Briefing on CNPC's Engagement in Jointly
Building “the Belt and Road”
May 8, 2017
China National Petroleum Corporation (CNPC)
China National Petroleum Corporation (CNPC) is an integrated international energy company, with main business covering oil & gas exploration and development, refining & chemicals, marketing, engineering & technical services, financial services, and new energy development. With its trans-region, multi-industry, and cross-border business presence, CNPC integrates the operation of upstream & downstream sectors, domestic & foreign trade, and production & marketing. In 2016, it ranked the 3rd in both the PIW Top 50 and Fortune Global 500, as well as the 2nd among the top 500 Chinese enterprises.
Energy collaboration serves as the pioneering industry and important engine in building the “Belt and Road”. Since the Initiative was unveiled, under the principles of joint discussing, co-building and sharing, CNPC has proactively been communicating with related countries in the region to expand oil and gas cooperation for better connectivity, scoring a number of new achievements. In 2016, CNPC’s equity oil & gas production of the current 50 cooperative projects in 19 countries (including Russia, Kazakhstan, Turkmenistan, Iraq, Iran, Indonesia and Singapore, etc.) registered almost 60 million tons of oil equivalent, or about 80% of the Company’s total overseas equity production. Besides, CNPC endeavors to improve infrastructure connectivity and expedite the building of oil & gas transportation corridors via China’s northwest, northeast, southwest and coastal terminals. Thanks to the initial completion of Trans-Asia Gas Pipeline, Kazakhstan-China Crude Pipeline, Russia-China Crude Pipeline, and Myanmar-China Oil and Gas Pipelines, an extensive oil and gas supply network has been shaped initially, connecting and benefiting countries along the corridors.
I. Building a community of shared destiny through win-win cooperation.
2017 marks the 20th anniversary of CNPC’s active engagement in the oil & gas collaboration along the “Belt and Road”. Over the past two decades, CNPC has shaped its five overseas oil & gas cooperation zones, four oil & gas transportation corridors, and three overseas oil & gas operation hubs. In 1997, CNPC sealed the collaboration agreement of the giant oil and gas project in Aktobe, Kazakhstan, the first cooperative project of the Company along “the Belt and Road”. Over the last two decades, adhering to its principle of win-win and collaborative development, CNPC has given full considerations to the reasonable need from the host governments, business partners and local communities while pursuing its own growth, relentlessly building a community of common destiny benefiting its partner(s), and all related stakeholders.
In Africa, CNPC assisted Sudan, Chad and Niger in their establishment of integrated upstream-to-downstream petroleum industry systems. Specifically, Sudan leapfrogged from an oil importer to an oil exporter, setting “a Sudanese example of the industrialization of African countries”. In addition, CNPC also helped training a large group of Sudanese petroleum professionals with a complete set of disciplines, complimented by the Sudanese President as “the most valuable gift”. In Central Asia, CNPC successfully implemented a series of cooperative projects, which was acknowledged by the government of Kazakhstan as the “Model of Kazakhstan-China Economic and Trade Cooperation”. In Southeast Asia, CNPC’s cooperative projects including Myanmar-China Oil and Gas Pipelines achieved exemplary effects in boosting Myanmar’s petrochemical industry, bilateral economic and trade relations, regional economic development in Southeast Asia, and win-win cooperation in even broader areas. In the Middle East, thanks to the efforts of CNPC, the Ahdeb Oilfield was put on stream in 2011, proving to be pivotal to the after-war economic recovery and social restoration in Iraq. The Chinese contribution to local development was described as “a Monument” in the words of the Iraqi media. It is CNPC’s practices in pursuing win-win cooperation that makes the Company a preferred partner to host governments and IOCs, with wide acclaim.
II. Achieving leapfrog development through innovation.
CNPC capitalizes on its unique techniques, integrated services, and well-developed corporate culture, forming, a whole set of managerial systems, decision-making mechanisms and operating systems with the characteristics of CNPC.
Create opportunities for cooperation via unique techniques. In Block 1/2/4 of Sudan, CNPC’s technical staff managed to develop and construct a giant oilfield with annual production capacity of more than 10 million tons in less than two years. In Block 3/7 of Sudan, guided by its exploration theory accumulated over the years, CNPC’s team discovered the Palouch Oilfield with 500 million tons of reserves in an area that had been widely regarded as “devoid of hope” in previous exploration, making big news in the international petroleum exploration circle. In Kazakhstan, CNPC’s team successfully developed the pre-salt oilfield by applying advanced exploitation technology, which was hailed by the petroleum circle in Kazakhstan. In Peru, CNPC managed to increase the production of a depleted Talara Oilfield with more than 100 years of development history from 80,000 tons to over 300,000 tons in just three years, commented by local media as “the biggest news in the petroleum industry of Peru in 20th Century”.
Enhance cooperative effectiveness through proper management. As the record holder in all operating indices of Ghraff Oilfield in Iraq, CNPC’s team won the award for its contribution to 10 million work hours with safety record, the award for community development, and a 2015 best HSE practice contractor award. In central Asia, thanks to its state-of-the-art and applicable management mode of pipeline construction, the Company’s staff completed the construction of Trans-Asia Gas Pipeline in just 28 months, creating a miracle in cross-border oil & gas pipeline construction which is acclaimed as “the Speed of Trans-Asia Gas Pipeline”. In Turkmenistan, the construction of phase-1 Amu Darya gas project was completed by CNPC’s team in less than 18 months. Internationally, the project of its kind usually requires at least 3 years in construction. Phase-2 project was completed 6 months ahead of schedule. Amazed at such high efficiency, the Turkmen President extolled CNPC’s staff as “heroic workers”.
Expand Cooperation through innovating collaboration model. In the project of Myanmar-China Oil and Gas Pipelines, six parties from four countries made an enabling collaboration model that integrates all premium resources, mitigates operation challenges, and keeps risks under control. In Trans-Asia Gas Pipelines, multiple parties from four countries co-built a coordination mechanism that ensures project alignment and win-win among relevant countries. In this way, CNPC honored its commitment to sharing interests and risks. Thanks to innovative oil & gas cooperation models, Russia-China oil and gas collaboration continues to expand. Fresh breakthrough was achieved in the gas cooperation after the Russia-China Crude Pipeline went on stream. In addition, CNPC capitalized on M&A opportunities amid the restructuring in international petroleum arena, which is evident in the acquisition of PK in Kazakhstan, a case that made a record in the M&A history of Chinese companies.
III. Commitment to CSR and environmental protection for sustainable development.
While observing local laws and regulations, respecting culture and customs, following international practices in cooperation, CNPC has played an active role in promoting local employment, fulfilling social responsibility, strengthening people-to-people bond, as well as environment protection.
On employment, with the average rate of local employment in CNPC’s overseas projects staying around 90%, the Company has created over 80,000 local jobs over the years. In Kazakhstan, half of the management team members of the Aktobe Company are local people, and the upstream projects alone have contributed more than 30,000 local jobs over the years. Out of the 2341 staff in its Indonesian company, only 19 are Chinese, making the non-Chinese ratio as high as 99.2%.
On CSR, CNPC has committed to improving local people’s livelihood, with a large number of initiatives launched in education, infrastructure, health care, water supply and community services. CNPC fulfilled CSR in all the host countries of its cooperative projects along the “Belt and Road”, namely Sudan, Kazakhstan, Niger, Chad, Indonesia and Myanmar. The number of direct local beneficiaries is over 2 million. Kazakhstan is located in the dry and cold interior of Central Asia, where local people do not have the customs of planting vegetables. Especially in the winter, the country is faced with shortage of affordable vegetables. To solve the problem, CNPC invested 2.87 million dollars to build a modern vegetable greenhouse, supplying fresh vegetables to citizens in Aktobe all year round.
On people-to-people bond, CNPC nurtures a coordination atmosphere featuring respect, inclusiveness, down-to-earth mentality, and efficiency among its Chinese, international, and local employees, shaping a distinctive and effective code of conduct. In order to promote understanding and improve professional skills of the employees, exchanges and training programs have been organized in different forms. Some 1,000 foreign employees have been sent to China each year for such initiatives. CNPC Kazakhstan has introduced to all the staff philosophies of “respect each other and enjoy work”, as well as “if united, we become a ball of fire, and if scattered, a sky of stars”, fully factoring in national conditions and local ethnic cultural needs, and winning the understanding and trust of partners and local employees. Cultural exchanges with Gasprom have become regular and popular activities held in turn in Russia and China every year.
On environmental protection, CNPC is committed to its mission statement of "Caring for Energy, Caring for You". In its North Azadegan project, located in the national wetland reserve in Iran, CNPC has continuously improved HSE management system and reinforced accountability mechanism, in an effort to protect local ecology system. The project was awarded a Certificate of Honor for environmental protection by the Iranian government in 2016. In the Ahdeb Oilfield, the hydrogen sulfide used to be flared for years. To solve the problem, a sulfur recovery system was put in place by CNPC, greatly improving the utilization capacity of the associated gas, which was highly recognized by the Ministry of Environment of Iraq.
Looking forward, CNPC will play an active role in the “Belt and Road” Initiative, and further deepen international oil and gas cooperation. Projects in Central Asian countries and Russia will be prioritized. Projects in Iraq, Iran and other Gulf countries will be expanded. Projects in countries such as Indonesia and Australia will be pushed forward. Oil and gas transportation corridors will be further constructed. The volume of trade will be expanded. In addition, CNPC will keep on training local talent, fulfilling social responsibility, focusing on sustainable development with local communities, strengthening people-to-people bond, in a bid to forge a win-win cooperation model in the “Belt and Road” development.
The “Belt and Road” initiative, which calls for policy coordination, facility connectivity, trade facilitation, finance integration, and people-to-people bond, is becoming a consensus among countries around the world attracting global wisdom and power. As an integrated international energy company deeply engaged in the implementation of the strategy, CNPC will grasp the now-or-never historic opportunity, reinforce partnerships with relevant countries, international companies and Chinese companies, in an effort to jointly contribute to global economic development, stable world energy supply, and sustained oil & gas cooperation.