Form 20-F     ü

Form 40-F _____

 

Yes ____

No     ü

2	Company Profile
3	Principal Financial Data and Indicators
5	Changes in Share Capital and Shareholdings of Principal Shareholders
7	Business Review and Prospects
11	Management’s Discussion and Analysis
23	Significant Events
30	Directors, Supervisors and Senior Management
31	Financial Statements
133	Documents for Inspection
134	Confirmation from the Directors and Senior Management

 

 

COMPANY PROFILE

1	FINANCIAL DATA AND INDICATORS PREPARED IN ACCORDANCE WITH THE CHINA ACCOUNTING STANDARDS FOR BUSINESS ENTERPRISES (“ASBE”)

	Items		At 30 June 2010 RMB millions		At 31 December 2009 RMB millions		Changes from the end of last year (%)
	Total assets		920,795		866,475		6.3
	Total equity attributable to equity shareholders of the Company		402,930		377,182		6.8
	Net assets per share (RMB) (Fully diluted)		4.647		4.350		6.8
	Adjusted net assets per share (RMB)		4.568		4.272		6.9
			Six-month periods ended 30 June				Changes over the same
	Items		2010 RMB millions		2009 RMB millions		period of the  preceding year  (%)
	Operating profit		47,986		43,999		9.1
	Profit before taxation		48,335		43,768		10.4
	Net profit attributable to equity shareholders of the Company		35,429		33,190		6.7
	Net profit attributable to equity shareholders of the Company
	before extraordinary gain and loss		34,948		33,285		5.0
	Weighted average return on net assets (%)		8.98		9.59		(0.61)
							percentage points
	Basic earnings per share (RMB)		0.409		0.383		6.7
	Basic earnings per share (before extraordinary gain and loss) (RMB)		0.403		0.384		5.0
	Diluted earnings per share (RMB)		0.403		0.380		6.1
	Net cash flow from operating activities		50,055		82,370		(39.2)
	Net cash flow from operating activities per share (RMB)		0.577		0.950		(39.2)

	Extraordinary items and corresponding amounts:
	Items		Six-month periods ended 30 June 2010 (Income)/expense RMB millions
	Gain on disposal of non-current assets		(361)
	Donations		32
	Gain on holding and disposal of various investments		(311)
	Other non-operating income and expenses, net		(14)
	Subtotal		(654)
	Tax effect		164
	Total		(490)
	Attributable to:
		Equity shareholders of the Company	(481)
		Minority interests	(9)

2	FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRS")

				Changes
				over the same
		Six- month periods ended 30 June		period of the
		2010	2009	preceding year
	Items	RMB millions	RMB millions	(%)
	Operating profit	49,775	46,182	7.8
	Profit attributable to equity shareholders of the Company	35,460	33,246	6.7
	Return on capital employed (%) Note	6.04	6.39	(0.35)
				percentage points
	Basic earnings per share (RMB)	0.409	0.383	6.7
	Diluted earnings per share (RMB)	0.403	0.381	5.8
	Net cash generated from operating activities	47,555	79,079	(39.9)
	Net cash generated from operating activities per share (RMB)	0.548	0.912	(39.9)
	Note:   Return on capital employed = operating profit x (1 - income tax rate)/capital employed

				Changes
		At 30 June	At 31 December	from the end
		2010	2009	of last year
	Items	RMB millions	RMB millions	(%)
	Total assets	929,476	877,842	5.9
	Total equity attributable to equity shareholders of the Company	401,440	375,661	6.9
	Net assets per share (RMB)	4.630	4.333	6.9
	Adjusted net assets per share (RMB)	4.551	4.254	7.0

3	DIFFERENCES BETWEEN THE AUDITED FINANCIAL STATEMENTS PREPARED UNDER ASBE AND IFRS ARE SHOWN ON PAGE 132 OF THE REPORT.

1	CHANGES IN THE SHARE CAPITAL OF SINOPEC CORP.	Unit: 1,000 Shares

 

			Before change			Increase/(decrease)				After change
			Number	Percentage %	New share issued	Bonus issued	Conversion from reserve	Others	Sub-total	Number	Percentage %
	1	RMB ordinary shares	69,921,951	80.65	—	—	—	89	89	69,922,040	80.65
	2	Foreign shares listed domestically	—	—	—	—	—	—	—	—	—
	3	Foreign shares listed overseas	16,780,488	19.35	—	—	—	—	—	16,780,488	19.35
	4	Others	—	—	—	—	—	—	—	—	—
	Total Shares		86,702,439	100.00	—	—	—	89	89	86,702,528	100.00

Note:

From 25 February 2010 to 3 March 2010, total number of shares of Sinopec Corp. increased by 88,774, as a result of exercise of warrants embedded in the bonds of RMB 30 billion issued by Sinopec Corp. For details, please refer to item 18 in “Significant Events".

2	NUMBER OF SHAREHOLDERS AND SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS
	As at 30 June 2010, there were a total of 956,305 shareholders of Sinopec Corp., of which 949,158 were holders of A share and 7,147 were holders of H share. The public float of Sinopec Corp. satisfied the minimum requirements under the Listing Rules of Hong Kong Stock Exchange.

(1)

Top ten shareholders

Unit: 1,000 shares

		Name of Shareholders		Nature of shareholders	As a percentage  of total shares at the end of reporting period (%)	Number of shares held at the end of reporting period	Number of shares with selling restrictions	Number of shares  pledged or  lock-ups
		China Petrochemical Corporation		A share	75.84	65,758,044	0	0
		HKSCC (Nominees) Limited		H share	19.26	16,698,441	0	Unknown
		Guotai Junan Securities Co., Ltd		A share	0.29	255,461	0	0
		China Life Insurance Corp.-Dividend-		A share	0.15	131,668	0	0
			Individual Dividend-005L-FH002
			Shanghai
		China International Fund		A share	0.06	52,500	0	0
			Management Advantage
			Securities Investment Fund
		Shanghai Stock Exchange
			Tradable Open-ended	A share	0.05	44,655	0	0
			Index 50 Fund
		Harvest Stable Open-ended Securities		A share	0.05	42,998	0	0
			Investment Fund
		Fortune SGAM Selected Sectors Fund		A share	0.04	38,090	0	0
		Changsheng Tongqing		A share	0.04	37,017	0	0
			Detachable Equity
			Investment Fund
		National Social Security
			Fund 102 Portfolio	A share	0.04	33,243	0	0
		Statement on the connected relationship or activity in concert among the aforementioned shareholders:
		We are not aware of any connection or activities in concert among or between the top ten shareholders.

(2)

Information disclosed by the shareholders of H Shares according to the Securities and Futures Ordinance as at 30 June 2010

	Name of shareholders	Status of shareholders		Number of shares with interests held or regarded as being held (share)	As a percentage of total interests (H share) of Sinopec Corp.
					(%)
	JPMorgan Chase & Co.	Beneficial owner		127,283,915(L)	0.76
				69,014,671(S)	0.41
		Investment manager		742,050,497(L)	4.42
		Custodian corporation/Approved lending agent		631,791,703(L)	3.77
	Blackrock Inc.	Interests of corporation controlled		1,161,200,884(L)	6.92
		by the substantial shareholder		9,967,552(S)	0.06
	Templeton Asset Management Ltd.	Investment manager		855,319,203(L)	5.10
	Note:  (L): Long position, (S): Short position.

3	CHANGES IN THE CONTROLLING SHAREHOLDERS AND THE EFFECTIVE CONTROLLER
	There were no changes in the controlling shareholders or the effective controller in the reporting period.

BUSINESS REVIEW

In the first half of 2010, the Company achieved encouraging operational results through fully leveraging its synergy, proactively expanding market to enlarge business volume, focusing on satisfying customer needs, further enhancing integration among production, sales and research, and optimising product mix in line with market demands.

1	PRODUCATION AND OPERATION

	(1)	Exploration and Production Segment
		In the first half of 2010, international crude oil price fluctuated within a certain range. Average Platts Brent Price was US$ 77.27/barrel, representing an increase of 49.8% over the same period of last year. The trend of domestic crude oil price generally followed the trend in the international markets.

In exploration, the Company made new discoveries in oil and natural gas exploration in Tarim Basin, southeastern Sichuan and western Sichuan. In development and production, the Company enhanced development rates, recovery rates and single-well productivity. The Sichuan-to-East China Gas Pipeline Project achieved stable operation after start-up and the Company’s natural gas production grew significantly over the same period last year. In the first half of this year, the Company produced 149 million barrels of crude oil, flat from a year earlier, and produced 200.6 billion cubic feet of natural gas, representing an increase of 40.7% compared with the same period of last year.

Summary of Operations of Exploration and Production Segment

		Six-month periods ended 30 June		Changes
		2010	2009	%
	Crude oil production (mmbbls)	149.19	149.12	0.05
	Natural gas production (bcf)	200.55	142.51	40.7
	Newly added proved reserve of crude oil (mmbbls)	129.86	137.74	(5.7)
	Newly added proved reserve of natural gas (bcf)	48.22	(131.64)	—
		At 30 June	At 31 December	Changes
		2010	2009	(%)
	Proved reserve of crude oil (mmbbls)	2,801	2,820	(0.7)
	Proved reserve of natural gas (bcf)	6,586	6,739	(2.3)
	Note:  Crude oil production is converted at 1 tonne = 7.1 barrels, and natural gas production is converted at 1 cubic meter = 35.31 cubic feet

	(2)	Refining
		In the first half of 2010, the Company focused on timely adjusting the product mix in response to the changing market. Refineries maintained high utilisation rate, resulting in production increase of both jet fuel and light chemical feedstock. At the same time,  the Company further reduced costs and improved efficiency through optimising resources, operations and management. We put revamping and expansion facilities into operation in an effort to accelerate the improvement of oil products quality. Leveraging its brand power, the Company stepped up its marketing efforts in promoting lubricants, asphalt and petroleum coke, etc. In the first half of this year, the refinery throughput reached 101 million tonnes, representing an increase of 16.7% compared with the same period last year.

Summary of Operations of Refining Segment

	(3)	Marketing and Distribution
		In the first half of 2010, with enhanced marketing initiatives, the Company strengthened and grew sales to end-market customers in face of strong market competition due to sufficient supply in the domestic market. The Company made timely adjustment of its marketing strategy and managed to enlarge the scale of its marketing operations. Sales volume of jet fuel and fuel oil was increased. The Company also improved its customer service system in an effort to increase direct sales. To enhance its marketing network and further boost service station business, the Company further improved the location of its oil depots, accelerated refurbishment ofstations, and focused on its non-fuel business.
		The Company actively fulfilled its social responsibilities by ensuring oil products supply for the earthquake relief work at Yushu, Qinghai, the rescue and rehabilitation in areas of Southern China with serious draught and flood damage, and supplied clean fuel for the Expo 2010 Shanghai, and the summer harvest and planting season.
		In the first half of this year, the Company’s total domestic sales volume of oil products reached 68.15 million tonnes, representing an increase of 18.1% compared with the same period of last year.
		Summary of Operations of Marketing and Distribution Segment

				Six-month periods ended 30 June		Changes
				2010	2009	%
	Total domestic sales volume of oil products (million tonnes)			68.15	57.71	18.1
		Including:  Retail sales (million tonnes)		41.70	37.43	11.4
			Direct sales (million tonnes)	15.70	11.44	37.2
			Wholesale (million tonnes)	10.75	8.83	21.7
	Average annual throughput per station (tonne/station)			2,841	2,596	9.4

				At 30 June 2010	At 31 December 2009	Increase/ decrease at the end of the reporting period over that of the last year
						(%)
	Total number of service stations			29,950	29,698	0.8
		Including: Number of company-operated service stations		29,357	29,055	1.0
			Number of franchised service stations	593	643	(7.8)

	(4)	Chemicals
		In the first half of 2010, the Company adjusted it business operations in line with market demand. By continuing to pay close attention to production management, the Company also ensured safe operation of its plants at a high utilisation rate. The Company pushed forward new product development and adjusted its product mix to produce more value-added products that are well received by the market. To further develop the strategic cooperation formed with key customers, the Company provided additional technical services and enhanced intergration among production, sales and R&D that created more value for customers. The Company sold all finished products including the extra volumes produced from the expanded capacity after the start-up of ethylene project in Fujian, Tianjin and Zhenhai. In the first half of this year, the output of ethylene reached 4.202 million tonnes, representing an increase of 41.3% compared with the same period of last year, and the total sales of chemical products reached 23.678 million tonnes.

Summary of Production of Major Chemical Products

Unit: 1,000 tonnes

		Six-month periods ended 30 June		Changes
		2010	2009	%
	Ethylene	4,202	2,973	41.3
	Synthetic resin	6,088	4,738	28.5
	Synthetic fibre monomer and polymer	4,275	3,721	14.9
	Synthetic fibre	676	629	7.5
	Synthetic rubber	485	409	18.6
	Urea	932	892	4.5
	Note:   100% production of joint ventures was included.

2	ENERGY SAVING AND EMISSION REDUCTION
	The Company places considerable emphasis on resource saving and environmental protection. In the first half of 2010, the Company completed the overall upgrade of gasoline quality to meet GB III standard and upgraded gasoline quality to meet GB IV standard in Beijing, Shanghai and Guangzhou. In the first half of this year, the Company’s overall energy ­intensity dropped by 5.0% year on year. Compared with the first half of 2009, its comprehensive unit energy consumption in crude oil & natural gas production dropped by 2.1%, the comprehensive unit energy consumption involved in refining dropped by 5.6%, and the unit fuel and power consumption of ethylene plants dropped by 2.9%.  Total volume of COD from its major pollutants dropped by 0.4%, and its total volume of sulphur dioxide emission dropped by 14% compared to the same period of last year.
3	CAPITAL EXPENDITURE
	In the first half of 2010, the Company’s total capital expenditure was RMB 34.796 billion. The capital expenditure for exploration and production segment was RMB 15.348 billion, which was mainly used for exploration of crude oil & natural gas resources and key capacity-building projects, with newly-built production capacity of 2.46 million tonnes per annum of crude and 0.17 billion cubic meters per annum of natural gas. The capital expenditure for the refining segment was RMB 4.875 billion, which was mainly used for upgrading oil products quality, refinery revamping projects to process low grade crude, and the storage facilities and pipeline construction projects. The capital expenditure for the marketing and distribution segment was RMB 7.659 billion, which was mainly used for building and acquiring service stations in key areas, accelerating the construction of pipelines, improving the sales network of refined products, and developing 838 service stations. The capital expenditure for the chemicals segment was RMB 6.543 billion, with which the ethylene project in Zhenhai was completed and such key projects as the ethylene project in Wuhan progressed well. The capital expenditure for corporate and others was RMB 371 million.

BUSINESS PROSPECTS

1	CONSOLIDATED RESULTS OF OPERATIONS
	In the first half of 2010, the Company’s turnover and other operating revenues amounted to RMB 936.5 billion, and the operating profit was RMB 49.8 billion, representing an increase of 75.4% and 7.8% respectively, over the same period of 2009. It is attributable to the steady progress of domestic economic recovery, the growing demand for petroleum and petrochemical products, continued expansion of the Company’s operational scale and rising prices of crude oil, refined oil products and chemical products as compared with the same period of last year. The Company actively took various measures to fully exert the scale and integration advantages and steadily increase its market share, and therefore achieved satisfying operational performance.
	The following table sets forth major revenue and expense items in the consolidated income statement of the Company for the indicated periods:

				Six-month periods ended 30 June
				2010 RMB millions	2009 RMB millions	Change (%)
	Turnover and other operating revenues			936,523	534,025	75.4
	Of which:		Turnover	923,123	523,015	76.5
			Other operating revenues	13,400	11,010	21.7
	Operating expenses			(886,748)	(487,843)	81.8
	Of which:		Purchased crude oil, products, and operating supplies and expenses	(741,121)	(361,460)	105.0
			Selling, general and administrative expenses	(22,885)	(22,471)	1.8
			Depreciation, depletion and amortisation	(26,800)	(24,584)	9.0
			Exploration expenses (including dry holes)	(5,747)	(4,392)	30.9
			Personnel expenses	(15,019)	(12,919)	16.3
			Taxes other than income tax	(75,410)	(61,518)	22.6
			Other operating income/(expenses) (net)	234	(499)	—
	Operating profit			49,775	46,182	7.8
	Net finance costs			(3,431)	(3,995)	(14.1)
	Investment income and share of profit less losses from associates and jointly controlled entities			2,033	1,647	23.4
	Profit before taxation			48,377	43,834	10.4
	Income tax expense			(11,028)	(9,121)	20.9
	Profit for the period			37,349	34,713	7.6
	Attributable to:
		Equity shareholders of the Company		35,460	33,246	6.7
		Non-controlling interests		1,889	1,467	28.8

	(1)	Turnover and other operating revenues
		In the first half of 2010, the Company’s turnover was RMB 923.1 billion, representing an increase of 76.5% over the first half of 2009. This was mainly due to expanded business scale, higher prices of crude oil, refined oil products and chemical products as compared with the same period of last year.

The following table sets forth the external sales volume, average realised prices and respective rates of change of the Company’s major products from the first half of 2010 to the first half of 2009:

			Sales Volume (thousand tonnes)			Average realised price (RMB/tonne, RMB/thousand cubic meters)
			Six-month periods ended 30 June		Change	Six-month periods ended 30 June		Change
			2010	2009	(%)	2010	2009	(%)
	Crude oil		2,327	2,430	(4.2)	3,363	1,699	97.9
	Natural gas (million cubic meters)		4,138	3,105	33.3	1,027	934	10.0
	Gasoline		21,215	18,793	12.9	7,205	5,852	23.1
	Diesel		43,725	36,166	20.9	5,847	4,631	26.3
	Kerosene		6,439	4,994	28.9	4,663	3,385	37.8
	Basic chemical feedstock		8,253	4,872	69.4	5,533	4,061	36.2
	Monomer and polymer for
		synthetic fibre	2,751	2,070	32.9	8,142	6,008	35.5
	Synthetic resin		4,712	4,015	17.4	9,226	7,547	22.2
	Synthetic fibre		728	691	5.4	11,171	8,481	31.7
	Synthetic rubber		606	487	24.4	15,687	10,177	54.1
	Chemical fertilizer		916	889	3.0	1,649	1,750	(5.8)

	Most of crude oil and a small portion of natural gas produced by the Company were internally used for refining and chemical production and the remaining were sold to other customers. In the first half of 2010, the turnover from crude oil and natural gas sold externally amounted to RMB 13.8 billion, increased by 74.4% over the same period of 2009, accounting for 1.5% of the Company’s turnover and other operating revenues. The change was mainly due to the increase in prices of crude oil and natural gas.
	The refining segment and marketing and distribution segment of the Company sold petroleum products (mainly consisting of refined oil products and other refined petroleum products), achieving external sales revenue of RMB 567.0 billion, representing an increase of 59.7% over the same period of 2009 and accounting for 60.5% of the Company’s turnover and other operating revenues. This mainly owes to the increase in sales volume and price of refined petroleum products. The sales revenue of gasoline, diesel and kerosene was RMB 438.5 billion, representing an increase of 48.9% over the same period in 2009, accounting for 77.3% of the sales revenue of petroleum products. Turnover of other refined petroleum products was RMB 128.5 billion, representing an increase of 112.4% compared with the first half of 2009, accounting for 22.7% of the sales revenue of petroleum products.
	The Company’s external sales revenue of chemical products was RMB 134.1 billion, representing an increase of 66.8% over the same period of 2009, accounting for 14.3% of its turnover and other operating revenues. This was mainly due to the increase in sales volume and price of chemical products.

	(2)	Operating expenses
		In the first half of 2010, the Company’s operating expenses were RMB 886.7 billion, representing an increase of 81.8% over the first half of 2009. The operating expenses mainly consisted of the following:
		Purchased crude oil, products and operating supplies and expenses were RMB 741.1 billion in the first half of 2010, representing an increase of 105.0% over the same period of 2009, accounting for 83.6% of the total operating expenses, of which:
		l	Procurement cost of crude oil was RMB 294.3 billion, representing an increase of 84.0% over the same period of 2009. Throughput of crude oil purchased externally in the first half of 2010 was 74.68 million tonnes (excluding the amount processed for third parties) increased by 14.2% over the first half of 2009. The average unit processing cost of crude oil purchased externally RMB 3,940 per tonne, increased by 61.1% over the first half of 2009.
		l	The Company’s other purchasing expenses were RMB 446.8 billion, representing an increase of 121.6% over the first half of 2009. This was mainly due to the higher cost of refined oil products and other feedstock purchased externally and higher procurement cost by its subsidiary trading companies.
		Selling, general and administrative expenses of the Company totaled RMB 22.9 billion, representing an increase of 1.8% over the first half of 2009.
		Depreciation, depletion and amortization expenses of the Company were RMB 26.8 billion, representing an increase of 9.0% compared with the first half of 2009. This was mainly due to the continuous investment in fixed assets in recent years.
		Exploration expenses in the first half of 2010 were RMB 5.7 billion, representing an increase of 30.9% compared with the first half of 2009, mainly owing to the Company’s increased investment in exploration in blocks such as northeastern Sichuan, western Sichuan and Ordos.
		Personnel expenses were RMB 15.0 billion, representing an increase of 16.3% compared with the first half of 2009, which was mainly because the Company provided for enterprise’s annuity fund, performance salary, and housing subsidy for employees who began to work after 31 December 1998, in accordance with relevant requirements.
		Taxes other than income tax totaled RMB 75.4 billion, representing an increase of 22.6% compared with the first half of 2009. It was mainly due to the increase of special oil income levy by RMB 9.5 billion caused by rising crude oil price, as compared with the first half of 2009. Meanwhile, as a result of sales volume increase, the consumption tax, city construction tax and educational surcharge increased by RMB 4.2 billion over the first half of 2009.
	(3)	Operating profit
		In the first half of 2010, the Company’s operating profit was RMB 49.8 billion, representing an increase of 7.8% over the same period of 2009.
	(4)	Net finance costs
		In the first half of 2010, the Company’s net financing costs were RMB 3.4 billion, representing a decrease of 14.1% compared with the first half of 2009. This was due to decreased scale of the Company’s interest-bearing borrowing, leading to a decrease of net interest expenses by RMB 0.3 billion compared with the first half of 2009. It was also due to a year over year increase of RMB 0.3 billion of gain from changes in fair value of the embedded derivative component of its overseas convertible bonds resulting from the change in the H-share price of Sinopec Corp.
	(5)	Profit before taxation
		In the first half of 2010, the Company’s profit before taxation amounted to RMB 48.4 billion, representing an increase of 10.4% compared with the same period of 2009.
	(6)	Income tax expense
		In the first half of 2010, the income tax expense of the Company totaled RMB 11.0 billion, with an increase of 20.9% over the same period of 2009.
	(7)	Profit attributable to non-controlling interests of the Company
		In the first half of 2010, profit attributable to non-controlling interests of the Company was RMB 1.9 billion, representing an increase of 28.8% over the same period of 2009. This was mainly due to increase of profits of the controlled subsidiaries of the Company compared with the same period of 2009.
	(8)	Profit attributable to equity shareholders of the Company
		In the first half of 2010, profit attributable to equity shareholders of the Company was RMB 35.5 billion, representing an increase of 6.7% over the same period of 2009.

2	DISCUSSION ON RESULTS OF SEGMENT OPERATION
	The Company manages its operations by four business segments, namely exploration and production segment, refining segment, marketing and distribution segment and chemicals segment, and corporate and others. Unless otherwise specified herein, the inter-segment transactions have not been eliminated from financial data discussed in this section. In addition, the operating revenue data of each segment include “other operating revenues”.
	The following table shows the operating revenues by each segment, the contribution of external sales and inter-segment sales as a percentage of operating revenues before elimination of inter-segment sales, and the contribution of external sales as a percentage of consolidated operating revenues (i.e. after elimination of inter-segment sales) for the periods indicated.

The following table sets forth the operating revenues, operating expenses and operating profit/(loss) by each segment before elimination of the inter-segment transactions for the periods indicated, and the changes between the first half of 2010 and the first half of 2009.

			Six-month periods ended 30 June
			2010 RMB millions	2009 RMB millions	Change (%)
	Exploration and Production Segment
		Operating revenues	81,478	46,176	76.5
		Operating expenses	59,489	40,675	46.3
		Operating profit	21,989	5,501	299.7
	Refining Segment
		Operating revenues	463,863	301,864	53.7
		Operating expenses	458,177	281,966	62.5
		Operating profit	5,686	19,898	(71.4)
	Marketing and Distribution Segment
		Operating revenues	492,786	317,770	55.1
		Operating expenses	478,336	305,262	56.7
		Operating profit	14,450	12,508	15.5
	Chemicals Segment
		Operating revenues	153,057	90,792	68.6
		Operating expenses	144,713	81,031	78.6
		Operating profit	8,344	9,761	(14.5)
	Corporate and others
		Operating revenues	419,555	195,426	114.7
		Operating expenses	420,249	196,912	113.4
		Operating profit	(694)	(1,486)	—

	(1)	Exploration and Production Segment
		Most of the crude oil and a small portion of the natural gas produced by the exploration and production segment were used for the Company’s refining and chemical operations. Most of the natural gas and a small portion of crude oil produced by the Company were sold externally to other customers.
		In the first half of 2010, operating revenues of the segment were RMB 81.5 billion, representing an increase of 76.5% over the first half of 2009. This was mainly attributable to the significant increase in crude oil price.
		In the first half of 2010, the segment sold 19.90 million tonnes of crude oil and 4.73 billion cubic meters of natural gas, representing an increase of 0.7% and 40.4% respectively compared with the first half of 2009. The average realised selling price of crude oil and natural gas were RMB 3,422 per tonne and RMB 1,059 per thousand cubic meters respectively, representing an increase of 89.3% and 10.2% respectively over the same period of 2009.
		In the first half of 2010, the operating expenses of the segment were RMB 59.5 billion, representing an increase of 46.3% over the first half of 2009. The increase was mainly due to the following:
		·	Special oil income levy paid by the Company increased by RMB 9.5 billion compared with the same period 2009 due to the significant increase in the price of crude oil;
		·	Depreciation, depletion and amortisation increased by RMB 1.5 billion over the first half of 2009, mainly caused by growth in depreciation and depletion of crude oil & natural gas assets resulting from investment;
		·	Exploration expenses (including cost of dry holes) increased by RMB 1.4 billion over the first half of 2009, mainly owing to the Company’s increased investment in exploration in blocks such as northeastern Sichuan, western Sichuan and Ordos.
		In the first half of 2010, the lifting cost for crude oil and natural gas was RMB 623 per tonne, increased by 2.4% over the same period of 2009.
		In the first half of 2010, the E&P segment achieved stable production in crude oil and significant increase of production in natural gas. With the increased of crude oil prices, its operating profit was RMB 22.0 billion, representing an increase of 299.7% over the first half of 2009.
	(2)	Refining Segment
		Business activities of the refining segment include purchasing crude oil from the third parties and the exploration and production segment of the Company and processing crude oil into refined petroleum products, among which, gasoline, diesel and kerosene are internally sold to the marketing and distribution segment of the Company. Part of the chemical feedstock is sold to the chemicals segment of the Company. Other refined petroleum products are sold to both domestic and overseas customers through refinery segment.
		In the first half of 2010, operating revenues of this segment totaled RMB 463.9 billion, representing an increase of 53.7% over the same period of 2009. This was mainly attributable to the increased sales volume and price of its refined products.