4.1 Impact of the Outbreak of COVID-19

January 2020 witnessed an outbreak of the COVID-19, which severely disrupted the global economy and China is set to take its toll on the Chinese economy. The Group was also significantly affected by the COVID-19, such that there has been a drastic downfall in the demand for refined oil and natural gas in the market, while the prices of crude and refined oil and natural gas have been significantly decreased, and the operation and management of oil and gas industrial chain became more complicated and difficult. The Group actively set up an anti-COVID-19 steering team to arrange in time for various steps to be taken in response, safeguarding the health of its employees in addition to safe and well-ordered production and operation, implementing special action on improving quality and enhancing profitability, controlling the capital expenditures and costs, optimizing debt settlement structure, actively promoting sales and improving profitability, and accelerating the development of domestic natural gas business, thus trying to minimize the loss arising therefrom and ensure sustainable business development in the long run.

Such matter does not affect the continuity of the business or the stability of management of the Group but had adverse effect on the sustainable and healthy development and operating results of the Group.

4.2 Significant Drop of International Crude Oil Prices

In the first half of 2020, affected by multiple factors, the prices of international crude oil experienced a sharp drop that was rare in history. The average prices of North Sea Brent crude oil and WTI crude oil were US$39.95 per barrel and US$36.59 per barrel, respectively, representing a decrease of 39.4% and 36.3% year-on-year. The Group actively takes measures to deal with the risks of crude oil price fluctuations, and strives to maintain stable and healthy development of production and operations.

Such matter does not affect the continuity of the business or the stability of management of the Group but had adverse effect on the operating results of the Group in the first half of the year.

4.3 Phased Adjustment of Price Policies of NaturalGas

On February 22, 2020, NDRC issued the Notice on Interim Reduction of Gas Cost for Non-resident Use to Support Resumption of Work and Production (Fa Gai Jia Ge [2020] No. 257) (《關於階段性降低非居民用氣成本支持企業復工複產的通知》 (發改價格〔2020〕 257 號)) (the “Notice”), pursuant to which, to act on the government’s guideline in respect of proper coordination of anti-COVID-19 efforts as well as economic and social development, the cost of non-resident use of gas will be lowered in the short term. Starting from the date thereof to June 30, 2020, off-season price policies shall be implemented in advance for the city gate prices of natural gas for non-resident use, greater price discounts shall be provided to industries, such as chemical fertilizers, which are deeply affected by the COVID-19, and the end-user prices of natural gas should reduce timely.

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Such matter does not affect the continuity of the business or the stability of management of the Group but had certain impact on the operating results of the Group in the first half of the year.

4.4 Continuous Implementation ofPreferential Corporate Income Tax Policies for the Western Development Program

On April 23, 2020, the Ministry of Finance, the State Taxation Administration and the NDRC jointly issued the Announcement on Continuing Corporate Income Tax Policies for Enterprises of the Western Development Program (Announcement of the Ministry of Finance, State Taxation Administration and NDRC [2020] No.23) (《關於延續西部大開發企業所得稅政策的公告》(財政部稅務總局國家發展改革委公告2020年第23號)), clarifying that from January 1, 2021 to December 31, 2030, the corporate income tax on enterprises established in encouraged industries in the western region will be levied at a reduced rate of 15%. The previous corporate income tax preferential policies for enterprises of the western development program will be extended to the end of 2030.

Such matter does not affect the continuity of the business or the stability of management of the Group and is conducive to the sustainable and healthy development of the Group and achieving sustainable and positive operating results.

4.5 Issuance by the State of the PolicyRelating to Special Funds for Clean Energy Development

On June 12, 2020, the Ministry of Finance issued the Interim Measures for the Management of Special Funds for Clean Energy Development (Caijian [2020] No. 190) (《清潔能源發展專項資金管理暫行辦法》(財建〔2020〕190號)), which stipulates that using special funds to reward and subsidize for the mining of unconventional natural gas such as coalbed methane (coal gas), shale gas, and tight gas in accordance with the distribution principle of “more production and more subsidy”. Subsidy will be awarded multi-step according to the excess degree for the exploitation and utilization of the previous year. If the amount of exploitation and utilization has not reached the amount of the previous year, the rewards and compensation fund will be deducted according to the degree of non-compliance; the excessive part of the unconventional natural gas produced during the heating season will be rewarded and subsidized in accordance with the principle of “more production in winter and more subsidy in winter” .

Such matter does not affect the continuity of the business or the stability of management of the Group and is conducive to the on the sustainable and healthy development and operating results of the Group.

4.6 Issuance by theState of the Export Tax Rebate Policy for Fuel Oil

On January 22, 2020, the Ministry of Finance, the State Taxation Administration , and the General Administration of Customs issued the Notice on the Policy on Implementing Export Tax Rebates for Bunkering Fuel Oil on International Shipping Vessels (No.4 Announcement of the Ministry of Finance, the State Taxation Administration, the General Administration of Customs in 2020) (《關於對國際航行船舶加注燃料油實行出口退稅政策的公告》(財政部稅務總局海關總署公告2020年第4號)), clarifying that refuelling international shipping vessels at coastal ports of China will be entitled to export tax rebate/exemption, with the VAT export rebate rate being 13%. According to the Provisional Regulations on Consumption Tax, taxable export consumption goods are exempt from consumption tax. The announcement was implemented as from February 1, 2020.

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Such matter does not affect the continuity of the business or the stability of management of the Group and is conducive to the sustainable and healthy development and operating results of the Group.

4.7 Regulating theCollection and Management of Taxes on Refined Oil

On June 12, 2020, NDRC and the National Energy Administration issued the Guiding Opinions on Effectively Guaranteeing Energy Security in 2020 (Fa Gai Yun Xing [2020] No.900) (《關於做好2020年能源安全保障工作的指導意見》(發改運行〔2020〕900號)), proposing to intensify the crackdown on smuggling, tax evasion and other illegal activities concerning refined oil products to maintain market order. For local oil refineries that are qualified for importing and using crude oil but have committed serious tax evasion or other violations, their qualification will be cancelled once their evasion or violation is verified by the law enforcement departments, so as to create a market environment of fair competition.

4.8 Events after the Balance Sheet Date

On July 23, 2020, the Company entered into the Framework Agreement on Transaction of Oil and Gas Pipeline Relevant Assets and 10 sub-agreements including the Equity Acquisition Agreement on PetroChina Pipeline Co., Ltd., and the Production and Operation Agreement with China Oil&Gas Pipeline Network Corporation (“PipeChina”). The Company proposes to sell its major oil & gas pipelines, certain gas storages, LNG terminals and initial oil and gas (including its equity interests) to PipeChina for 29.9% of its equity interests (equivalent to RMB149.5 billion) and corresponding cash consideration. Taking December 31, 2019 as the base date, the book value of the net assets disposed in this transaction attributable to owners of the Company is RMB222,880 million, and the appraised value is RMB268,705 million. The final transaction consideration is based on the appraised value, taking into account factors such as the profit and loss during the transition period, subsequent adjustment events and the timing of the delivery of initial oil and gas assets, which will be determined after audit. The transaction has been reviewed and approved by the 6th meeting of the Board of Directors of the Company of 2020 and the 4th meeting of the Supervisory Committee of the Company of 2020. Uncertainty remains since it is subject to the approval of relevant governmental authorities and the general meeting of the Company. Please refer to the announcements published by the Company on the website of Shanghai Stock Exchange numbered as Lin 2020-032 and Lin 2020-033 on July 23, 2020 and August 12, 2020, and the announcement published by the Company on the website of Hong Kong Stock Exchange for details.

Such matter does not affect the continuity of the business or the stability of management of the Group, it may have an impact on the operating results of the Group’s natural gas and pipeline business in the short term, and be conducive to the sustainable and healthy development of the Group and achieving sustainable and positive operating results in the long term.

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5 Financial Report

5.1 Explanation for Changes in Accounting Policy, Accounting Estimate or Recognition Policy as Compared with those for Last AccountingPeriod

☐Applicable ✓Not applicable

5.2 Content, Corrected Amount, Reason and Impact of Material Accounting Error

☐Applicable ✓ Not applicable

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5.3 The Balance Sheets and Income Statements, with Comparatives

5.3.1 Condensed financial statements prepared in accordance with IFRS

(1) Condensed Consolidated Statement of Comprehensive Income

	Notes			Six months ended June 30
				2020			2019
				RMB million			RMB million
REVENUE		(i	)		929,045			1,196,259
OPERATING EXPENSES
Purchases, services and other					(627,188	)		(796,103	)
Employee compensation costs					(60,746	)		(65,028	)
Exploration expenses, including exploratory dry holes					(10,569	)		(12,267	)
Depreciation, depletion and amortisation					(114,388	)		(108,607	)
Selling, general and administrative expenses					(29,883	)		(32,695	)
Taxes other than income taxes					(98,931	)		(113,088	)
Other income, net					6,617			2,192
TOTAL OPERATING EXPENSES					(935,088	)		(1,125,596	)
(LOSS)/PROFIT FROM OPERATIONS					(6,043	)		70,663
FINANCE COSTS
Exchange gain					6,409			4,907
Exchange loss					(5,966	)		(5,197	)
Interest income					1,396			1,893
Interest expense					(14,886	)		(15,197	)
TOTAL NET FINANCE COSTS					(13,047	)		(13,594	)
SHARE OF PROFIT OF ASSOCIATES AND JOINT VENTURES					570			4,707
(LOSS)/PROFIT BEFORE INCOME TAX EXPENSE	****	(ii	)		(18,520	)		61,776
INCOME TAX EXPENSE	****	(iii	)		(4,804	)		(22,638	)
(LOSS)/PROFIT FOR THE PERIOD					(23,324	)		39,138
OTHER COMPREHENSIVE INCOME
(i) Item that will not be reclassified to profit or loss
Fair value changes in equity investment measured at fair value through other comprehensive<br>income					(64	)		195
(ii) Items that are or may be reclassified subsequently to profit or loss
Currency translation differences					(444	)		2,475
Share of the other comprehensive income of associates and joint ventures accounted for using the<br>equity method					75			337
OTHER COMPREHENSIVE INCOME, NET OF TAX					(433	)		3,007
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD					(23,757	)		42,145
(LOSS)/PROFIT FOR THE PERIOD ATTRIBUTABLE TO:
Owners of the Company					(29,983	)		28,423
Non-controlling interests					6,659			10,715
					(23,324	)		39,138
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ATTRIBUTABLE TO:
Owners of the Company					(31,297	)		29,175
Non-controlling interests					7,540			12,970
					(23,757	)		42,145
BASIC AND DILUTED (LOSS)/EARNINGS PER SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY(RMB)	****	(iv	)		(0.164	)		0.155

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(2) Condensed Consolidated Statement of Financial Position

			June 30, 2020			December 31, 2019
			RMB million			RMB million
NON-CURRENT ASSETS
Property, plant and equipment				1,745,642			1,783,224
Investments in associates and joint ventures				104,010			102,073
Equity investment measured at fair value through other comprehensive income				818			922
Right-of-use assets				217,306			254,736
Intangible and other non-current assets				104,520			100,663
Deferred tax assets				29,391			24,259
Time deposits with maturities over one year				3,533			120
TOTAL NON-CURRENT ASSETS				2,205,220			2,265,997
CURRENT ASSETS
Inventories				175,298			181,921
Accounts receivable	(vi	)		63,550			64,184
Prepayments and other current assets				115,062			103,127
Notes receivable				4,468			7,016
Time deposits with maturities over three months but within one year				23,414			24,256
Cash and cash equivalents				90,335			86,409
TOTAL CURRENT ASSETS				472,127			466,913
CURRENT LIABILITIES
Accounts payable and accrued liabilities	(vii	)		307,786			328,314
Contract liabilities				92,376			82,490
Income taxes payable				3,393			7,564
Other taxes payable				40,877			59,818
Short-term borrowings				213,528			175,840
Lease liabilities				6,163			7,393
TOTAL CURRENT LIABILITIES				664,123			661,419
NET CURRENT LIABILITIES				(191,996	)		(194,506	)
TOTAL ASSETS LESS CURRENT LIABILITIES				2,013,224			2,071,491
EQUITY
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY:
Share capital				183,021			183,021
Retained earnings				701,052			743,124
Reserves				304,674			304,011
TOTAL EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY				1,188,747			1,230,156
NON-CONTROLLING INTERESTS				211,648			214,149
TOTAL EQUITY				1,400,395			1,444,305
NON-CURRENT LIABILITIES
Long-term borrowings				314,963			290,882
Asset retirement obligations				134,557			137,935
Lease liabilities				129,417			164,143
Deferred tax liabilities				22,051			21,411
Other long-term obligations				11,841			12,815
TOTAL NON-CURRENT LIABILITIES				612,829			627,186
TOTAL EQUITY AND NON-CURRENT LIABILITIES				2,013,224			2,071,491

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(3) Selected notes from the financial statements prepared in accordance with IFRS

(i) Revenue

Revenue mainly represents revenues from the sale of crude oil, natural gas, refined products and chemical products and from the transmission of crude oil, refined products and natural gas.

(ii) (Loss) / Profit Before Income Tax Expense

	Six months ended June 30
	2020			2019
	RMB million			RMB million
Items credited and charged in arriving at the profit before income tax<br><br><br>expense include:
Credited
Dividend income from equity investment measured at fair value through other comprehensive<br>income		18			9
Reversal of provision for impairment of receivables and credit impairment loss		16			292
Reversal of write down in inventories		39			62
Gain on disposal of investment in subsidiaries		393			125
Charged
Amortisation of intangible and other assets		2,342			2,212
Depreciation and impairment loss:
Owned Property, plant and equipment		104,962			99,245
Right-of-use<br>assets		7,084			7,111
Cost of inventories recognised as expense		759,624			932,676
Provision for impairment of receivables and credit impairment loss		367			67
Interest expense (i)		14,886			15,197
Loss on disposal of property, plant and equipment		2,283			1,692
Variable lease payments low-value and short-term lease<br>payment not included in the measurement of lease liabilities		1,508			1,522
Research and development expenses		6,775			7,687
Write down in inventories		8,187			846
(i): Interest expense
Interest expense		15,346			15,812
Include: Interest on lease liabilities		3,440			3,504
Less: Amount capitalised		(460	)		(615	)
		14,886			15,197

34 -

(iii) Income Tax Expense

	Six months ended June 30
	2020			2019
	RMB million			RMB million
Current taxes		8,838			25,789
Deferred taxes		(4,034	)		(3,151	)
		4,804			22,638

In accordance with the relevant PRC income tax rules and regulations, the PRC corporate income tax rate applicable to the Group is principally 25%. In accordance with the Circular jointly issued by the Ministry of Finance, the General Administration of Customs of the PRC and the State Taxation Administration on Issues Concerning Tax Policies for In-depth Implementation of Western Development Strategy (Cai Shui [2011] No.58), the corporate income tax on enterprises established in encouraged industries in the western region will be levied at a reduced rate of 15% from January 1, 2011 to December 31, 2020. Certain branches and subsidiaries of the Company in the western region obtained the approval for the use of the reduced corporate income tax rate of 15%. On April 23, 2020, the Ministry of Finance, the State Taxation Administration and the NDRC jointly issued the Announcement on Continuing Corporate Income Tax Policies for Enterprises of the Western Development Program (Announcement of the Ministry of Finance, State Taxation Administration and NDRC [2020] No.23). From January 1, 2021 to December 31, 2030, the corporate income tax on enterprises established in encouraged industries in the western region will be continuingly levied at a reduced rate of 15%.

(iv) Basic and Diluted Earnings Per Share

Basic and diluted earnings per share for the six months ended June 30, 2020 and June 30, 2019 have been computed by dividing profit attributable to owners of the Company by 183,021 million shares issued and outstanding during the period.

There are no potentially dilutive ordinary shares.

(v) Dividends

	Six months ended June 30
	2020		2019
	RMB million		RMB million
Interim dividends attributable to owners of the Company for 2020 (a)		16,000		—
Interim dividends attributable to owners of the Company for 2019 (c)		—		14,212
(a)	As authorised by shareholders in the Annual General Meeting on June 11, 2020, the Board of Directors<br>resolved to distribute interim dividends attributable to owners of the Company in respect of 2020 of RMB0.08742 yuan per share amounting to a total of RMB16,000 million on August 27, 2020. The dividends were not paid by the end of the<br>reporting period, and were not recognised as liability at the end of the reporting period, as they were declared after the date of the statement of financial position.
---	---
(b)	Final dividends attributable to owners of the Company in respect of 2019 of RMB0.06601 yuan per share amounting<br>to a total of RMB12,081 million were approved by the shareholders in the Annual General Meeting on June 11, 2020 and were paid on June 30, 2020 (A shares) and July 31, 2020 (H shares).
---	---

35 -

(c)	Interim dividends attributable to owners of the Company in respect of 2019 of RMB0.07765 yuan per share<br>amounting to a total of RMB14,212 million and were paid on September 24, 2019 (A shares) and November 1, 2019 (H shares).
(d)	Final dividends attributable to owners of the Company in respect of 2018 of RMB 0.09 yuan per share amounting<br>to a total of RMB 16,472 million were approved by the shareholders in the Annual General Meeting on June 13, 2019 and were paid on June 28, 2019 (A shares) and August 2, 2019 (H shares).
---	---

36 -

(vi) Accounts Receivable

	June 30, 2020			December 31, 2019
	RMB million			RMB million
Accounts receivable		66,339			66,615
Less: Provision for impairment of accounts receivable		(2,789	)		(2,431	)
		63,550			64,184

The aging analysis of accounts receivable (net of impairment of accounts receivable) based on the invoice date (or date of revenue recognition, if earlier), as of June 30, 2020 and December 31, 2019 is as follows:

	June 30, 2020		December 31, 2019
	RMB million		RMB million
Within 1 year		62,877		63,392
Between 1 and 2 years		393		419
Between 2 and 3 years		97		267
Over 3 years		183		106
		63,550		64,184

The Group offers its customers credit terms up to 180 days.

(vii) Accounts Payable and Accrued Liabilities

	June 30, 2020		December 31, 2019
	RMB million		RMB million
Trade payables		103,220		148,335
Salaries and welfare payable		11,483		10,169
Accrued expenses		21,679		10
Dividends payable		14,112		389
Interest payable		3,470		4,719
Construction fee and equipment cost payables		87,713		111,767
Other(i)		66,109		52,925
		307,786		328,314

(i) Other consists primarily of notes payable, insurance payable, etc.

The aging analysis of trade payables as of June 30, 2020 and December 31, 2019 is as follows:

	June 30, 2020		December 31, 2019
	RMB million		RMB million
Within 1 year		91,715		136,670
Between 1 and 2 years		3,353		5,472
Between 2 and 3 years		3,477		3,180
Over 3 years		4,675		3,013
		103,220		148,335

37 -

(viii) Segment Information

The Group is principally engaged in a broad range of petroleum related products, services and activities. The Group’s operating segments comprise: Exploration and Production, Refining and Chemicals, Marketing and Natural Gas and Pipeline.

The segment information for the operating segments for the six months ended June 30, 2020 and 2019 are as follows:

Six months ended<br><br><br>June 30, 2020	Exploration<br>and<br>Production			Refining<br>and<br>Chemicals			Marketing			NaturalGas andPipeline			Head<br>Office and<br>Other			Total
	RMB<br>million			RMB<br>million			RMB<br>million			RMB<br>million			RMB<br>million			RMB<br>million
Revenue		255,450			369,811			749,203			179,341			469			1,554,274
Less: intersegment sales		(212,621	)		(258,798	)		(136,436	)		(17,285	)		(89	)		(625,229	)
Revenue from external customers		42,829			111,013			612,767			162,056			380			929,045
Depreciation, depletion and amortisation		(81,813	)		(11,813	)		(8,664	)		(11,263	)		(835	)		(114,388	)
Profit/(loss) from operations		10,351			(10,540	)		(12,892	)		14,372			(7,334	)		(6,043	)
Six months ended<br><br><br>June 30, 2019	Exploration<br>and<br>Production			Refining<br>and<br>Chemicals			Marketing			NaturalGas andPipeline			Head<br>Office and<br>Other			Total
	RMB<br>million			RMB<br>million			RMB<br>million			RMB<br>million			RMB<br>million			RMB<br>million
Revenue		326,339			486,366			982,656			196,163			598			1,992,122
Less: intersegment sales		(266,789	)		(341,377	)		(166,913	)		(20,703	)		(81	)		(795,863	)
Revenue from external customers		59,550			144,989			815,743			175,460			517			1,196,259
Depreciation, depletion and amortisation		(77,094	)		(11,731	)		(8,032	)		(10,910	)		(840	)		(108,607	)
Profit/(loss) from operations		53,628			6,370			494			18,302			(8,131	)		70,663

38 -

5.3.2 Financial statements prepared in accordance with CAS

(1) Consolidated and Company Balance Sheets

	Unit: RMB million
	June 30,<br>2020		December 31,<br>2019		June 30,<br>2020		December 31,<br>2019
ASSETS	The Group		The Group		TheCompany		TheCompany
Current assets
Cash at bank and on hand		113,749		110,665		21,136		6,636
Accounts receivable		63,550		64,184		8,365		10,072
Receivables financing		4,468		7,016		1,928		2,538
Advances to suppliers		25,631		17,038		13,888		6,980
Other receivables		21,929		21,199		8,915		8,997
Inventories		175,298		181,921		106,498		117,757
Other current assets		67,502		64,890		48,929		47,565
Total current assets		472,127		466,913		209,659		200,545
Non-current assets
Investments in other equity instruments		827		930		374		437
Long-term equity investments		104,103		102,165		406,359		402,584
Fixed assets		679,145		703,414		331,978		347,649
Oil and gas properties		800,269		831,814		580,419		599,230
Construction in progress		266,228		247,996		165,044		158,823
Right-of-use<br>assets		152,099		189,632		71,348		107,852
Intangible assets		84,313		84,832		64,101		64,530
Goodwill		43,139		42,808		—		—
Long-term prepaid expenses		10,177		10,258		9,029		8,198
Deferred tax assets		29,391		24,259		20,378		14,725
Other non-current assets		35,806		28,169		13,782		10,571
Total non-current assets		2,205,497		2,266,277		1,662,812		1,714,599
TOTAL ASSETS		2,677,624		2,733,190		1,872,471		1,915,144

39 -

	Unit: RMB million
LIABILITIES AND SHAREHOLDERS’ EQUITY	June 30,<br>2020			December 31,<br>2019			June 30,<br>2020		December 31,<br>2019
	The Group			The Group			The Company		TheCompany
Current liabilities
Short-term borrowings		79,280			70,497			51,878		66,027
Notes payable		13,039			13,153			10,899		12,046
Accounts payable		190,933			260,102			80,158		102,780
Contract liabilities		92,376			82,490			55,553		54,014
Employee compensation payable		11,483			10,169			8,976		7,931
Taxes payable		44,270			67,382			27,279		42,779
Other payables		81,901			34,699			90,398		60,291
Current portion of non-current liabilities		114,562			92,879			96,580		36,799
Other current liabilities		36,279			30,048			30,373		25,882
Total current liabilities		664,123			661,419			452,094		408,549
Non-current liabilities
Long-term borrowings		223,452			174,411			112,792		110,717
Debentures payable		91,511			116,471			87,000		113,000
Lease liabilities		129,417			164,143			52,008		85,449
Provisions		134,557			137,935			98,924		95,643
Deferred tax liabilities		22,058			21,418			—		—
Other non-current liabilities		11,841			12,815			5,787		6,511
Total non-current liabilities		612,836			627,193			356,511		411,320
Total liabilities		1,276,959			1,288,612			808,605		819,869
Shareholders’ equity
Share capital		183,021			183,021			183,021		183,021
Capital surplus		127,365			127,314			127,845		127,845
Special reserve		14,369			12,443			7,907		6,513
Other comprehensive income		(29,070	)		(27,756	)		1,006		979
Surplus reserves		197,282			197,282			186,190		186,190
Undistributed profits		696,049			738,124			557,897		590,727
Equity attributable to equity holders of the Company		1,189,016			1,230,428			1,063,866		1,095,275
Non-controlling interests		211,649			214,150			—		—
Total shareholders’ equity		1,400,665			1,444,578			1,063,866		1,095,275
TOTAL LIABILITIES AND<br><br><br>SHAREHOLDERS’ EQUITY		2,677,624			2,733,190			1,872,471		1,915,144

40 -

(2) Consolidated and Company Income Statements

	Unit: RMB million
	For the sixmonths ended<br><br><br>June 30, 2020			For the sixmonths ended<br><br><br>June 30, 2019			For the sixmonths ended<br><br><br>June 30, 2020			For the six<br><br><br>months ended<br><br><br>June 30, 2019
Items	The Group			The Group			The Company			The Company
Operating income		929,045			1,196,259			514,116			669,127
Less: Cost of sales		(770,193	)		(944,943	)		(427,129	)		(514,313	)
Taxes and surcharges		(98,423	)		(112,419	)		(76,838	)		(86,261	)
Selling expenses		(32,272	)		(32,901	)		(22,213	)		(22,535	)
General and administrative expenses		(25,135	)		(28,605	)		(16,059	)		(18,984	)
Research and development expenses		(6,775	)		(7,687	)		(5,636	)		(6,902	)
Finance expenses		(13,505	)		(14,028	)		(11,103	)		(10,120	)
Including: Interest expenses		14,886			15,197			11,216			10,336
Interest income		1,396			1,893			351			465
Add: Other income		4,083			4,655			3,201			3,902
Investment income		1,063			5,233			17,726			18,501
Including: Income from investment in associates and joint ventures		570			4,707			1,392			2,210
Credit (losses)/reversal		(351	)		225			(139	)		265
Asset impairment (losses)/reversal		(8,151	)		(784	)		(1,967	)		18
Gains on asset disposal		861			87			856			75
Operating (loss)/profit		(19,753	)		65,092			(25,185	)		32,773
Add: Non-operating income		1,460			1,524			1,122			1,265
Less: Non-operating expenses		(230	)		(4,843	)		(2,796	)		(4,372	)
(Loss)/Profit before taxation		(18,523	)		61,773			(26,859	)		29,666
Less: Taxation		(4,804	)		(22,638	)		6,111			(6,917	)
Net (loss)/profit		(23,327	)		39,135			(20,748	)		22,749
Classified by continuity of operations:
Net (loss)/profit from continuous operation		(23,327	)		39,135			(20,748	)		22,749
Net profit from discontinued operation		—			—			—			—
Classified by ownership:
Net (loss)/profit attributable to Shareholders of the Company		(29,986	)		28,420			(20,748	)		22,749
Non-controlling interests		6,659			10,715			—			—
Other comprehensive income		(433	)		3,007			27			321
Other comprehensive income attributable to equity holders of the Company, net of tax		(1,314	)		752			27			321
(1) Item that will not be reclassified to profit or loss
Changes in fair value of investments in other equity instruments		(66	)		138			(48	)		55
(2) Items that may be reclassified to profit or loss
Share of other comprehensive income of equity-accounted investee		75			337			75			266
Translation differences arising from translation of foreign currency financial statements		(1,323	)		277			—			—
Other comprehensive income (net of tax) attributable to<br>non-controlling interests		881			2,255			—			—
Total comprehensive income		(23,760	)		42,142			(20,721	)		23,070
Attributable to:
Equity holders of the Company		(31,300	)		29,172			(20,721	)		23,070
Non-controlling interests		7,540			12,970			—			—
Earnings per share
Basic (loss)/earnings per share (RMB yuan)		(0.164	)		0.155			(0.113	)		0.124
Diluted (loss)/earnings per share (RMB yuan)		(0.164	)		0.155			(0.113	)		0.124

41 -

6 Repurchase, Sale or Redemption of Securities

The Company and its subsidiaries did not repurchase, sell or redeem any listed securities of the Company during the six months ended June 30, 2020.

7 Disclosure of Other Information

Save for disclosed above, there have been no material changes in the information disclosed in the annual report of the Group for the year ended December 31, 2019 in respect of matters required to be disclosed under paragraph 46(3) of Appendix 16 to the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (the “Listing Rules”).

8 Compliance with the Model Code for Securities Transactions by Directors of Listed Issuers

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers contained in Appendix 10 to the Listing Rules (the “Model Code”) in respect of dealing in the Company’s shares by its Directors. Upon specific enquiries made to each Director and Supervisor, each Director and Supervisor has confirmed to the Company that each of them had complied with the requirements set out in the Model Code during the reporting period.

9 Compliance with the Corporate Governance Code

For the six months ended June 30, 2020, save for the following changes during the reporting period, the Company has complied with all the code provisions of the Corporate Governance Code set out in Appendix 14 to the Listing Rules.

On December 9, 2019, Mr. Hou Qijun resigned as Director and President of the Company due to work change. On January 19, 2020, Mr. Wang Yilin resigned as Chairman, Director and chairman of the Nomination Committee of the Company due to his age. On March 9, 2020, Mr. Duan Liangwei was appointed as the President of the Company. On March 25, 2020, Mr. Dai Houliang was elected as the Chairman, and also the chairman of the Nomination Committee of the Company, and Mr. Li Fanrong was elected as the Vice Chairman of the Company. Currently, the Company has complied with all the code provisions of the Corporate Governance Code.

10 AuditCommittee

The Audit Committee of the Company comprises Mr. Cai Jinyong, Mr. Jiang, Simon X. and Mr. Liu Yuezhen. The main duties of the Audit Committee are to review and monitor the financial reporting procedures and internal control system of the Group and make recommendations to the Board.

The Audit Committee of the Company has reviewed and confirmed the interim results for the six months ended June 30, 2020.

42 -

By Order of the Board of Directors

PetroChina Company Limited

Dai Houliang

Chairman

Beijing, the PRC

August 27, 2020

As atthe date of this announcement, the Board of Directors comprises Mr. Dai Houliang as the Chairman; Mr. Li Fanrong as Vice Chairman and non-executive Director; Mr. Liu Yuezhen, Mr. Lv Bo andMr. Jiao Fangzheng as non-executive Directors; Mr. Duan Liangwei as executive Director; and Ms. Elsie Leung Oi-sie, Mr. Tokuchi Tatsuhito,Mr. Simon Henry, Mr. Cai Jinyong and Mr. Jiang, Simon X. as independent non-executive Directors.

This announcement contains certain forward-looking statements with respect to the financial position, operational results and business ofthe Group. These forward-looking statements are, by their nature, subject to significant risks and uncertainties because they relate to events and depend on circumstances that may occur in the future and are beyond our control. The forward-lookingstatements reflect the Group’s current views with respect to future events and are not a guarantee of future performance. Actual results may differ from information contained in the forward-looking statements.

This announcement is prepared in English and Chinese. In the event of any inconsistency between the two versions, the Chinese version shallprevail.

43 -

EX-99.2

Exhibit 99.2

LOGO

新 闻稿 Press Release

中国石油天然气股份有限公司 P e t r o C h i n a C o m p a n y L i m i t e d 中国北京东城区东直门北大街9 号 9 Dongzhimen North Street, Dongcheng 邮编： 100007 District, Beijing,100007,P.R.China 电话： 86–10–59986266 TEL: 86–10–59986266 **传真：**86–10–62099559FAX: 86–10–62099559

Comprehensively Enhanced Quality and Profitability

Strictly Controlled Costs and Expenses

PetroChina’s Production and Operation Remained Stable in the First Half of 2020

(Beijing, 27 August 2020) – PetroChina Company Limited (“PetroChina” or “the Company”, HKSE: 00857; NYSE: PTR; SSE: 601857) announced today that in the first half of 2020, the outbreak of COVID-19 led to a severe contraction of demand for oil, gas and chemical products, and a plunge in international oil prices. Amid the complex and severe situation, the Company coordinated and implemented a series of work including COVID-19 prevention and control, resumption of work and production, as well as production and operation, and reform and development. At the same time, the Company vigorously enhanced quality and profitability, strictly controlled costs and capital expenditures, minimized the loss induced by COVID-19 and low oil prices, and maintained overall smooth operation of the oil and gas industrial chain.

Interim Results Review

Comprehensively enhanced quality and profitability, financial position remained overall stable. Under the International Financial Reporting Standards, PetroChina recorded a revenue of RMB929,045 million in the first half of 2020, representing a decrease of 22.3% year on year. Net loss attributable to owners of the Company was RMB29,983 million, of which the loss in the second quarter narrowed compared to the first quarter, indicating a steady improvement of business trend. The Exploration and Production segment achieved an operating profit of RMB10,351 million. The Refining and Chemicals segment recorded an operating loss of RMB10,540 million, of which, the refining operations recorded an operating loss of RMB13,644 million while the chemical operations realized an operating profit of RMB3,104 million. The Marketing segment recorded an operating loss of RMB12,892 million, while the Natural Gas and Pipeline segment achieved an operating profit of RMB14,372 million. The Company stringently controlled expenses and capital expenditures, and its financial position was overall stable. Capital expenditures amounted to RMB74,761 million in the first half of 2020, representing a decrease of 11.0%. The estimated capital expenditure for the whole year of 2020 is RMB228.5 billion, representing a decrease of 23.0% from RMB296.776 billion for the year of 2019. In overall consideration of factors such as the operating results, financial condition, cash flow and expected gains from pipeline assets restructuring of the Company, the Board has resolved to declare an interim dividend of RMB0.08742 yuan per share in order to secure a better return for shareholders. The total amount of the interim dividends payable was RMB16 billion.

Focused on sizable and profitable exploration and effectively controlled costs and expenses. The Company continued to strengthen the management of investment, reserves and costs as a whole, and strived to control and reduce investment. It also rigorously tightened operating cost, resulting in an increase of profitable reserves. During the first half of the year, the Company optimized the deployment of exploration activities, risk exploration and concentrated exploration made important discoveries and progress. High-yield oil and gas flow was obtained from Tarim Manshen No.1 well, representing a major breakthrough in ultra-deep oil and gas exploration in the hinterland of the basin. In addition, a batch of risk exploration wells such as Sichuan Pengtan No.1, Tarim Luntan No.1, and Junggar Shatan No.2, etc. achieved new breakthroughs and opened up a new area of oil and gas exploration. The overseas oil and gas business made steady progress, with the risk exploration of the Chad project and the progressive exploration of the Kazakhstan PK project achieving new breakthroughs and making progress. Meanwhile, the Company continued to devote great efforts to existing projects in the Middle East, Central Asia, America, the Asia-Pacific region and other joint cooperation areas, with the aim of ensuring qualitative and effective development. In the first half of 2020, the Company’s total crude oil output amounted to 475 million barrels, representing an increase of 5.2% compared with last year. The marketable natural gas output reached 2,150 billion cubic feet, representing a rise of 9.4% compared with last year. The oil and natural gas equivalent output amounted to 834 million barrels, representing a growth of 7.0% compared with last year. The Company continued to strengthen cost control, and the oil and gas lifting cost was US$9.64 per barrel, representing a decrease of 14.0% year on year.

Insisted on the reduction of refined products and increased the production of chemicals,strived to increase production of profitable products. The Refining and Chemicals segment actively responded to unfavorable conditions arising from a drop-in market demand and a decrease in the facility loads, and endeavored to optimize productions operations. Based on the market-oriented approach, the Company optimized the allocation of crude oil resources, adjusted utilization rate in a timely manner, and made great efforts to achieve “reduction of refined products and increasing the production of chemicals”. It also continued to optimize product structure and flexibly adjusted diesel-gasoline ratio, to increase the production of high value-added products, as well as improving the direct selling rate of chemical products. The integration project of refining and chemicals of Guangdong Petrochemical, Tarim and Changqing ethane to ethylene projects and other key projects also progressed in an orderly manner. In the first half of 2020, the Company processed 568 million barrels of crude oil, representing a decrease of 4.9% year on year; the production of refined oil products was 52.085 million tons, representing a decrease of 8.2% year on year. The output of chemical products was 13.847 million tons, representing an increase of 9.5% over the same period of last year. The output of ethylene increased by 4.0% year on year, while the output of synthetic resin and synthetic rubber grew by 3.7% and 4.7% respectively year on year.

Fully enhanced refined marketing, leading to an improvement in the efficiency of thevalue chain. During the first half of the year, the Company actively responded to the challenging situation of shrinking consumption and high inventories of the refined oil market, and strengthened the connection between production and sales. By seizing favorable timing of resumption of work and production as well as spring ploughing, the Company used its best endeavor to facilitate the expansion in sales coverage, improve the alignment rate of price, and strive to promote the sales and production volume in key areas, in order to ensure the smooth operation of sales channel of refineries and overall stable operation of the crude oil industry chain. By optimizing the pace of refined oil export, the Company also strengthened the integration and coordination between the domestic and international markets, leading to an improvement in the overall profitability of the value chain. In the first half of 2020, the Company sold a total of 76.569 million tons of gasoline, kerosene and diesel, among which the domestic sales of gasoline, kerosene and diesel were 48.572 million tons.

Continuallyoptimized gas resource structure and improved the capability of end-user marketing. The Company implemented precise measures to lower its procurement costs to develop the end-user market of natural gas, further optimized the customer structure, and greatly enhanced the capability of end-user sales. In respect to the changes in market demand, the Company continued to upgrade the gas resource structure to attain the interconnecting mechanism between the gas resource and price, while coordinating and optimizing resource allocation and sales structure. At the same time, the Company continued to strengthen the upgrade of pipeline safety management, to ensure safe and stable operation of the oil and gas pipeline network.

Outlook

Looking ahead to the second half of 2020, despite the severe situation of COVID-19 prevention and control, and the uncertainty about the recovery of the world economy and rebound of crude oil market, with the gradual pick up of China’s economy, the demand for oil and gas is expected to stabilize. The Company will maintain its strategic consistency, strengthen bottom-line thinking, and adhere to its quality-based development. It will also stick to the governance principles of professional development, market-oriented operation, precise management, and integrated coordination. While advancing to deeply promote the construction of the oil and gas production, supply, storage and sales system, and deepening reform and innovation, the Company will pay more attention to green and low carbon development, digital transformation, intelligent development as well as value creation, fulfilling the annual objectives and tasks of production and operation.

Additional information on PetroChina is available at the Company’s website: http://www.petrochina.com.cn

Issued by PetroChina Company Limited

For further information, please contact:

PetroChina Company Limited

PR Agency (Overseas media):
Hill+Knowlton Strategies	Fax: (852) 2576 1990
Joanne Lam	Tel: (852) 2894 6211
	Email: petrochina@hkstrategies.com
PR Agency (Domestic media):
EverBloom Investment Consulting Lt. Co.	Fax: (8610) 8562 3181
Di Shen	Tel: (8610) 5166 3828
	Email: zhongshiyou.list@everbloom.com.cn

EX-99.3

Exhibit 99.3

Hong Kong Exchange and Clearing Limited and TheStock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or inreliance upon the whole or any of the contents of this announcement.

LOGO

中國石油天然氣股份有限公司 ****

PETROCHINA COMPANY LIMITED

(a joint stock limited company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 857)

RENEWAL OF CONTINUING CONNECTED TRANSACTIONS WITH CNPC

IN RESPECT OF 2021 TO 2023

RENEWAL OF CONTINUING CONNECTED TRANSACTIONS WITH

BEIJING GAS IN RESPECT OF 2021 TO 2023

RENEWAL OF CONTINUING CONNECTED TRANSACTIONS WITH CNPC IN RESPECT OF 2021 TO 2023

Reference is made to the announcement of the Company dated 24 August 2017 in respect of the renewal of the continuing connected transactions with CNPC/Jointly-held Entities. At the extraordinary general meeting of the Company held on 26 October 2017, the Independent Shareholders approved the continuing connected transactions with CNPC/Jointly-held Entities and the annual caps for the three years ending 31 December 2020.

The Board hereby announces that the Company and CNPC entered into (1) the New Comprehensive Agreement and (2) a confirmation letter to the Land Use Rights Leasing Contract and the 2017 Buildings Leasing Contract on 27 August 2020 to continue the Continuing Connected Transactions with CNPC after 31 December 2020 and the Company will continue to comply with the provisions of Chapter 14A of the HKEx Listing Rules in relation to the Continuing Connected Transactions with CNPC including the reporting, announcement, annual review and Independent Shareholders’ approval requirements, if applicable.

CNPC is a controlling shareholder of the Company. By virtue of the above, CNPC is a connected person of the Company under the HKEx Listing Rules. Transactions between the Company and CNPC constitute connected transactions of the Company under the HKEx Listing Rules. Jointly-held Entities are companies in which the Company and CNPC jointly hold shares while CNPC and/or its subsidiaries (individually or together) is/are entitled to exercise, or control the exercise of, 10% or more of the voting power of these companies, therefore, Jointly-held Entities are connected persons of the Company and transactions between the Group and Jointly-held Entities constitute connected transactions of the Company under the HKEx Listing Rules. The terms and the proposed annual caps in respect of the Non-Exempt Continuing Connected Transactions are subject to approval by the Independent Shareholders under the HKEx Listing Rules. In view of the interests of CNPC, CNPC and its associates will abstain from voting in relation to the resolutions approving the terms and the proposed annual caps in respect of the Non-Exempt Continuing Connected Transactions.

An Independent Board Committee has been formed to advise the Independent Shareholders in connection with the terms and the proposed annual caps in respect of the Non-Exempt Continuing Connected Transactions, and the Independent Financial Advisor has been appointed to advise the Independent Board Committee and the Independent Shareholders on the same.

GENERAL

A circular containing, amongst other things, further information on the terms of the Non-Exempt Continuing Connected Transactions with CNPC, a letter from the Independent Board Committee, an opinion of the Independent Financial Advisor, together with a notice to convene the Extraordinary General Meeting to approve the Non-Exempt Continuing Connected Transactions and their proposed annual caps, is expected to be despatched to the Shareholders on or before 15 September 2020.

RENEWAL OF CONTINUING CONNECTED TRANSACTIONS WITH BEIJING GAS IN RESPECT OF 2021TO 2023

Reference is made to the announcement of the Company dated 24 August 2017 in respect of the continuing connected transactions entered into between the Group and Beijing Gas from 1 January 2018 to 31 December 2020.

The Board hereby announces that the Company and Beijing Gas entered into the New Products and Services Agreement on 27 August 2020 to continue the continuing connected transactions with Beijing Gas after 31 December 2020.

PetroChina Beijing Gas Pipeline is a non-wholly owned subsidiary of the Company. Beijing Gas is a substantial shareholder of PetroChina Beijing Gas Pipeline (holding 40% of the issued share capital of PetroChina Beijing Gas Pipeline) and is a connected person of the Company at the subsidiary level. Therefore, the transactions under the New Products and Services Agreement constitute continuing connected transactions of the Company under Chapter 14A of the HKEx Listing Rules.

Since the highest of the applicable percentage ratios (other than the profits ratio) under the HKEx Listing Rules for the transactions contemplated under the New Products and Services Agreement is more than 5% but less than 25%, the transactions contemplated under the New Products and Services Agreement are subject to the reporting, announcement, annual review and Independent Shareholders’ approval requirements under Chapter 14A of the HKEx Listing Rules.

As (i) Beijing Gas is regarded as a connected person of the Company only at the subsidiary level; (ii) the Continuing Connected Transactions with Beijing Gas contemplated under the New Products and Services Agreement are on normal commercial terms; and (iii) the Board (including all the independent non-executive Directors of the Company) has approved the Continuing Connected Transactions with Beijing Gas under the New Products and Services Agreement and confirmed that the terms of the Continuing Connected Transactions with Beijing Gas are fair and reasonable and that the Continuing Connected Transactions with Beijing Gas are on normal commercial terms and in the interests of the Company and the Shareholders as a whole, the Continuing Connected Transactions with Beijing Gas contemplated under the New Products and Services Agreement are subject to the reporting and announcement requirements but are exempt from the circular, independent financial advice and Independent Shareholders’ approval requirements under Rule 14A.101 of the HKEx Listing Rules.

1.	RENEWAL OF CONTINUING CONNECTED TRANSACTIONS WITH CNPC/JOINTLY-HELD ENTITIES IN RESPECT OF 2021 TO 2023
1.1	Background
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Reference is made to the announcement of the Company dated 24 August 2017 in respect of the renewal of the continuing connected transactions with CNPC/Jointly-held Entities. At the extraordinary general meeting of the Company held on 26 October 2017, the independent shareholders approved the continuing connected transactions with CNPC and the annual caps for the three years ending 31 December 2020.

1.2	Continuing Connected Transactions with CNPC under the New Comprehensive Agreement
1.2.1	The New Comprehensive Agreement ****
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The Company and CNPC entered into the Comprehensive Agreement on 24 August 2017, which was effective from 1 January 2018, valid for a term of three (3) years, and will expire on 31 December 2020, for the provisions (1) by the Group to CNPC/Jointly-held Entities and (2) by CNPC/Jointly-held Entities to the Group, of a range of products and services which may be required and requested from time to time by either party and/or its subsidiaries and relevant units (including their respective subsidiaries, branches and other units). Therefore, on 27 August 2020, the Company and CNPC entered into the New Comprehensive Agreement, and the material terms are as follows:

(1)	Products and services to be provided by the Group to CNPC/Jointly-held Entities
(a)	Products and services including those relating to refined oil products, chemical products, natural gas, crude<br>oil, supply of water, supply of electricity, supply of gas, supply of heating, quantifying and measuring, entrusted operation, material supply and other products and services as may be requested by CNPC/Jointly-held Entities for its own consumption,<br>use or sale from time to time; and
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(b)	Financial services provided by the Group to Jointly-held Entities, including entrustment loans, guarantees and<br>other financial services.
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(2)	Products and services to be provided by CNPC/Jointly-held Entities to the Group
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The products and services to be provided by CNPC/Jointly-held Entities to the Group are expected to be more numerous, both in terms of quantity and variety, than those to be provided by the Group to CNPC/Jointly-held Entities. They have been grouped together and categorised according to the following types of products and services:

(a)	Engineering technology services, mainly associated with products and services to be provided at the stage,<br>including but not limited to exploration technology service, downhole operation service, oilfield construction service, refinery construction service and engineering design service;

(b)	Production services, mainly associated with products and services to be provided, arising from the day-to-day operations of the Group, including but not limited to crude oil, natural gas, refined oil products, chemical products, water supply, electricity supply, gas supply<br>and communications;
(c)	Material supply services, mainly involving the agency services on the procurement of materials, including but<br>not limited to purchase of materials, quality examination, storage of materials and delivery of materials, which by virtue of its nature, are not covered in the engineering technology services and production services referred to above;<br>
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(d)	Social and living support services, including but not limited to security system services, staff canteens and<br>training centers etc.; and
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(e)	Financial services, including loans and other financial assistance, deposits services, entrustment loans,<br>settlement services, financial leasing services and other financial services.
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1.2.2	General principles ****
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The New Comprehensive Agreement requires in general terms that:

•	the quality of products and services to be provided should be satisfactory to the recipient;<br>
•	the price at which such products and services are to be provided must be fair and reasonable; and<br>
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•	the terms and conditions on which such products and services are to be provided should be no less favourable than<br>those offered by independent third parties.
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1.2.3	Pricing determination ****
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Pricing principles for Non-Exempt Continuing Connected Transactions:

(a)	Products and services provided by the Group to CNPC/Jointly-held Entities: pricing principles include<br>government-prescribed pricing and market-oriented pricing;
(b)	Engineering technology services provided by CNPC to the Group: pricing principles include government-prescribed<br>pricing, market-oriented pricing (which includes tender prices) and agreed contractual price;
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(c)	Production services provided by CNPC to the Group: pricing principles include government-prescribed pricing<br>plus diversion cost (if any), market-oriented pricing, agreed contractual price and cost; and
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(d)	Deposit service provided by CNPC to the Group: pricing principles include government-prescribed pricing and<br>market-oriented pricing.
---	---

The New Comprehensive Agreement details specific pricing principles for the products and services to be provided pursuant to the New Comprehensive Agreement. The pricing determination of the New Comprehensive Agreement remains consistent with that of the Comprehensive Agreement. If, for any reason, the specific pricing principle for a particular product or service ceases to be applicable, whether due to a change in circumstances or otherwise, such product or service must then be provided in accordance with the following general pricing principles:

(a)	government-prescribed price (this applies to products and services such as refined oil products, natural gas,<br>refinery and chemical facilities construction, water supply, electricity supply, gas supply and heat supply (plus diversion costs in respect of supply of water, electricity, gas and heat)); or
(b)	where there is no government-prescribed price, then according to the relevant market-oriented prices (at<br>present, this applies to engineering design, project monitoring and management, products and services such as crude oil, chemical products, asset leasing, repair of machinery, transportation, purchase of material, quantifying and measuring and<br>entrusted operation, etc.); or
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(c)	where neither (a) nor (b) is applicable, then according to:
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(i)	the actual cost incurred (at present, this applies to products and services such as book information and<br>partial filing storage, maintenance of roads); or
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(ii)	the agreed contractual price, being the actual cost for the provision of such product or service plus an<br>addition of not more than:
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(1)	15 per cent of the cost for certain engineering technology services (at present, this applies to products<br>and services such as geophysical prospecting, drilling, well cementing, logging, mud logging, well testing and oilfield construction) provided that, such agreed contractual price shall not be higher than the prices available for the provision of<br>such products and services in the international market; and
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(2)	3 per cent of the cost for all other types of products and services priced (at present, this applies to<br>products and services such as downhole operations, equipment maintenance and repair, equipment antiseptic testing and research, technical services, communications, firefighting, quality inspection, storage of materials, delivery of materials and<br>training centres).
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As a commitment to the investors, the Company has set caps of profit margin in light of the prevailing market circumstances as at the time of the Company’s listing, and the caps of profit margin have remained unchanged since then. Based on the past business performance and with reference to the margin of profit before tax of the similar business of more than two comparable companies in market, the Company is of the view that these caps are fair and reasonable and therefore are still in the interests of the Company and its Shareholders as a whole in the present circumstances.

In order to ensure the reasonableness and accuracy of the actual cost for the relevant products and services, the transaction parties under the Company and CNPC will generally negotiate the cost for the products and services to be provided in advance. The cost will be determined based on the number of consumed units and unit price. The number of consumed units will be determined by the parties according to the cost-efficient level or the average level of similar projects in history. The unit price will be determined by the parties with reference to the market-oriented price for cost. Meanwhile, the Company and CNPC have jointly set up a construction cost center comprised by experienced technical experts, which is responsible for the formulation of the cost standards for certain engineering technology services provided by CNPC according to the above-mentioned mechanism. After the provision of relevant products or services, the internal auditors of the Group will review the actual cost of these products or services prepared by CNPC with reference to the negotiation results prior to the transactions or the cost standards formulated by the construction cost center. The settlement and payment shall only be made after the review is approved by the internal auditors.

(d)	with regards to certain special products and services, the following pricing principles are adopted:<br>
(i)	for public engineering services (means engineering service in relation to oil regions, factory roads, municipal<br>facilities, civil construction and public facilities), in accordance with the set quotas and pricing standards (the quotas specified by the People’s Government of respective provinces, autonomous regions or municipalities) if the same have been<br>set uniformly by the government; and via public tendering if no such quotas and pricing standards have been set;
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(ii)	for security system services, the price shall not be more than the Company’s actual expense incurred on<br>security system in 1998;
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(iii)	for educational, medical and cultural promotional services, reasonably proportioned between the Company and<br>CNPC with reference to CNPC’s actual expenses incurred on educational, medical and cultural promotional service and the share of benefits between the Company and CNPC in 1998; prices for subsequent periods shall not be more than the<br>Company’s share of expenses as calculated in accordance with the aforementioned formula in 1998, and shall decrease progressively; and
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(iv)	retirement management and re-employment service centre, reasonably<br>proportioned between CNPC and the Company with reference to the cost for such services and the share of benefits between CNPC and the Company, and shall decrease progressively.
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The definition of “government-prescribed price” refers to the price in respect of certain category of services determined by the laws, regulations, decisions, orders or policies, etc. enacted by governments of the relevant countries or regions (including but not limited to the central government, federal government, provincial government, state or coalition government or any organisation responsible for domestic ruling and foreign affairs in respect to certain specified territory, irrespective of its name, organisation or form) or other regulatory departments; or

The “government-prescribed price” for different products and services is determined with reference to the following:

Type of<br> <br>product/service with<br><br><br>“government-<br> <br>prescribed prices”	Basis for price determination
Refined oil products	According to the Notice of the National Development and Reform Commission on Further Improving the Pricing Mechanism of Refined Oil (Fa Gai Jia Ge [2016] No. 64) issued by the National Development and Reform Commission on<br>13 January 2016, the retail price and wholesale price of gasoline and diesel, as well as the supply price of gasoline and diesel, to special users such as social wholesale enterprises, railway and transportation, etc., shall be<br>government-guided prices. The supply price of gasoline and diesel to the national reserve and Xinjiang Production and Construction Corps shall be government-prescribed prices. The price of gasoline and diesel may be adjusted every ten working days<br>with reference to the changes in the international market price of crude oil. The National Development and Reform Commission publishes the maximum retail price in ton of standard gasoline and diesel , and the supply price of gasoline and diesel to<br>the national reserve and Xinjiang Production and Construction Corps on its portal website. The provincial price authorities shall publish the highest wholesale prices and highest retail prices of gasoline and diesel standard products and non-standard products in their regions on the designated websites.

Type of product/service with “government- prescribed prices”

Basis for price determination

Refined oil products

According to the Notice of the National Development and Reform Commission on Further Improving the Pricing Mechanism of Refined Oil (Fa Gai Jia Ge [2016] No. 64) issued by the National Development and Reform Commission on 13 January 2016, the retail price and wholesale price of gasoline and diesel, as well as the supply price of gasoline and diesel, to special users such as social wholesale enterprises, railway and transportation, etc., shall be government-guided prices. The supply price of gasoline and diesel to the national reserve and Xinjiang Production and Construction Corps shall be government-prescribed prices. The price of gasoline and diesel may be adjusted every ten working days with reference to the changes in the international market price of crude oil. The National Development and Reform Commission publishes the maximum retail price in ton of standard gasoline and diesel , and the supply price of gasoline and diesel to the national reserve and Xinjiang Production and Construction Corps on its portal website. The provincial price authorities shall publish the highest wholesale prices and highest retail prices of gasoline and diesel standard products and non-standard products in their regions on the designated websites.

Type of<br> <br>product/service with<br><br><br>“government-<br> <br>prescribed prices”	Basis for price determination
Natural gas	According to the Circular of the National Development and Reform Commission on the Adjustment of Natural Gas Prices (Fa Gai Jia Ge [2013] No. 1246) issued by the National Development and Reform Commission on 28 June 2013,<br>the price management of natural gas is adjusted to the gate station. At present, the National Development and Reform Commission divides the natural gas which implements the gate station price policy into two categories: (1) Natural gas which<br>implements market-adjusted price, including unconventional gases such as shale gas, coal-bed methane and coal gas, and domestic offshore natural gas supplied to the market; imported gas supplied to the market<br>through imported LNG and imported pipeline gas projects put into operation after the end of 2014; natural gas supplied to the market through gas storages and trading platforms such as Shanghai Petroleum and Natural Gas Exchange and Chongqing<br>Petroleum and Natural Gas Exchange; natural gas supplied to LNG manufacturers, fertilizer manufacturers and other direct-supply industrial enterprises, etc.; (2) Natural gas which implements government-guided price. For the natural gas that does not<br>meet the above conditions implementing government-guided price, the base price of the gate station in each province shall be the basis and the exact price shall be negotiated by the supplying party and the requisitioning party without exceeding the<br>specified range (i.e. up to 20% and down unlimited). The natural gas which implements the government-guided price mainly consists of onshore domestic conventional natural gas supplied to city gas companies and pipeline natural gas imported<br>through the imported pipeline gas project put into operation before the end of 2014.

Type of product/service with “government- prescribed prices”

Basis for price determination

Natural gas

According to the Circular of the National Development and Reform Commission on the Adjustment of Natural Gas Prices (Fa Gai Jia Ge [2013] No. 1246) issued by the National Development and Reform Commission on 28 June 2013, the price management of natural gas is adjusted to the gate station. At present, the National Development and Reform Commission divides the natural gas which implements the gate station price policy into two categories: (1) Natural gas which implements market-adjusted price, including unconventional gases such as shale gas, coal-bed methane and coal gas, and domestic offshore natural gas supplied to the market; imported gas supplied to the market through imported LNG and imported pipeline gas projects put into operation after the end of 2014; natural gas supplied to the market through gas storages and trading platforms such as Shanghai Petroleum and Natural Gas Exchange and Chongqing Petroleum and Natural Gas Exchange; natural gas supplied to LNG manufacturers, fertilizer manufacturers and other direct-supply industrial enterprises, etc.; (2) Natural gas which implements government-guided price. For the natural gas that does not meet the above conditions implementing government-guided price, the base price of the gate station in each province shall be the basis and the exact price shall be negotiated by the supplying party and the requisitioning party without exceeding the specified range (i.e. up to 20% and down unlimited). The natural gas which implements the government-guided price mainly consists of onshore domestic conventional natural gas supplied to city gas companies and pipeline natural gas imported through the imported pipeline gas project put into operation before the end of 2014.

Type of<br> <br>product/service with<br><br><br>“government-<br> <br>prescribed prices”	Basis for price determination
Refinery and chemical facilities construction (including construction and installation)	For the construction phase, prices shall be determined by standards prescribed by the People’s Government of the respective province, autonomous region and municipalities.
	For the installation phase, prices shall be determined by industrial standards.
Water supply	In accordance with the National Guidelines on Water Tariffs, issued by the former National Planning Committee and the former Ministry of Construction on 23 September 1998 and revised by the National Development and Reform<br>Commission and the former Ministry of Construction on 29 November 2004, the urban water supply price shall be government-prescribed prices, and the specific pricing authority shall be executed based on the price management catalogue.
Electricity supply	In line with the Electricity Law issued by Standing Committee of the National People’s Congress on 28 December 1995 and revised respectively on 27 August 2009, 24 April 2015 and 29 December 2018, for the power<br>purchase price of a power network spanning different provinces, autonomous regions, or municipalities, as well as in a provincial power network, a proposal shall be made through consultation by the enterprises engaged in power production and power<br>network operation, and shall be examined and approved by the pricing administrative department of the State Council. The on-grid electricity price in an independent power network shall be negotiated and<br>proposed by the power production enterprise and the power network operating enterprise, and submitted to the pricing administrative department with management authority for approval. For the power produced by locally funded power production<br>enterprises, if an independent power network within different regions of the province is formed or the power is generated for local use, the price shall be under the control of the People’s Government of the province, autonomous region or<br>municipality.
Gas supply	According to the Regulation on the Administration of Urban Gas (PRC State Council Order No.666 issued by the State Council on 19 October 2010 and revised on 6 February 2016), the pricing bureau of the People’s<br>Government above the county level could prescribe and adjust the selling price for pipeline gas.

Type of<br> <br>product/service with<br><br><br>“government-<br> <br>prescribed prices”	Basis for price determination
Heat supply	Prices for the supply of heat are prescribed by the local governments.

Save as disclosed above, the macro government-prescribed prices are updated in accordance with the development of national economy and policies to be issued from time to time. The prices prescribed by the People’s Government of the respective provinces, autonomous regions and municipalities are updated from time to time in accordance with the local actual situations from time to time. The Company has paid and will continue to pay close attention to the updates of government-prescribed prices and determine the prices for relevant products and services accordingly.

The definition of “market-oriented price” refers to the price determined in accordance with the following order:

(i)	with reference to the price charged, by at least two independent third parties, in areas where such type of<br>product or service is provided and on normal terms in the area where the product or service of comparable scale is being provided at that time; or
(ii)	with reference to the price charged, by at least two independent third parties, in nearby areas where such type<br>of product or service is provided and on normal terms in the area or country adjacent to the area where the product or service of comparable scale is being provided at that time.
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According to the regulations for the management of bidding and tendering of the Company, in terms of the product or service of which the transaction amount reaches the particular standard prescribed in regulations, the Company shall obtain the above-mentioned market-oriented prices through tendering and the final suppliers of products or services are determined based on the price quotations and other factors including quality of products and services, specific needs of the transaction parties, technical advantages of the suppliers, performance capabilities of the suppliers, and qualification and relevant experience of the suppliers. The operating entities or the tendering center of the Company are responsible for the preparation of tendering requirement documents. A tendering committee comprised by both internal and external randomly picked experts will be established to conduct the tendering process for each project. If the terms offered by CNPC are considered to be comparable to or better than other bidders by the tendering committee after taking into consideration the above-mentioned factors, CNPC will be selected as the supplier. In terms of the product and service of which the transaction amount is lower than the particular standard prescribed in regulations, the Company shall obtain the above-mentioned market-oriented prices by inviting suppliers to the competitive negotiations and the final suppliers of products or services are determined based on the price quotations and other factors including quality of products and services, specific needs of the transaction parties, technical advantages of the suppliers, performance capabilities of the suppliers, and qualification and relevant experience of the suppliers. The relevant departments of the operating entities to which the products or services will be supplied shall be responsible for comparing the terms of these suppliers. If the terms offered by CNPC are considered to be comparable to or better than other suppliers by the such department after taking into consideration the above-mentioned factors, CNPC will be selected as the supplier upon the final approval by the management team of the operating entity.

Further, the New Comprehensive Agreement specifically stipulates that:

(i)	for the financial services provided by the Group:
•	the pricing of entrusted loans shall be determined based on the relevant interest rate and standard for fees as<br>promulgated by the People’s Bank of China and with reference to market-oriented price;
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•	the guarantees shall be provided with reference to the market-oriented price; and
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•	the pricing of other financial services shall be determined based on the prices prescribed by government<br>authorities including, among others, People’s Bank of China, China Banking and Insurance Regulatory Commission, and the fee charging standards published by the aforementioned relevant regulatory authorities and with reference to the<br>market-oriented price.
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(ii)	for the financial services provided by CNPC/the Jointly Held Entities:
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•	the loans and deposit services shall be provided at prices determined in accordance with the relevant interest<br>rate and standard for fees as promulgated by the People’s Bank of China. Such prices must also be no less favourable to the Group than those offered by other independent third parties;
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•	the guarantees shall be provided at prices not higher than the fees charged by the state policy banks in relation<br>to the provision of guarantees. References must also be made to the relevant government-prescribed price and market-oriented price; and
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•	the pricing of other financial services shall be determined based on the prices prescribed by government<br>authorities including, among others, People’s Bank of China, China Banking and Insurance Regulatory Commission, and the fee charging standards published by the aforementioned relevant regulatory authorities and with reference to the<br>market-oriented price.
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For the financial leasing service provided by CNPC, payments due from the Company shall include rental payable, pre-leasing interest and leasing service fees, etc. Rental payable and pre-leasing interest shall be calculated with reference to the lease principal and the leasing interest rate. Leasing interest rate shall be determined by reference to the benchmark annual lending rate as promulgated by the People’s Bank of China from time to time. In respect of leasing service fee, reference will be made to rates chargeable by other major financial institutions for financial leasing in connection with assets of a similar or the same type. The standard of rental payable, pre-leasing interest (if any) and leasing service fee (if any) will be determined on terms no less favourable to the Group than those offered by other independent third parties.

1.2.4	Coordination of annual demand of products and services ****

Two months prior to the end of each financial year, both parties are required to prepare and submit to each other an annual plan detailing the estimated demand for products and services to be rendered in accordance with the New Comprehensive Agreement for the forthcoming financial year. Furthermore, one month prior to the end of each financial year, both parties are required to prepare and submit to each other a plan of provision of products and services to each other in accordance to the New Comprehensive Agreement.

1.2.5	Rights and obligations ****

The Group retains the right to choose to receive products and services, as contemplated under the New Comprehensive Agreement, from independent third parties where the terms and conditions as to price or quality of products or services offered by such third parties may be superior to those offered by CNPC.

In addition, the New Comprehensive Agreement does not require provision of products and services on an exclusive basis. Each party may provide products and services to other third parties, subject always to the obligation that each party must provide those products and services which may be required in accordance with the New Comprehensive Agreement and the annual plan then in force.

1.2.6	Term and termination ****

The New Comprehensive Agreement is valid for 3 years commencing 1 January 2021. During the term of the New Comprehensive Agreement, termination of the individual product and service implementation agreements may be effected from time to time by the parties to the product and service implementation agreements providing at least 6 months’ written notice of termination in relation to any one or more categories of products or services. Further, in respect of any products or services contracted to be provided on or before the notice of termination, the notice of termination will not affect the completion of the provision of such products and services.

In the event that the Company is unable to find an alternative product or service provider (which shall be communicated by the Company to CNPC from time to time), then unless permitted by the Company, CNPC must continue to provide such products or services.

1.2.7	Comparison between the New Comprehensive Agreement and the Comprehensive Agreement ****

Main revised terms and conditions of the New Comprehensive Agreement in comparison with the Comprehensive Agreement are as follows:

(1) Updated the pricing basis for refining products, natural gas, power supply, and gas supply services provided by the Group to CNPC/ Jointly-held Entities;

(2) Updated the pricing basis for project design, project supervision, power supply, and gas supply services provided by CNPC to the Group; and

(3) Supplemented sharing services in the services provided by CNPC to the Group.

1.2.8	Internal control measures to ensure that the connected transactions are conducted in accordancewith the New Comprehensive Agreement ****

The Company will strictly enforce a series of measures, including connected transaction management methods, internal control management handbook and internal control assessment management methods, to ensure that connected transactions are conducted in accordance with the New Comprehensive Agreement. The Company’s external auditors shall conduct an interim review and a year end audit on the Company’s internal control measures. Meanwhile, the Company’s Reform and Enterprise Management Department, the Audit Committee of the Board of the Company and the Supervisory Committee shall each conduct internal assessments, supervision and examination on the internal control measures and the financial information of the Company, in order to ensure that the internal control measures in respect of connected transactions remain complete and effective. Furthermore, they shall convene meetings twice a year to discuss and assess the implementation of connected transactions.

The Company has established a series of internal control measures to ensure that the pricing basis for continuing connected transactions of the Company will follow the prescribed pricing mechanism under its framework agreement, including:

(1)	For products and services where the government-prescribed price applies, when any laws, regulations or other<br>regulatory documents in relation to government prescribed price in respect of certain category of products or services come into effect, the pricing department of the Company will forward these regulatory requirements to its operating entities and<br>require all the operating entities to follow the government-prescribed price. The internal audit department of the Company will review the enforcement of the government-prescribed price by the operating entities from time to time. All the operating<br>entities shall accept the law enforcement supervision by the pricing authorities of the government;
(2)	For products and services where the market-oriented price applies, all the operating entities of the Company<br>shall comply with the regulations for the management of bidding and tendering of the Company. In terms of the product or service of which the transaction amount reaches the particular standard prescribed in regulations, all the operating entities<br>shall determine their suppliers of products and services through tendering. The operating entities or the tendering center of the Company are responsible for the preparation of tendering requirement documents. A tendering committee comprised by both<br>internal and external randomly picked experts will be established to conduct the tendering process for each project and determine the final suppliers. In terms of the product and service of which the transaction amount is lower than the particular<br>standard prescribed in regulations, all the operating entities shall determine their suppliers of products and services by inviting suppliers to the competitive negotiations. The relevant department of the operating entities to which the product or<br>service will be offered is responsible for comparing the terms of these suppliers. The comparison results will be submitted to the management team of the operating entity for final approval;
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(3)	For products and services where the actual cost or agreed contractual price applies, the operating entities of<br>the Company and CNPC will generally negotiate the cost for the products and services to be provided in advance. Meanwhile, the Company and CNPC have jointly set up a construction cost center comprised by experienced technical experts, which is<br>responsible for the formulation of the cost standards for certain engineering technology services provided by CNPC. After the provision of relevant products or services, the internal auditors of the Group will review the actual cost of these<br>products or services prepared by CNPC with reference to the negotiation results prior to the transactions or the cost standards formulated by the construction cost center. The settlement and payment shall only be made after the review is approved by<br>the internal auditors;
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(4)	The Company’s Reform and Enterprise Management Department shall regularly conduct internal assessments on<br>the internal control measures every year to ensure that the internal control measures in respect of connected transactions remain complete and effective;
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(5)	The Board shall review the financial reports containing the disclosure and analysis of the execution of the<br>continuing connected transaction on a semi-annual basis. The review will mainly include: whether the Company and relevant connected persons follow the continuing connected transaction agreements (including the prescribed pricing mechanism<br>thereunder) during the year or half of the year and whether the actual transaction amounts incurred between the Company and relevant connected persons are within the annual caps as approved at the shareholders’ general meeting;<br>
(6)	The independent non-executive Directors shall conduct annual review on<br>the continuing connected transactions and provide annual confirmations in the annual reports of the Company on whether the continuing connected transactions are conducted (i) in the ordinary course of business of the Company; (ii) in<br>accordance with normal commercial terms or better and on terms that are fair and reasonable; (iii) in accordance with the terms of the relevant agreements; and (iv) in the interest of the Company and the Shareholders as a whole;<br>
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(7)	The audit committee of the Company shall conduct review on the annual financial statements, annual report,<br>interim financial statements and interim report which include the disclosure and analysis of the execution of the continuing connected transactions and opine on the continuing connected transactions disclosed in such reports and financial<br>statements, including whether the terms of the continuing connected transactions are fair and reasonable and whether the transaction amounts are within the relevant annual caps;
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(8)	The external auditors of the Company shall report on the continuing connected transactions of the Company every<br>year and issue a letter to the Board in respect of the continuing connected transactions of the Company in accordance with the HKEx Listing Rules;
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(9)	The Supervisory Committee shall supervise the continuing connected transactions and review the annual financial<br>report and interim financial report which include the execution of the continuing connected transactions every year. The Supervisory Committee shall also review whether the connected transactions between the Company and connected persons comply with<br>the regulatory requirements of domestic and overseas places where the Company is listed, whether the prices are fair and reasonable and whether there is any act which is detrimental to the interests of the Company and the Shareholders.<br>
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1.2.9	Advice from the Independent Financial Advisor and the Independent Board Committee ****
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The Independent Board Committee will give their view on the terms and the proposed annual caps in respect of the Non-Exempt Continuing Connected Transactions after considering the advice from the Independent Financial Advisor on the same, and their view will be given in the circular to be despatched to the Shareholders.

1.3	Land lease provided by CNPC to the Group

The Company entered into the Land Use Rights Leasing Contract with CNPC on 10 March 2000 under which CNPC has leased parcels of land in connection with and for the purpose of all aspects of the operations and business of the Group covering an aggregate area of approximately 1,145 million square meters, located throughout the PRC, to the Company for a term of 50 years. The Board believes that a leasing term of 50 years is appropriate for the Land Use Rights Leasing Contract, since the Company is one of China’s largest petroleum companies principally engaging in the exploration, development, production and sales of crude oil and natural gas and the production and sales of refined products and chemical products, and the relevant land leases are of material significance of the Group’s operations. The long stability of a 50-year tenure is required to avoid the unnecessary disruption of its operations and such tenure conforms with normal business practices in the PRC property market. The total fee payable for the lease of all such property may, after the expiration of 10 years from the date of the Land Use Rights Leasing Contract, be adjusted to reflect market conditions prevalent at such time of adjustment, including current market prices, inflation or deflation, as appropriate, and such other pertinent factors as may be considered in negotiating and agreeing to any such adjustment by agreement between the Company and CNPC.

Having regard to the operational need of the Company and changes in the land markets in the recent years, the Company entered into a supplemental agreement to the Land Use Rights Leasing Contract with CNPC on 25 August 2011, pursuant to which the parties reconfirmed the area of the leased land parcels, and the Company agreed to rent from CNPC parcels of land situated at 16 different provinces/municipalities with an area of approximately 1,782.97 million square metres. Further, the parties agreed to adjust the total rental payable in accordance to the reconfirmed area of leased land parcels and the prevailing situation of the land market, and the adjusted annual rental fee (exclusive of tax and government charges) of the rented parcels of land shall be not more than RMB3,892 million. The expiry date of the Land Use Rights Leasing Contract as amended by the supplemental agreement would be the same as the original Land Use Rights Leasing Contract. The supplemental agreement took effect from 1 January 2012 upon the approval of the Board. The Company and CNPC may, taking into consideration the production situation and the market situation of the Company, negotiate to revise the leased area and rental payable every three (3) years.

Having regard to the actual operational demand for land and changes in the land market in recent years, the Company and CNPC each issued a confirmation letter to the Land Use Rights Leasing Contract on 28 August 2014, which adjusted the rental payable and the area for the leased land parcels. The Company agreed to rent from CNPC parcels of land with an aggregate area of approximately 1,777.21 million square metres with annual rental payable adjusted to approximately RMB4,831 million in accordance with the reconfirmed area of leased land parcels and the prevailing situation of the land market. The Land Use Rights Leasing Contract and its supplemental agreement shall remain unchanged, apart from the rental payable and the leased area. The confirmation letter became effective from 1 January 2015.

Having regard to the actual operational demand for land and changes in the land market in recent years, the Company and CNPC each issued a confirmation letter to the Land Use Rights Leasing Contract on 24 August 2017, which adjusted the rental payable and the area for the leased land parcels. The Company agreed to rent from CNPC parcels of land with an aggregate area of approximately 1,772.65 million square metres with annual rental payable adjusted to approximately RMB5,783 million in accordance with the reconfirmed area of leased land parcels and the current situation of the land market. The Land Use Rights Leasing Contract shall remain unchanged, apart from the rental payable and the leased area. The confirmation letter became effective from 1 January 2018.

Having regard to the actual operational demand for land and changes in the land market in recent years, the Company and CNPC issued a confirmation letter to the Land Use Rights Leasing Contract on 27 August 2020, which further adjusted the rental payable and the area for the leased land parcels. The Company agreed to rent from CNPC parcels of land with an aggregate area of approximately 1,141.73 million square metres with annual rental payable adjusted to approximately RMB5,673.17 million in accordance with the reconfirmed area of leased land parcels and the current situation of the land market. The Land Use Rights Leasing Contract shall remain unchanged, apart from the rental payable and the leased area. The confirmation letter shall become effective from 1 January 2021.

Savills Valuation and Professional Services Limited, an independent valuer, has reviewed the confirmation letter and has confirmed that the adjusted rentals payable by the Company to CNPC are fair and reasonable and such rentals are not higher than the market level. The date of valuation is 30 June 2020.

As the independent financial advisor opined in their letter when they were engaged for advising on the renewal of continuing connected transaction in August 2011, a lease term of 50 years is essential to the long term development of the Group and is in line with normal business practices. Therefore, the Directors (including independent non-executive directors) of the Company still consider that a lease term of 50 years is in line with normal business practices.

1.4	Buildings lease provided by CNPC to the Group

The Company and CNPC entered into the Buildings Leasing Contract on 10 March 2000 for a term of 20 years, and the supplemental buildings leasing agreement on 26 September 2002, pursuant to which CNPC has leased to the Company buildings with an aggregate gross floor area of 712,500 square meters, located throughout the PRC for the use by the Company for its business operation including the exploration, development and production of crude oil, the refining of crude oil and petroleum products, the production and sale of chemical products, etc. The Company is responsible for the payment of any governmental, legal or other administrative taxes and maintenance charges required to be paid in connection with these leased buildings. The Company and CNPC agreed to, based on their needs for production and operation or the changes of the market prices of the buildings, adjust the numbers and the sizes of the buildings leased under the Buildings Leasing Contract as well as the supplemental buildings leasing agreement every three years.

On 25 August 2011, the Company entered into an Amended Buildings Leasing Contract with CNPC, pursuant to which the Company agreed to lease from CNPC buildings with an aggregate gross floor area of approximately 734,316 square metres and adjust the annual rental payable for the buildings leased to approximately RMB770.25 million. The expiry date of the Amended Buildings Leasing Contract is the same as the Buildings Leasing Contract. The Company and CNPC may adjust the area of building leased and the rental payable every three years as appropriate by reference to the status of the production and operations of the Company and the prevailing market price, but the adjusted rental payable shall not exceed the comparable fair market price.

The Company and CNPC each issued a confirmation letter to the Buildings Leasing Contract on 28 August 2014, which adjusted the rental payable and the gross floor area for the buildings leased. The Company agreed to rent from CNPC buildings with an aggregate gross floor area of approximately 1,179,585.57 square metres with annual rental payable adjusted to approximately RMB707.71 million in accordance with the reconfirmed gross floor area leased and the current situation of the market. The Buildings Leasing Contract shall remain unchanged apart from the rental payable and the gross floor area leased. The confirmation letter became effective from 1 January 2015.

On 24 August 2017, the Company entered into a 2017 Buildings Leasing Contract with CNPC, pursuant to which (1) the Company and CNPC have agreed that the Amended Buildings Leasing Contract will be terminated on 1 January 2018, the effective date of the 2017 Buildings Leasing Contract; (2) the Company agreed to lease from CNPC buildings with an aggregate gross floor area of approximately 1,152,968 square meters and the annual rental shall be paid by the Company based on the actual situations and business development demand, but the annual rental payable shall not exceed the amount of RMB730.00 million. The Company and CNPC agreed that they may adjust the area of building leased and the rental payable every three years as appropriate by reference to the status of the production and operations of the Company and the prevailing market price, but the adjusted rental payable shall not exceed the comparable fair market price. The 2017 Buildings Leasing Contract became effective from 1 January 2018 for a term of 20 years.

The Company and CNPC issued a confirmation letter to the 2017 Buildings Leasing Contract on 27 August 2020, which further adjusted the rental payable and the gross floor area for the buildings leased. The Company agreed to rent from CNPC buildings with an aggregate gross floor area of approximately 1,287,486.41 square metres with annual rental payable adjusted to approximately RMB713.00 million in accordance with the reconfirmed gross floor area leased and the current situation of the market. The Buildings Leasing Contract shall remain unchanged apart from the rental payable and the gross floor area leased. The confirmation letter shall become effective from 1 January 2021.

The Board considered that a leasing term of 20 years for the 2017 Buildings Leasing Contract was reasonable. The reason is that the Company is one of the largest petroleum companies in the PRC, which principally engages in the exploration, development, production and sales of crude oil and natural gas and the production and sales of refined products and chemical products, and the relevant building lease is of paramount importance to the business of the Group. Furthermore, a long lease term of 20 years can avoid unnecessary suspension of the business. The Directors (including independent non-executive Directors) of the Company consider that a lease term of 20 years is in line with normal business practices.

1.5	Historical amounts, historical annual caps, proposed annual caps and rationale

The Board has considered and proposed that the following proposed maximum values in respect of the Continuing Connected Transactions with CNPC which will serve as the annual caps of the relevant transactions above for the period from 1 January 2021 to 31 December 2023:

Transaction categories	Historicalamount	Historicalannual caps	Proposedannual capsfor 2021 to2023	Basis of determination of the proposed annual caps
(1) Products and services to be provided by the Group to CNPC/Jointly-held Entities
(a) Products and services	For the two years ended 31 December 2019 and the six months ended 30 June 2020, approximately RMB84,064 million, RMB99,574 million and RMB33,051 million, respectively.	For the three years ending 31 December 2020, RMB153,716 million, RMB153,861 million and RMB155,390 million, respectively.	For the three years ending 31 December 2023, RMB150,000 million, RMB147,200 million and RMB144,600 million, respectively.	The proposed annual caps for the products and services to be provided by the Group to CNPC/Jointly-held Entities have been determined with reference to the historical transactions and transaction amounts in providing products and<br>services by the Group to CNPC/Jointly-held Entities; the estimated business development of the Group; the estimated business development of

Transaction categories	Historicalamount	Historicalannual caps	Proposedannual capsfor 2021 to2023	Basis of determination of the proposed annual caps
				CNPC; the potential fluctuations in the prices of crude oil, petrochemical products, natural gas and other oil products and services both in the international market and in the domestic market; and quantities of crude oil and<br>natural gas reserves required (by CNPC as decreed by the government).
				The Group is of the view that the proposed adjustment in annual cap is in line with the estimated development of the business of the Group and CNPC, and is determined based on principles of fairness and reasonableness.
				The difference between the 2018 and 2019 annual caps and the actual amount incurred in 2018 and 2019 and the difference between the proposed annual caps and the historical amount incurred in 2018 and 2019 are mainly because both the<br>Company and CNPC are large enterprises, with a large scale and transaction volumes. Since the annual caps for the continuing connected transactions are for three years, it is difficult for the Company to anticipate all the possible contingencies<br>accurately during the period. As such, the Company makes sufficient estimations taking into consideration commercially feasible plans when applying for the proposed annual caps. Main details are as follows: (1) international trade accounts for a<br>large proportion of this category of connected transactions, and its uncertainty is far greater than other businesses; (2) considering that the Group and CNPC and most of their respective subsidiaries are located in the same region, the Group<br>wishes to supply more products and services to CNPC in order to save logistic costs and improve efficiency. However, as there is competition from independent third parties on market, products and services actually provided by the Group to CNPC may<br>be less than anticipated.

Transaction categories	Historicalamount	Historicalannual caps	Proposedannual capsfor 2021 to2023	Basis of determination of the proposed annual caps
(b) Financial services	For the two years ended 31 December 2019 and the six months ended 30 June 2020, RMB 645 million, RMB 1,154 million and RMB 606 million, respectively.	For the three years ending 31 December 2020, RMB22,291 million, RMB22,398 million and RMB22,506 million, respectively.	For the three years ending 31 December 2023, RMB22,000 million, RMB22,000 million and RMB22,000 million, respectively.	The proposed annual caps for the financial services, including entrustment loans, guarantees and other financial services, to be provided by the Group to the Jointly- held Entities have been determined with reference to the business<br>development and financing needs of the Jointly held Entities, and the acquisition opportunities which may arise from time to time in the international market. The Group’s strategic objective is to become an international petroleum company with<br>significant oil assets both onshore and offshore as well as in both the PRC and international markets. The Group is of the view that the provision of financial services to the Jointly-held Entities will enable them to have sufficient funding for<br>future acquisition.
				The difference between the 2018 and 2019 annual caps and the actual amount incurred in 2018 and 2019 and the difference between the proposed annual caps and the historical amount incurred in 2018 and 2019 are mainly because the<br>Group plans to grasp acquisition opportunities that may emerge on the international market from time to time. Once it is confirmed that the Group will proceed with an acquisition, the capital needs can be immense. Accordingly, the Company makes<br>sufficient estimations taking into consideration commercially feasible plans when applying for the proposed annual cap. Main details are as follows: (1) capital needs of Jointly-held Entities for acquisition may be obtained from other sources,<br>therefore, the Group may not actually be required to provide financial services to these Jointly held Entities; (2) acquisition targets that emerge on the market may not be able to meet the acquisition expectations of the Jointly-held<br>Entities.

(2) Products and services to be provided by CNPC/Jointly-held Entities to the Group

(a) For the two For the three For the three The proposed annual caps for the

Transaction categories	Historicalamount	Historicalannual caps	Proposedannual capsfor 2021 to2023	Basis of determination of the proposed annual caps
Engineering technology services	years ended 31 December 2019 and the six months ended 30 June 2020, approximately RMB147,925 million, RMB175,804 million and RMB39,579 million, respectively.	years ending 31 December 2020, RMB208,103 million, RMB203,908 million and RMB198,537 million, respectively.	years ending 31 December 2023, RMB198,200 million, RMB197,500 million and RMB197,000 million, respectively.	provision of engineering technology services have been determined with reference to the completed transactions and transaction amounts for<br>the engineering technology services provided by CNPC/Jointly- held Entities to the Group and the estimated business development of the Group.<br> <br><br><br><br>The Group has obtained engineering technology services from CNPC in the ordinary course of business, and as one of the most experienced companies in the world,<br>the engineering technology services CNPC provided to the Group are quality services. CNPC is also one of the few companies in the PRC which provide quality petrochemical related engineering technology services.
				The Group is of the view that the proposed adjustment in annual cap is in line with the estimated development of the business of the Group, and is determined based on principles of fairness and reasonableness.
				The difference between the 2018 and 2019 annual caps and the actual amount incurred in 2018 and 2019 and the difference between the proposed annual caps and the historical amount incurred in 2018 and 2019 are mainly because both the<br>Company and CNPC are large enterprises, with a large scale and transaction volumes. Since the proposed annual caps for the continuing connected transactions are for three years, it is difficult for the Company to anticipate all the possible<br>contingencies accurately during the period. Accordingly, the Company makes sufficient estimations taking into consideration commercially feasible plans when applying for the annual caps. Main details are as follows: CNPC’s competitiveness in<br>the industry are comparably stronger as it has human resource advantages, technological advantages and cost advantages, etc.

Transaction categories	Historicalamount	Historicalannual caps	Proposedannual capsfor 2021 to2023	Basis of determination of the proposed annual caps
				When forecasting the caps, the Group shall consider the possibility that CNPC will participate in all the projects. However, CNPC might not be able to participate in all the projects in practice due to specific conditions of<br>different projects.
(b) Production services	For the two years ended 31 December 2019 and the six months ended 30 June 2020, approximately RMB151,950 million, RMB148,128 million and RMB48,132 million, respectively.	For the three years ending 31 December 2020, RMB228,730 million, RMB220,525 million and RMB212,833 million, respectively.	For the three years ending 31 December 2023, RMB207,700 million, RMB205,500 million and RMB204,500 million, respectively.	The proposed annual caps for the production services provided by CNPC to the Group have been determined with reference to the<br>previous transactions conducted and transaction amounts in respect of production services provided by CNPC to the Group; the estimated business development of the Group; and the potential fluctuations in the international and the PRC market prices<br>of crude oil, petroleum and petrochemical products.<br> <br><br> <br>Production services mainly<br>consist of water supply, electricity supply, gas supply, the supply of petroleum, natural gas and petrochemical products and others (including sharing services) by CNPC to the Group. The Group is of the view that the proposed adjustment in annual<br>cap is in line with the estimated development of the business of the Group, and is determined based on principles of fairness and reasonableness.
				The difference between the 2018 and 2019 annual caps and the actual amount incurred in 2018 and 2019 and the difference between the proposed annual caps and the historical amount incurred in 2018 and 2019 are mainly because both the<br>Company and CNPC are large enterprises, with a large scale and transaction volumes. Since the proposed annual caps for the continuing connected transactions are for three years, it is difficult for the Company to anticipate all the possible<br>contingencies accurately during the period. Accordingly, the Company makes sufficient estimations taking into consideration commercially feasible plans when

Transaction categories	Historicalamount	Historicalannual caps	Proposedannual capsfor 2021 to2023	Basis of determination of the proposed annual caps
				applying for the proposed annual caps. Main details are as follows: (1) international trade accounts for a large proportion of this category of connected transactions, and uncertainty is much greater than other businesses;<br>(2) due to the objective to maintain the quality of crude oil and natural gas, CNPC is required to replace its crude oil and natural gas reserve from time to time and supply the replaced crude oil and natural gas to the Company to conduct<br>production and sales activities. Therefore, this amount needs to be taken into consideration when determining the proposed annual caps.
(c) Material supply services	For the two years ended 31 December 2019 and the six months ended 30 June 2020, approximately RMB31,670 million, RMB34,947mil lion and RMB5,055 million, respectively.	For the three years ending 31 December 2020, RMB35,566 million, RMB35,344 million and RMB35,819 million, respectively.	For the three years ending 31 December 2023, RMB35,300 million, RMB35,300 million and RMB35,300 million, respectively.	The annual caps for the supply of materials services paid by the Group to CNPC have been determined by reference to the estimated business<br>development of the Company.<br> <br><br> <br>CNPC is one of the leading buyers of petrochemical raw<br>materials in the PRC. With the economy of scale and the collective bargaining power of CNPC, the centralized purchase of materials by CNPC can stabilise the purchase prices of the Company’s raw materials.
				The Group is involved in a number of oil and gas fields and refinery construction projects in which CNPC provides to the Group material supply services.
				The Group is of the view that the proposed adjustment in annual cap is in line with the estimated development of the business of the Group, and is determined based on principles of fairness and reasonableness.
				The difference between the 2018 and 2019 annual caps and the actual amount incurred in 2018 and 2019 and the difference between the proposed annual caps and the historical amount incurred in 2018 and 2019 are mainly because both<br>the

Transaction categories	Historicalamount	Historicalannual caps	Proposedannual capsfor 2021 to2023	Basis of determination of the proposed annual caps
				Company and CNPC are large enterprises, with a large scale and transaction volumes. Since the proposed annual caps for the continuing connected transactions are for three years, it is difficult for the Company to anticipate all the<br>possible contingencies accurately during the period. Accordingly, the Company makes sufficient estimations taking into consideration commercially feasible plans when applying for the proposed annual caps in order to satisfy the needs of changes in<br>the Group’s production and operations.
(d) Social and living support services	For the two years ended 31 December 2019 and the six months ended 30 June 2020, approximately RMB7,362 million, RMB3,463 million and RMB997 million, respectively.	For the three years ending 31 December 2020, RMB9,093 million, RMB9,432 million and RMB9,731 million, respectively.	For the three years ending 31 December 2023, RMB5,800 million, RMB5,800 million and RMB5,800 million, respectively.	A majority of the Group’s local subsidiaries are situated in isolated industry or mining zones, where no social and living support<br>services are available from independent third parties on more favourable terms, if at all. It is therefore more convenient for CNPC to provide such services.<br> <br><br><br><br>The proposed annual caps for social and living support services have been determined with reference to the previous transactions conducted and transaction<br>amounts in respect of the social and living support services provided by CNPC to the Group, estimated development of the Group’s business and possible future reforms to the social and living support services provided by CNPC. The Group is of<br>the view that the proposed annual cap is in line with the development of the business of the Group, and is determined based on principles of fairness and reasonableness.
				The difference between the 2018 and 2019 annual caps and the actual amount incurred in 2018 and 2019 and the difference between the proposed annual caps and the historical amount incurred in 2018 and 2019 are mainly because both the<br>Company and CNPC are large enterprises, with a large scale and large volumes. Since the proposed annual caps for the continuing

Transaction categories	Historicalamount	Historicalannual caps	Proposedannual capsfor 2021 to2023	Basis of determination of the proposed annual caps
				connected transactions are for three years, it is difficult for the Company to anticipate all the possible contingencies accurately during the period. Accordingly, the Company makes sufficient estimations taking into consideration<br>commercially feasible plans when applying for the proposed annual caps in order to satisfy the needs of changes in the Group’s production and operations.
(e) Financial services
(i) Aggregate of maximum daily deposits made by the Group with CNPC and the interests received in respect of these deposits	For the two years ended 31 December 2019 and the six months ended 30 June 2020, approximately RMB61,345 million, RMB61,692 million and RMB58,417mil lion, respectively.	For the three years ending 31 December 2020, RMB63,000 million, RMB63,000 million and RMB63,000 million, respectively.	For the three years ending 31 December 2023, RMB55,000 million, RMB55,000 million and RMB55,000 million, respectively.	The proposed annual caps for the financial services (aggregate of deposits and interests) provided by CNPC to the Group have been determined<br>with reference to the estimated business development of the Group; the Group’s historical cash flow and levels of deposits and the competitive interest rates offered by CNPC Finance, and other financial institutions.<br><br><br><br> <br>In order to optimise cash flow management and capital efficiency of the Group and CNPC,<br>CNPC Finance and other financial institutions provide a full range of financial services to the Group and CNPC. The Group is of the view that the proposed annual cap is in line with the development of the business of the Group, and is determined<br>based on principles of fairness and reasonableness.<br> <br><br> <br>Fees and interest rates with<br>respect to financial services provided by CNPC Finance are determined in accordance with the benchmark lending rates and fees promulgated by the People’s Bank of China, or other relevant regulations by financial regulatory bodies (where<br>applicable), and they are no less favourable than those offered by independent third parties.<br> <br><br><br><br>The difference between the 2018 and 2019 annual caps and the actual amount incurred in 2018 and 2019 was minimal. The proposed annual cap is similar to<br>historical amounts incurred.

Transaction categories	Historicalamount	Historicalannual caps	Proposedannual capsfor 2021 to2023	Basis of determination of the proposed annual caps
(ii) Insurance, fees and expenses for entrustment loans, settlement services and other intermediary services	For the two years ended 31 December 2019 and the six months ended 30 June 2020, approximately RMB1,059 million, RMB983 million and RMB707 million, respectively.	For the three years ending 31 December 2020, RMB2,417 million, RMB2,753 million and RMB3,110 million, respectively.	For the three years ending 31 December 2023, RMB2,400 million, RMB2,400 million and RMB2,400 million, respectively.	To optimise cash flow management and capital efficiency of the Group, CNPC Finance and other financial institutions provide a full range of<br>financial services to the Group.<br> <br><br> <br>Through captive insurance, property insurance and<br>life insurance services provided by Generali China Insurance Co., Ltd. (中意財産保險有限公司 ) in which CNPC holds 51% issued share capital, CNPC Captive Insurance Co., Ltd.<br>(中石油專屬財産保險股份有限公司 ) in which CNPC holds 51% issued share capital and Generali China Life Insurance Co., Ltd<br>(中意人壽保險有限公司) in which CNPC holds 50% issued share capital, the Group obtains broader and more in-depth access to different types of<br>insurance, including property, personal injury and liability, etc. This enhances the Group’s ability to manage risks.<br> <br><br><br><br>Fees and interest rates with respect to financial services provided by CNPC Finance is determined in accordance with the benchmark lending rates and fees<br>promulgated by the People’s Bank of China, or other regulations by financial regulatory bodies. CNPC Finance offers interest rates, fee scale or other terms to the Group that are no less favourable than those offered by independent third<br>parties. Currently, settlement services provided by CNPC Finance (including bills of exchange, entrusted fund collection, online settlement, account management and fund management, etc.) can offer more simplicity and expediency in terms of approval<br>process and settlement efficiency compared to other commercial banks in the market.

Transaction categories	Historicalamount	Historicalannual caps	Proposedannual capsfor 2021 to2023	Basis of determination of the proposed annual caps
				The difference between the 2018 and 2019 annual caps and the actual amount incurred in 2018 and 2019 and the difference between the proposed annual caps and the historical amount incurred in 2018 and 2019 are mainly because both the<br>Company and CNPC are large enterprises, with a large scale and transaction volumes. Since the proposed annual caps for the continuing connected transactions are for three years, it is difficult for the Company to anticipate all the possible<br>contingencies accurately during the period. Accordingly, the Company makes sufficient estimations taking into consideration commercially feasible plans when applying for the proposed annual caps.
(iii) Financial leasing services<br> <br><br><br><br>Maximum outstanding daily balance (including the outstanding lease principal, rentals, pre-leasing/leasin g interest and other fees) due by the<br>Group	For the two years ended 31 December 2019 and the six months ended 30 June 2020, approximately RMB3,207 million, RMB2,837 million and RMB1,912 million, respectively.	For the three years ending 31 December 2020, RMB17,804 million, RMB19,894 million and RMB21,605 million, respectively.	For the three years ending 31 December 2023, RMB5,000 million, RMB5,000 million and RMB5,000 million, respectively.	In order to maintain its investment in development of oil and gas area with scale, major refining infrastructure and sales networks for<br>refined products, the Company needs service support from financial companies which are capable of providing low cost, reliable fund-raising, financing and settlement services of high quality, flexibility and convenience, in such a way as to<br>reconcile financial capital with industrial capital. Leveraging on the financial edge of Kunlun Leasing, the Group will be capable of deepening financing innovation, broadening sources of financing and ensuring timely and effective availability of<br>capital required for the Group’s strategic development. The Group would also be able to refine the Group’s management of interest-bearing debt and match potential project investment return to fund-raising and financing capabilities, and<br>capital operations to operating cash flows.<br> <br><br> <br>Kunlun Leasing is capable of providing<br>the Company with more quality services at prices, terms and conditions which are no less favourable than those offered by any other third-party financial institutions.

Transaction categories	Historicalamount	Historicalannual caps	Proposedannual capsfor 2021 to2023	Basis of determination of the proposed annual caps
				The difference between the 2018 and 2019 annual caps and the actual amount incurred in 2018 and 2019 and the difference between the proposed annual caps and the historical maximum outstanding daily balances for 2018 and 2019 are<br>mainly because financial leasing is only one of financing means used by the Company. In practice, the Company will make general adjustments to means of financing taking into consideration the prevailing circumstances and the needs of the Company,<br>and may use other means of financing. As a result, the actual amount incurred for financial leasing is lower than the relevant annual cap. However, as the Company may still need to use financial leasing as a means of financing. Therefore, the<br>proposed annual cap was determined with reference to the estimated capital needs of the Company, circumstances of the relevant assets and the cost of financing in the market, etc.
(f) Land lease	For the two years ended 31 December 2019 and the six months ended 30 June 2020, approximately RMB2,157 million, RMB1,959 million and RMB<br>2,710 million, respectively (exclusive of tax and government charges).<br> <br><br><br><br>Note 1: The historical amount were calculated based on the annual leasing fee (exclusive of tax and government charges) paid in respect of the land<br>lease.	For the three years ending 31 December 2020, RMB5,783 million, RMB5,783 million and RMB5,783 million, respectively (exclusive of tax and<br>government charges).<br> <br><br> <br>Note: The historical caps were calculated based on the<br>annual leasing fee (exclusive of tax and government charges) paid in respect of the land lease.	For the three years ending 31 December 2023, RMB16,578 million, RMB11,019 million and RMB5,685 million, respectively.	The Board considers that the proposed annual caps on the land lease provided by CNPC to the Group would ensure that the Company achieves its<br>future business development plans.<br> <br><br> <br>In the light of the fact that International<br>Financial Reporting Standard No. 16 “Leases” has become effective on January 1, 2019 and pursuant to the requirements of the Hong Kong Stock Exchange, the Company changed the basis of determination of the proposed annual cap for<br>the period from 2021 to 2023 with reference to the annual value of right-of-use assets relating to land lease. The annual value of the right- of-use assets is mainly based on the recognition of the current value of the minimum lease payment and the measurement of the corresponding lease<br>liability.

Transaction categories	Historicalamount	Historicalannual caps	Proposedannual capsfor 2021 to2023	Basis of determination of the proposed annual caps
	Note 2: In the light of the fact that International Financial Reporting Standard No. 16 “Leases” has become effective on January 1, 2019, for the two years ended 31 December 2019 and the six months ended<br>30 June 2020, the amount of the total value of right-of-use assets relating to the leases expected to be entered into by the Group each year were approximately nil,<br>RMB7,206 million and RMB2,601 million. The right-of-use assets are confirmed based on the land leasing situations of the period of 2019-2020, while the amount of right-of-use assets related to the land leasing as disclosed in 2019 annual report and 2020 interim financial report, are determined based on the aforementioned period<br>after taking into consideration of the lease renewal option.			The proposed annual caps of 2021- 2023 for land lease are mainly based on: (1) the total value of right-of-use assets relating to land lease in the period of 2021-2023; (2) the estimated changes in annual leasing fee to be paid in respect of the land lease in the period of 2021-2023 and relevant situation<br>of the market price of land lease; (3) the discount rate determined based on the five-year period loan issued by the People’s Bank of China and with reference to the interest rate for the Company’s new loans.<br><br><br><br> <br>The difference between the 2018 and 2019 annual caps determined based on annual leasing<br>fee paid in respect of the land lease and the actual amount incurred are mainly because during the contractual period, members of the Group may choose to terminate the lease in respect of certain lands based on the actual conditions.<br><br><br><br> <br>The difference between the proposed annual caps and the historical amount of total right-of-use assets of the year of 2019 and the six months ended 30 June 2020 determined based on the land leasing situation of 2019-2020, are mainly because: (1) the<br>relevant leasing period of right-of-use assets are different; (2) the estimated changes in annual leasing fee to be paid in respect of the land lease and relevant<br>situation of the market price of land lease are different.

Transaction categories	Historicalamount	Historicalannual caps	Proposedannual capsfor 2021 to2023	Basis of determination of the proposed annual caps
(g) Buildings lease	For the two years ended 31 December 2019 and the six months ended 30 June 2020, approximately RMB497 million, RMB569 million and RMB175<br>million, respectively.<br> <br><br> <br>Note 1: The historical amount were<br>calculated based on the annual leasing fee paid in respect of the buildings lease.<br> <br><br><br><br>Note 2: In the light of the fact that International Financial Reporting Standard No. 16 “Leases” has become effective on January 1,<br>2019, for the two years ended 31 December 2019 and the six months ended 30 June 2020, the amount of the total value of right of use assets relating to the leases expected to be entered into by the Group each year were approximately nil, RMB1,218<br>million and RMB168 million. The	For the three years ending 31 December 2020, RMB730 million, RMB730 million and RMB730 million, respectively.<br><br><br><br> <br>Note: The historical caps were calculated based on the annual leasing<br>fee paid in respect of the buildings lease.	For the three years ending 31 December 2023, RMB2,083 million, RMB1,384 million and RMB714 million, respectively.	The Board considers that the proposed annual caps in respect of the building leases provided by CNPC to the Group would ensure that the<br>Company achieves its future business development plans.<br> <br><br> <br>In the light of the fact<br>that International Financial Reporting Standard No. 16 “Leases” has become effective on January 1, 2019 and pursuant to the requirements of the Hong Kong Stock Exchange, the Company changed the basis of determination of the<br>proposed annual cap with reference to the annual value of right-of-use assets relating to buildings lease. The annual value of right-of-use assets is mainly based on the recognition of the current value of the minimum lease payment and the measurement of the corresponding lease liability.<br><br><br><br> <br>The proposed annual caps of 2021- 2023 for buildings lease are mainly based on:<br>(1) the total value of right-of-use assets relating to the buildings lease in the period of 2021-2023; (2) the estimated changes in annual leasing fee to be paid in respect of the buildings lease in the<br>period of 2021- 2023 and relevant situation of the market price of buildings lease; (3) the discount rate determined based on the five-year period loan issued by the People’s Bank of China and with reference to the interest rate for the<br>Company’s new loans.<br> <br><br> <br>The difference between the 2018 and 2019 annual caps<br>determined based on annual leasing fee paid in respect of the buildings lease and the actual amount incurred are mainly because members of CNPC who own one or more leased buildings may enter into individual building leasing contracts with members of<br>the Group pursuant to the terms of the framework agreement. Members of the Group may choose to terminate the lease in respect of certain buildings taking into consideration the conditions offered by independent third parties on the<br>market.

Transaction categories	Historicalamount	Basis of determination of the proposed annual caps
	right-of-use assets are confirmed based on the buildings leasing situation of the period of 2019-2020, while the amount of right-of-use assets related to the buildings leasing as disclosed in 2019 annual report and 2020 interim financial report, are determined based on the aforementioned period after taking into consideration of the<br>lease renewal option.	The difference between the proposed annual caps and the historical amount of total right-of-use assets of the year of 2019 and the six months ended 30<br>June 2020 determined based on the buildings leasing situation of 2019- 2020, are mainly because: (1) the relevant leasing period of right-of-use assets are<br>different; (2) the estimated changes in annual leasing fee to be paid in respect of the buildings lease and relevant situation of the market price of buildings lease are different.
Notes:	The New Comprehensive Agreement also provides for loans and other financial assistance to be provided byCNPC/Jointly-held Entities to the Group. These transactions are fully exempt from shareholders’ approval, annual review and all disclosure requirements set out in Chapter 14A of the HKEx Listing Rules, pursuant to the Rule 14A.90 of the HKExListing Rules. Please refer to paragraph 1.7.1 for details.
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1.6	Reasons for and benefits of the Continuing Connected Transactions with CNPC
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CNPC is an integrated energy corporation with businesses covering oil and gas exploration and development, refining and petrochemical, oil product marketing, oil and gas storage and transportation, international trading, engineering and technical services, petroleum equipment manufacturing and logistical support services. The Company is a joint-stock company established during the reorganization of CNPC on 5 November 1999. CNPC injected the assets, liabilities and rights related to its core business into the Company, such as oil and gas exploration and development, oil refinement, petrochemical, sales and marketing, natural gas, pipelines and related scientific research, etc. CNPC is the sole promoter of the Company. The Company completed its offshore listing in April 2000 and CNPC continues to be the controlling shareholder of the Company. CNPC retained businesses related to the operation and production of petroleum and natural gas, such as engineering technology services, production services, material supply services, ancillary services, social services and financial services, etc. These businesses can provide a series of necessary services in relation to the production and operation of the Company and its subsidiaries and in relation to the livelihood of its employees. The Group and CNPC are equipped with advantages of talented employees, advanced technology and geographical vicinity, and have been in a long-term cooperation relationship with each other. Therefore, the Company believes that the Continued Connected Transactions will be beneficial to the continued operation and development of the Group. This is mainly reflected in:

(a)	The construction technology, production and financial services provided to the Group by CNPC have competitive<br>advantages over other service providers in the same industry in the PRC. CNPC has significant experience, technology and cost advantages when compared with other service providers;
(b)	The petroleum industry has its unique requirements for technology and quality, and the oil and gas engineering<br>and technological services provided by CNPC are of higher standards within the industry, which can satisfy the technological and quality standards of the projects invested in and operated by the Group. At the same time, high quality services can<br>also reduce safety and environmental protection risks of the Group significantly;
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(c)	Financial subsidiaries of CNPC focus on providing services to the Group and have strong financial capabilities.<br>They have provided highly efficient financial services to the Group both domestically and abroad. Details of which are described below:
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(i)	CNPC Finance is the internal settlement, fund raising and financing and capital management platform of CNPC.<br>CNPC provides deposit and other financial services to the Group through CNPC Finance and other financial institutions;
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(ii)	CNPC Finance lowered the costs of the Group through various mechanisms, such as providing more efficient<br>internal settlement, and the loan process is convenient, timely and efficient. Furthermore, CNPC Finance utilizes its status as member of the China Foreign Exchange Trading Centre (中國外匯交易中心) to<br>develop businesses in the settlement, sales and conversion of foreign currency, which saved the Group a considerable amount in foreign exchange costs;
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(iii)	CNPC Finance is under the supervision of the China Banking and Insurance Regulatory Commission as a major<br>domestic non-bank financial institution, and has achieved the regulatory requirements as determined by regulatory indicators over the years. As at the end of 2019, CNPC Finance has total assets of<br>RMB600,142 million and achieved an income of RMB17,714 million and a net profit of RMB7,926 million, occupying a leading position among domestic counterparts. In 2013, CNPC Finance (HK) Limited, a wholly-owned subsidiary of CNPC<br>Finance, obtained the sovereign rating assigned by an international rating agency. This is currently the highest credit rating obtained by domestic financial institutions; The Company considers that due to familiarity with the business and operation<br>of the Group, the service provided by CNPC Finance is generally no less favourable to the market level in terms of price and quality, and with high efficiency, more convenience and lower transaction costs. In particular, CNPC’s undertaking to<br>act as the payer of last resort for CNPC Finance provides better security of funds as compared to external banks. Furthermore, the Company is in a position to benefit from dividends by virtue of owning 32% shareholding in CNPC Finance;<br>
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(iv)	Kunlun Leasing is capable of providing low cost, reliable fund-raising, financing and settlement services of<br>high quality, flexibility and convenience which will support the Group to maintain its scale of investment in development of oil and gas, major refining infrastructure and in sales networks for refined products and to reconcile financial capital<br>with industrial capital. Leveraging on the financial edge of Kunlun Leasing, the Group will be capable of deepening financing innovation, broadening sources of financing and ensuring timely and effective availability of capital required for the<br>Group’s strategic development. The Group would further be able to refine the Group’s management of interest-bearing debt and match potential project investment return to fund-raising and financing capabilities, and capital operations to<br>operating cash flows;
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(d)	The Group’s main oil fields and refining and chemical production facilities are scattered across different<br>regions, some of which are in remote areas with harsh operating conditions. CNPC and its subsidiaries can provide service and business support to the Group locally, and this to a large extent is beneficial to the Group’s continued development<br>in such regions.

Actual practices proved that the Continuing Connected Transactions with CNPC benefit the continued operation and development of the Company.

Given the nature of the cooperation between the Company and CNPC, the Company considers the New Comprehensive Agreement, the Non-Exempt Continuing Connected Transactions and their proposed annual caps to be one significant proposal. As such, the New Comprehensive Agreement and the proposed annual caps in respect of the Non-Exempt Continuing Connected Transactions will be proposed to the Extraordinary General Meeting for consideration and approval as one single resolution. Any votes by the Shareholders on such resolution will be applicable to the New Comprehensive Agreement as well as the proposed annual caps in respect of each of the Non-Exempt Continuing Connected Transactions alike.

The Continuing Connected Transactions with CNPC are and will be conducted in the ordinary and usual course of business of the Company. These transactions will continue to be agreed on an arm’s length basis with terms that are fair and reasonable to the Company. Due to the long-term relationship between the Company and CNPC, the Directors (including the independent non-executive Directors) consider that: (a) it is beneficial to the Company to continue to enter into the Continuing Connected Transactions with CNPC as these transactions have facilitated and will continue to facilitate the operation and growth of the Group’s business; (b) the Continuing Connected Transactions with CNPC have been conducted on normal commercial terms or on terms no less favourable than those available to the Group from independent third parties, under prevailing local market conditions, and are entered into in the ordinary and usual course of business of the Group, are fair and reasonable and in the interests of the Company and the Shareholders as a whole, and that the proposed annual caps for the Continuing Connected Transactions with CNPC are fair and reasonable and are in the interests of the Company and the Shareholders as a whole. At the same time, the Continuing Connected Transactions with CNPC do not harm the interests of the Company and the minority Shareholders, will not have an adverse effect on the Company’s current and future financial condition; and will not affect the Company’s independence.

The Independent Board Committee will give their view on the Non-Exempt Continuing Connected Transactions and their proposed annual caps after considering the advice from the Independent Financial Advisor, and their view will be given in the circular to be despatched to the Shareholders.

1.7	HKEx Listing Rules Implication
1.7.1	The Continuing Connected Transactions with CNPC mainly comprise:
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(1)	(a) Products and services to be provided by the Group to CNPC/Jointly-held Entities
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(b) Financial services to be provided by the Group to Jointly-held Entities

(2)	(a) Engineering technology services to be provided by CNPC to the Group

(b) Production services to be provided by CNPC to the Group

(d) Social and living support services to be provided by CNPC to the Group

(e) Financial services to be provided by CNPC/Jointly-held Entities to the Group

(i) Aggregate of the maximum daily amount of deposits made by the Group with CNPC and the total amount of interest received in respect of these deposits

(ii) Insurance, fees and expenses for entrustment loans, settlement services and other intermediary services provided by CNPC to the Group

(iii) Maximum outstanding daily balance (including the outstanding lease principal, rentals, pre-leasing/leasing interest and other fees) due by the Group to Kunlun Leasing in respect of the financial leasing services provided by Kunlun Leasing to the Group

(iv) Loans and other financial assistance to be provided by CNPC/Jointly-held Entities to the Group

(f) Land lease provided by CNPC to the Group

(g) Buildings lease provided by CNPC to the Group

1.7.2	The implications of the aforementioned Continuing Connected Transactions under the HKEx Listing Rules are as<br>below:

(1) Under the HKEx Listing Rules, (2)(e)(iv) loans and other financial assistance to be provided by CNPC/Jointly-held Entities to the Group, being financial assistance provided by a connected person for the benefit of the listed issuer on normal commercial terms (or better to the listed issuer) where no security over the assets of the listed issuer is granted in respect thereof, is fully exempt from shareholders’ approval, annual review and all disclosure requirements set out in Chapter 14A of the HKEx Listing Rules, pursuant to the Rule 14A.90 of the HKEx Listing Rules.

(2) Under the HKEx Listing Rules, the following categories of Continuing Connected Transactions with CNPC are exempted from the Independent Shareholders’ approval requirement but are subject to the reporting and announcement requirements, as each of the percentage ratios under Rule 14.07 of the HKEx Listing Rules (other than the profits ratio), where applicable, in relation of each of these categories is, on an annual basis, expected to be less than 5% under Rule 14A.76(2) of the HKEx Listing Rules:

(1)(b) Financial services to be provided by the Group to Jointly-held Entities

(2)(c) Material supply services to be provided by CNPC to the Group

(2)(d) Social and living support services to be provided by CNPC to the Group

(2)(e)(ii) Insurance, fees and expenses for entrustment loans, settlement services and other intermediary services provided by CNPC to the Group

(2)(e)(iii) Maximum outstanding daily balance (including the outstanding lease principal, rentals, pre-leasing/leasing interest and other fees) due by the Group to Kunlun Leasing in respect of the financial leasing services provided by Kunlun Leasing to the Group

(2)(f) Land lease provided by CNPC to the Group

(2)(g) Buildings lease provided by CNPC to the Group

(3) Under the HKEx Listing Rules, the following transactions are Non-Exempt Continuing Connected Transactions with CNPC which are subject to the reporting, announcement and Independent Shareholders’ approval requirements:

(1)(a) Products and services to be provided by the Group to CNPC/Jointly-held Entities

(2)(a) Engineering technology services to be provided by CNPC to the Group

(2)(b) Production services to be provided by CNPC to the Group

(2)(e)(i) Aggregate of the maximum daily amount of deposits made by the Group with CNPC and the total amount of interest received in respect of these deposits

1.8	Approval by Board and Independent Shareholders

The Audit Committee of the Board gave advice to the Board about the Continuing Connected Transactions with CNPC and their proposed annual caps. The Board (including the independent non-executive directors) has reviewed the advice and is of the view that such transactions are in the ordinary course of business of the Company, and have been entered into on normal commercial terms or terms no less favourable to the Company than those with independent third parties, are fair and reasonable, and in the interest of the Company and the Shareholders as a whole. On such basis, the Board suggests the Independent Shareholders of the Company to approve the terms and the proposed annual caps in respect of the Non-Exempt Continuing Connected Transactions.

On 26 August 2020 and 27 August 2020, the seventh meeting of the Board in 2020 was convened by way of a physical meeting, at which the non-connected Directors unanimously approved the resolution on the Continuing Connected Transactions with CNPC and their proposed annual caps. Each of Mr. Dai Houliang, Mr. Li Fanrong, Mr. Liu Yuezhen, Mr. Lv Bo, Mr. Jiao Fangzheng and Mr. Duan Liangwei, who are deemed as connected directors of the Company by virtue of their positions in CNPC, abstained from voting on the relevant resolutions of the Board. Save as disclosed above, none of the Directors has any material interest in the transactions abovementioned.

Further, an Independent Board Committee has been formed to advise the Independent Shareholders in connection with the terms and the proposed annual caps in respect of the Non-Exempt Continuing Connected Transactions, and the Independent Financial Advisor has been appointed to advise the Independent Board Committee and the Independent Shareholders on the same.

2.	RENEWAL OF CONTINUING CONNECTED TRANSACTIONS WITH BEIJING GAS IN RESPECT OF 2021 TO 2023
2.1	Background
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The Board hereby announces that the Company and Beijing Gas entered into the New Products and Services Agreement on 27 August 2020 to continue the Continuing Connected Transactions with Beijing Gas after 31 December 2020.

2.2	Continuing connected transactions under the New Products and Services Agreement

The Company entered into the Products and Services Agreement with Beijing Gas on 24 August 2017, pursuant to which the Company has agreed to supply, and Beijing Gas has agreed to purchase natural gas and natural gas related pipeline transportation services. The Products and Services Agreement serves as a framework agreement between the Company and Beijing Gas, pursuant to which the Group and Beijing Gas Group will enter into specific agreements during the term of the Products and Services Agreement. The Products and Services Agreement became effective from 1 January 2018 for a term of three (3) years and may be extended if agreed by both parties and approved by the Board or Shareholders of the Company (as the case may be).

As the Products and Services Agreement will expire on 31 December 2020, the Company entered into a New Products and Services Agreement with Beijing Gas on 27 August 2020, which shall be effective from 1 January 2021 for a term of three years.

During the term of the New Products and Services Agreement, the specific product and service agreements may be terminated from time to time by either of the parties thereto providing at least 6 months’ written notice of termination in relation to any categories of products or services.

2.3	Basis for price determination

The New Products and Services Agreement provides the following pricing principles for the products and services to be provided:

(a) The pricing of the various products and services under the New Product and Service Agreement shall be formulated in accordance with this general principle and sequence: where there exist government-prescribed price, government-prescribed price shall be implemented; where there exist no government-prescribed price but market prices, reference shall be made to the market prices in the same market for the same period, and being negotiated by both parties; and

(b) Specific pricing principles: according to the principles and sequence determined in article (a), the government-prescribed price of natural gas provided by the Group to Beijing Gas Group shall be determined in accordance with the relevant notice and pricing documents issued by the National Development and Reform Commission. Where there exist no government-prescribed price but market price for the products and services to be provided by the Group to Beijing Gas Group, reference shall be made to the market prices in the same market for the same period, and being negotiated by both parties.

2.4	Historical amounts, historical caps, proposed annual caps and rationale

The Board has considered and proposed that the following maximum amounts in respect of the Continuing Connected Transactions with Beijing Gas which will serve as the annual caps for such transactions:

Historical amounts	Historical caps	Proposed annualcaps for 2021 to 2023	Basis of determination of the proposedannual caps
For two years ended 31<br> <br>December<br>2019 and<br> <br>the six months ended<br> <br>30 June 2020,<br><br><br>approximately<br> <br>RMB31,455 million,<br><br><br>RMB31,709 million<br> <br>and RMB16,733<br><br><br>million , respectively.	For the three years ending 31 December 2020, RMB33,072 million,<br><br><br>RMB34,975 million and RMB36,776 million, respectively.	For the three years ending 31 December 2023, RMB40,000 million, RMB40,000 million and RMB40,000 million, respectively	The proposed annual caps have been determined with reference to (i) the relevant pricing principles, i.e., the government prescribed price; (ii) the historical transaction levels for the same type of transactions; and (iii) the<br>estimated future transaction levels based on the market needs of natural gas in the coming three years.
2.5	Reasons for and benefits of the Continuing Connected Transactions with Beijing Gas
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Due to the long term relationship between the Company and Beijing Gas and the significant share of Beijing Gas in Beijing natural gas market, the Directors (including the independent non-executive Directors) consider that: (a) it is beneficial to the Company to enter into the Continuing Connected Transactions with Beijing Gas as these transactions have facilitated and will continue to facilitate the operation and growth of the Group’s business; (b) the Continuing Connected Transactions with Beijing Gas are on normal commercial terms and were entered into in the ordinary and usual course of business of the Group, are fair and reasonable and in the interests of the Company and the Shareholders as a whole, and that the proposed annual caps are fair and reasonable.

2.6	HKEx Listing Rules Implication

PetroChina Beijing Gas Pipeline is a non-wholly owned subsidiary of the Company. Beijing Gas is a substantial shareholder of PetroChina Beijing Gas Pipeline (holding 40% of the issued share capital of PetroChina Beijing Gas Pipeline) and is a connected person at the subsidiary level of the Company. Therefore, the transactions under the New Products and Services Agreement constitute continuing connected transactions of the Company under Chapter 14A of the HKEx Listing Rules.

Since the highest of the applicable percentage ratios (other than the profits ratio) under the HKEx Listing Rules for the transactions contemplated under the New Products and Services Agreement are more than 5% but less than 25%, the transactions contemplated under the New Products and Services Agreement are subject to the reporting, announcement, annual review and Independent Shareholders’ approval requirements under Chapter 14A of the HKEx Listing Rules.

As (i) Beijing Gas is regarded as a connected person of the Company only at the subsidiary level; (ii) the continuing connected transactions contemplated under the New Products and Services Agreement are on normal commercial terms; (iii) the Board (including all the independent non-executive Directors of the Company) has approved the continuing connected transactions under the New Products and Services Agreement and confirmed that the terms of the continuing connected transactions are fair and reasonable and that the continuing connected transactions are on normal commercial terms and in the interests of the Company and the Shareholders as a whole, the continuing connected transactions contemplated under the New Products and Services Agreement are subject to the reporting and announcement requirements but are exempt from the circular, independent financial advice and shareholders’ approval requirements under Rule 14A.101 of the HKEx Listing Rules.

On 26 August 2020 and 27 August 2020, the seventh meeting of the Board in 2020 was convened by way of a physical meeting, at which the Directors unanimously approved the resolution on the Continuing Connected Transactions with Beijing Gas and their proposed annual caps. None of the Directors has any material interest in the New Products and Services Agreement and none of them has abstained from voting on the relevant resolution of the Board.

3.	GENERAL INFORMATION
3.1	Information on the Company
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The Company is a joint stock limited company incorporated on 5 November 1999 under the PRC Company Law as a result of the restructuring of CNPC. The H Shares, ADSs, and A Shares of the Company are listed on the Hong Kong Stock Exchange, the New York Stock Exchange, and the Shanghai Stock Exchange, respectively.

The Company and its subsidiaries engage in a broad range of petroleum and natural gas activities including the exploration, development, production and sale of crude oil and natural gas; the refining of crude oil and petroleum products; the production and sale of basic petrochemical products, derivative petrochemical products and other petrochemical products; the sale and trading of refined products; and the transportation of natural gas, crude oil and refined products, and the sale of natural gas.

3.2	Information on CNPC

CNPC is the controlling shareholder and a connected person of the Company. CNPC is a petroleum and petrochemical conglomerate that was formed in the wake of the restructuring launched by the State Council to restructure the predecessor of CNPC, China National Petroleum Company (中國石油天然氣總公司), in July 1998. CNPC is also a state-authorised investment corporation and state-owned enterprise. CNPC is an integrated energy corporation with businesses covering oil and gas exploration and development, refining and petrochemical, oil product marketing, oil and gas storage and transportation, international trading, engineering and technical services and petroleum equipment manufacturing.

3.3	Information on CNPC Finance

CNPC Finance is owned as to 40% by CNPC, 32% by the Company and 28% by CNPC Capital Company Limited and is a connected person of the Company. As approved by the People’s Bank of China and the China Banking Regulatory Commission, the principal business activities of CNPC Finance include providing guarantee to members of the CNPC group and the Group, providing entrusted loan and entrusted investment services to members of the CNPC group and the Group, bill acceptance and discounting for members of the CNPC group and the Group, internal fund transfer and settlement among members of the CNPC group and the Group and relevant internal settlement and clearance plans designing, taking deposits from members of the CNPC group and the Group, providing loans to members of the CNPC group and the Group, underwriting corporate bonds of members of the CNPC group and the Group, and investment in marketable securities.

3.4	Information on Kunlun Leasing

Kunlun Leasing is a subsidiary of CNPC and is a connected person of the Company. Kunlun Leasing is a non-bank financial institution established in 2010 with the approval of the China Banking Regulatory Commission. Kunlun Leasing is principally engaged in financial leasing, accepting fixed deposits from shareholders with maturities of one year or above, interbank borrowings and loans to financial institutions, etc.

3.5	Information on Beijing Gas

Beijing Gas is a company established under the laws of the PRC with limited liability and is mainly engaged in operation of natural gas supply network in the PRC. Beijing Gas is a substantial shareholder of PetroChina Beijing Gas Pipeline (holding 40% of the issued share capital of PetroChina Beijing Gas Pipeline) and is a connected person of the Company. The ultimate beneficial owner of Beijing Gas is Beijing Enterprises Group Company Limited, an independent third party of the Company.

4.	CIRCULAR, VIEWS OF THE INDEPENDENT BOARD COMMITTEE AND ADVICE OF THE INDEPENDENT FINANCIAL ADVISOR

In accordance with the HKEx Listing Rules, the views of the Independent Board Committee as well as the advice of the Independent Financial Advisor to the Independent Board Committee and the Independent Shareholders in respect of the terms and conditions and the proposed annual caps in respect of the Non-Exempt Continuing Connected Transactions will be stated in a circular to be despatched to the Shareholders.

A circular containing, amongst other things, further information on the terms of the Continuing Connected Transactions, a letter from the Independent Board Committee, an opinion of the Independent Financial Advisor, together with a notice to convene the Extraordinary General Meeting to approve the Non-Exempt Continuing Connected Transactions and their proposed annual caps, is expected to be issued to the Shareholders on or before 15 September 2020.

5.	INDEPENDENT SHAREHOLDERS’ APPROVAL

Pursuant to the HKEx Listing Rules, the Non-Exempt Continuing Connected Transactions and their proposed annual caps shall be approved by the Independent Shareholders at the Extraordinary General Meeting. Any Shareholder with a material interest in the transaction and its associates will not vote.

CNPC and its associates will abstain from voting on the relevant resolution. To the knowledge of the Company and its Directors, as at the date of this announcement, CNPC and its associates hold 146,882,339,136 A Shares and 291,518,000 H Shares, representing approximately 80.41% of the total issued share capital of the Company.

6.	DOCUMENTS FOR INSPECTION

The following documents are available for inspection at the legal address of the Company during its normal business hours:

(1)	Resolutions passed at the seventh meeting of the Board in 2020;
(2)	Opinion of the independent non-executive directors of the Company;<br>
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(3)	Opinion of the Audit Committee of the Board;
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(4)	The New Comprehensive Agreement;
(5)	The New Products and Services Agreement; and
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(6)	The confirmation letter to the Land Use Rights Leasing Contract and the 2017 Buildings Leasing Contract.<br>
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7.	DEFINITIONS
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In this announcement, unless the context otherwise requires, the following terms shall have the meanings set out below:

“2017 Buildings Leasing Agreement”	the new buildings leasing agreement entered into by the Company and CNPC on 24 August 2017
“ADS(s)”	the American Depository Share(s) issued by the Bank of New York as the depository bank and listed on the New York Stock Exchange, with each the ADS representing 100 H Shares
“Amended Buildings Leasing Contract”	the amended buildings leasing contract entered into between the Company and CNPC on 25 August 2011
“associate(s)”	has the meanings ascribed to it under the HKEX Listing Rules
“A Shares”	the domestic ordinary shares issued by the Company to domestic investors for subscription and trading and denominated in Renminbi
“Beijing Gas”	Beijing Gas Group Company Limited (北京市燃氣集團有限責任公司), a company established under the laws of the PRC with limited liability, and a substantial<br>shareholder of PetroChina Beijing Gas Pipeline, holding 40% interest in PetroChina Beijing Gas Pipeline
“Beijing Gas Group”	Beijing Gas and its subsidiaries, branches and units
“Board”	the board of directors of the Company
“Buildings Leasing Contract”	the buildings leasing contract dated 10 March 2000 entered into between the Company and CNPC pursuant to which CNPC has leased to the Company buildings located throughout the PRC for the use by the Company for its business<br>operation including the exploration, development and production for a term of 20 years, as amended by a supplemental agreement dated 26 September 2002
“CNPC”	China National Petroleum Corporation (中國石油天然氣集團有限公司), a state-owned enterprise incorporated under the laws of the PRC, and the controlling<br>shareholder of the Company, and for the purpose of this announcement, unless otherwise specified, shall include other subsidiaries and units of CNPC (including subsidiaries, branches and relevant units) other than the<br>Group

“CNPC Finance”	China Petroleum Finance Company Limited (中油財務有限責任公司), owned as to 40% by CNPC, 32% by the Company and 28% by CNPC Capital Company Limited
“Company”	PetroChina Company Limited, a joint stock company limited by shares incorporated in the PRC on 5 November 1999 under the PRC Company Law, the H shares of which are listed on the Hong Kong Stock Exchange with ADS(s) listed on<br>the New York Stock Exchange and the A shares are listed on the Shanghai Stock Exchange
“Comprehensive Agreement”	the comprehensive products and services agreement dated 24 August 2017 entered into between CNPC and the Company regarding the provision by the Group to CNPC and by CNPC to the Group, of a range of products and services from time to<br>time, coming into effect on 1 January 2018 and effective for 3 years
“connected person”	has the meanings ascribed to it under the HKEx Listing
“Continuing Connected Transactions with CNPC”	the continuing connected transactions which have been and will continue to be entered into between the Group and CNPC/Jointly-held Entities, details of which are set out in the section 1 of this announcement
“Continuing Connected Transactions with Beijing Gas”	the continuing connected transactions which have been and will continue to be entered into between the Group and Beijing Gas, details of which are set out in the section 2 of this announcement
“controlling shareholder”	has the meanings ascribed to it under the HKEx Listing
“Director(s)”	directors of the Company
“Extraordinary General Meeting”	an extraordinary general meeting of the Company to be held at Talimu Petroleum Hotel, 5 Beishatan, Chaoyang District, Beijing, PRC at 9 a.m. on 5 November 2020 to approve, among other things, the New Comprehensive Agreement,<br>the Non- Exempt Continuing Connected Transactions and their proposed annual caps
“Group”	the Company and its subsidiaries
“HKEx Listing Rules”	the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Hong Kong Stock Exchange”	The Stock Exchange of Hong Kong Limited
“H Share(s)”	the overseas-listed foreign share(s) in the Company’s share capital, with a nominal value of RMB1.00 each, which are listed on the Hong Kong Stock Exchange and subscribed for in Hong Kong dollars, and which include the H<br>Share(s) and the underlying ADS(s)

“Independent Board Committee”	the independent committee of the Board, comprising Ms. Elsie Leung Oi-sie, Mr. Tokuchi Tatsuhito, Mr. Simon Henry, Mr. Cai Jinyong and Mr. Jiang, Simon X., the independent non- executive<br>Directors of the Company, established for the purpose of reviewing and advising the Independent Shareholders in respect of the New Comprehensive Agreement, the Non-Exempt Continuing Connected Transactions and<br>the relevant proposed annual caps
“Independent Financial Advisor”	ICBC International Capital Limited (工銀國際融資有限公司), a licensed corporation carrying out Type 1 (dealing in securities) and Type 6 (advising on corporate finance)<br>regulated activities under the SFO, and the independent financial advisor appointed to advise the Independent Board Committee and the Independent Shareholders in respect of the terms and the relevant proposed annual caps in connection with the Non-<br>Exempt Continuing Connected Transactions
“Independent Shareholders”	the shareholders of the Company other than CNPC and its associates
“Jointly-held Entity(ies)”	A company in which the Company and CNPC jointly hold shares while CNPC and/or its subsidiaries (individually or together) is/are entitled to exercise, or control the exercise of, 10% or more of the voting power at any general<br>meeting of such company
“Kunlun Leasing”	Kunlun Financial Leasing Co., Ltd. (昆侖ï¤Š融租賃有限責任公司 ), a company incorporated in the PRC with limited liability, which is a subsidiary of<br>CNPC
“Land Use Rights Leasing Contract”	the land use rights leasing contract dated 10 March 2000 entered into between the Company and CNPC pursuant to which CNPC has leased to the Company parcels of land situated in different places over the PRC in connection with<br>and for the purpose of all aspects of the operations and business of the Group for a term of 50 years
“New Comprehensive Agreement”	the comprehensive products and services agreement dated 27 August 2020 entered into between CNPC and the Company regarding the provision by the Group to CNPC and by CNPC to the Group, of a range of products and services from time to<br>time which shall come into effect on 1 January 2021 for a term of three years
“New Products and Services Agreement”	the new products and services agreement entered into by the Company and Beijing Gas on 27 August 2020, pursuant to which the Company has agreed to supply, and Beijing Gas has agreed to purchase natural gas and natural gas<br>related pipeline transportation services

“Non-Exempt Continuing Connected Transactions”	the Continuing Connected Transactions under the categories of (1)(a), (2)(a), (2)(b) and (2)(e)(i), as set out in the section 1 of this announcement
“PetroChina Beijing Gas Pipeline”	PetroChina Beijing Gas Pipeline Co., Ltd. (中石油北京天然氣管道有限公司), a company established under the laws of the PRC with limited liability<br>and a subsidiary of the Company, in which the Company holds 60% interest
“PRC” or “China”	the People’s Republic of China (for the purpose of this announcement, excludes Hong Kong, the Macao Special Administrative Region and Taiwan)
“Products and Services Agreement”	the agreement entered into between the Company and Beijing Gas on 24 August 2017, pursuant to which the Company has agreed to supply, and Beijing Gas has agreed to purchase natural gas and natural gas related pipeline<br>transportation services
“RMB”	Renminbi, the lawful currency of the PRC
“Shanghai Stock Exchange”	The Shanghai Stock Exchange
“Share(s)”	shares of the Company, including the A Share(s) and the H Share(s)
“Shareholder(s)”	holder(s) of Shares of the Company
“subsidiaries”	has the meanings ascribed to it under the HKEx Listing Rules
“substantial shareholder”	has the meanings ascribed to it under the HKEx Listing Rules
“Supervisory Committee”	the supervisory committee of the Company
By order of the Board
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PetroChina Company Limited
Wu Enlai
Secretary to the Board

Beijing, the PRC

27 August 2020

As at the date of this announcement, the Board comprises Mr. Dai Houliang as Chairman; Mr. Li Fanrong as Vice Chairman and non-executive Director; Mr. Liu Yuezhen, Mr. Lv Bo and Mr. Jiao Fangzheng as non-executive Directors; Mr. Duan Liangwei as executive Director; andMs. Elsie Leung Oi-sie, Mr. Tokuchi Tatsuhito, Mr. Simon Henry, Mr. Cai Jinyong and Mr. Jiang, Simon X. as independent non-executive Directors.