Dec 5 2006 Beijing China 1 Sustainable Growth

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Sustainable Growth for Oil and Gas Dec. 5, 2006 / Beijing China / 2

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World oil production witnessed three major increments; In 1920 s-1930 s, the application of technologies such as seismic reflected wave method, internal combustion engine drilling rig and cone bit, increased the production from 100 million tons to 200 million tons； In 1960 s-1970 s, thanks to new theories and technologies in plate tectonics, water flooding, and jet drilling, oil production worldwide increased from 1 billion tons to 2 billion tons； Dec. 5, 2006 / Beijing China / 8

Since 1990 s, 3 D seismic and directional well drilling technology improved the success rate of exploration drilling from 50% in early 1990 s to today’s 70%. The single well oil and gas equivalent increased from 2 million barrel to over 7 million barrels. Offshore seismic, drilling and production technology, plus the development of petroleum equipment have made it possible to tap reserve beyond 3000 meters deep in water. Offshore oil production represents one-third of the world total. Breakthroughs in basin simulation, horizontal drilling, 3 -D seismic and deep-water exploration stabilize world oil production at 3 billion tons/ year. Dec. 5, 2006 / Beijing China / 9

Exploration targets shifted to 6000 -7000 meters onshore and 3000 meters water depth offshore. It’s increasingly difficult to develop newly discovered reservoirs of small size and low quality. 75% of the newly added reserves from complicated or hidden oil pool of existing oil fields. Stringent requirement on environment protection demands a clean production mechanism. Dec. 5, 2006 / Beijing China / 10

Non-marine petroleum geology theory terminates “China is poor in oil” argument and led to discoveries of large oil fields one after another. Application of large heterogeneous sandstone reservoir development theory, separate zone production, stabilizing oil output by controlling water-cut, and tertiary recovery technologies, stabilized the production of Daqing oilfield at 50 million tons/year for 27 consecutive years. Progressive E&P technologies make it possible for the commercial development of small fault-block reservoirs less than 1 square kilometers. Dec. 5, 2006 / Beijing China / 11

Application of geology theory and exploration technology for passive rift basin and under-explored basins in Sudan, led to the discovery of 5 billion barrels oil in place in Block 3/7 of Melut Basin of Sudan. Application of production technology for carbonate reservoir of abnormal high pressure and extremely low porosity increased the daily single well production of Kenziyak subsalt formation to 500 tons from only tens of tons. Dec. 5, 2006 / Beijing China / 12

◆ Our philosophy for cooperation: Win-win solution ◆ Combination of our synergy: oil company and service company. ◆ Make due capital expenditures to ensure benefits of partners. ◆ Nurturing technical, managerial and operational personnel of host countries, to realize localization of employment. ◆ Harmonious development together with communities. Dec. 5, 2006 / Beijing China / 13

THANK YOU Dec. 5, 2006 / Beijing China / 14