26 March, 2015, Beijing - PetroChina Company Limited ("PetroChina" or "the Company", HKSE: 0857; NYSE: PTR; SSE: 601857) today announced that the Company recorded sound operating results in 2014 amid the adverse scenarios represented by the slow growth of demand in the oil and gas market due to sluggish global economic recovery and in particular the plunge in global oil prices since the second half of 2014. The Company achieved this by actively responding to the "New Normal" and adhering to its guidelines of quality, profitability and sustainable development. It also carried out the strategic transformation, moving from scale-based development to one focusing more on quality and profitability, and implemented a series of reform initiatives such as performance-based compensation scheme to achieve growth in production, sales and profitability.

For the year ended 31 December, 2014, the Company recorded turnover of RMB2,282,962 million, representing an increase of 1.1% over the previous year. Specifically, as a result of lower oil prices, continuous declines in domestic refined products prices and other factors, net profit attributable to shareholders of the Company was RMB107,172 million, representing a decrease of 17.3% over the previous year. Basic earning per share was RMB0.59.

Exploration and Production

In 2014, the Company continued to increase its investment in upstream operations and implemented its "Peak Growth in Oil and Gas Reserves" Program. The Company pushed forward its oil exploration steadily, making significant breakthroughs in the exploration of unconventional resources such as tight oil, and in particular achieving prominent results in natural gas exploration. The Company optimized its overall development plan, expedited the build-up of key production capacities, and steadily implemented secondary development and major development experiments. As a result, crude oil output once again hit a new high, and natural gas output was maintained at a stable growth rate and accounted for an increasing proportion of the total oil and gas equivalent output. In 2014, the Company's total crude oil output reached 945.5 million barrels, representing an increase of 1.4% over the previous year. Marketable natural gas output reached 3,028.8 billion cubic feet, representing an increase of 8.1% over the previous year. Oil and gas equivalent output amounted to 1,450.4 million barrels, representing an increase of 3.6% over the previous year.

In 2014, the Exploration and Production segment recorded profit from operations of RMB186,897 million by proactively coping with unfavorable conditions caused by the drop in oil prices and constantly tightening control over costs and expenses. The Exploration and Production segment remained the most important profit driver of the Company.

Refining and Chemicals

In 2014, the Company upheld the principles of market orientation and profitability, optimized resource allocation and planning for production and operations, and improved processing flow and product structure in line with market trends. The Company increased the production of products well demanded in the market, with high-margin or high added value. The Company processed 1,010.6 million barrels of crude oil and produced 92.671 million tons of refined products, performing relatively well in a number of technical and economic indicators. For the sales of chemical products, the Company strengthened the planning for optimization, expedited the development and marketing of new products, and achieved stable growth in sales volume of high-margin products and in regions with high profitability. The Company pushed forward its key refining and chemicals projects in an orderly manner. Sichuan Petrochemical fully commenced production and Yunnan Petrochemical pushed forward its construction steadily. The diesel quality upgrading and reformation projects progressed as scheduled and all automobile diesels reached the China IV standard.

In 2014, the Refining and Chemicals segment upheld the principle of market orientation, made timely adjustment to its operational strategy, and took multiple measures to strengthen its controls over key costs. The Refining and Chemicals segment incurred a loss from operations of RMB23,560 million, narrowing the loss by RMB832 million over the previous year. This included a loss from operations of RMB7,155 million in refining operations due to a drop in gross margin from the lower oil prices, and a fall in the value of inventory. Chemicals operations recorded an improvement of RMB3,279 million in loss from operations, as a result of the Company's efforts to continuously optimize product structures and control costs.

Marketing

In 2014, the Company took active steps to cope with unfavorable conditions such as slowing growth in market demand, including the scientific allocation of oil product resources, optimizing marketing structure and inventory control, as well as emphasizing profit through the retail business and sale of products with high profitability. It continuously increased sale capability per service station, promoting the transformation and potential tapping of low-profit service stations, constructed "high margin terminals" and further improved its marketing and service network. The newly added and operated service stations of the Company amounted 150, and the total number of service stations operated reached 20,422.

In 2014, the Marketing segment sought to broaden sources of income, strengthened cost cutting, improved efficiency, enhanced inventory management, and promoting sales of high-grade gasoline and aviation fuel. However, due to factors including the slowing growth of the domestic economy and weak market demand, the Marketing segment recorded a profit from operations of RMB5,421 million, representing a decrease of 28.3% over the previous year.

Natural Gas and Pipeline

In 2014, the Company undertook the scientific planning of its oil and gas allocation and transportation, raised the operating load of pipelines and effectively increased transmission volume and reduced cost. The Company achieved safe and stable operations in line with the annual plan. For natural gas sales, the Company proactively responded to changes in demand and supply in the market, coordinated various resources including domestically produced gas, imported gas and liquefied natural gas, and optimized the distribution of gas to the market. It also strengthened the management of demand side, furthered development of key high-profit markets, expedited the development of high-end users, and made continuous improvements to the quality and profitability of sales. Construction of key oil and gas pipelines made steady progress. The west section of the Third West-East Gas Pipeline, the Hohhot-Baotou-Erdos Refined Oil Pipeline, the Fourth Daqing-Tieling Crude Oil Pipeline and other projects were successfully put into operation. Continuous improvements were made to key domestic oil and gas pipelines. As at the end of 2014, the Company's domestic pipelines spanned a total of 76,795 km, comprising 48,602 km of natural gas pipelines, 18,107 km of crude oil pipelines and 10,086 km of refined product pipelines.

In 2014, the Natural Gas and Pipeline segment realized an increase in both the volume and profitability of sales of natural gas, and recorded profit from operations of RMB13,126 million. Excluding income generated from the cooperation of certain pipeline net assets and business in 2013, profit from operations increased by RMB9,060 million over the previous year.

Overseas Oil and Gas (Note)

In 2014, the Company made major breakthroughs in overseas oil and gas cooperation projects and further diversify its gas sources. In relation to overseas oil and gas exploration, the Company adhered to the principles of overall research, scientific argumentation and reasonable organisation and made further achievements in key exploration areas. In respect of overseas oil and gas development, the Company optimized its planning for key production capacity construction to ensure a stable output in the major oil and gas fields in Central Asia and other areas, and to expedite the commencement and increase in output in the new oil and gas fields in Iraq and other areas. Oil and gas equivalent output from overseas operations reached 147.2 million barrels, representing 10.1% of the Company's total oil and gas equivalent output. The Company's international trading operations continued to develop rapidly, with growth in scale of international trade and quality of operations. The Company's ability to adjust its resources allocation continued to improve, and it made significant achievements in innovation, profit making and market development.

In 2014, the Company's overseas operations(note) recorded a turnover of RMB803,779 million, representing 35.2% of its total turnover. Profit before income tax amounted to RMB19,242 million, representing 12.3% of the Company's profit before income tax. The overseas operations achieved notable results and further increased their contribution to the Company.

Outlook for 2015

In 2015, the Company will strive to improve its quality and profitability in spite of the growing challenges caused by low oil prices, and proactively responded to the "New Normal" in economic and social development. The Company will promote the sustainable and healthy development of its main businesses, and carefully implement 33 measures in 12 areas to broaden sources of income, reduce expenditure, cut costs and increase profitability, making every effort to reduce management expenses and non-productive expenditure. The Company will prudently execute the integrated management of refining, sales and trading, lightening of assets and other reformative actions, with the main goal of improving its corporate governance and management and control capacity, and increase the Company's vitality and efficiency. The Company will, with legal compliance as a prerequisite, strengthen its compliant management in key fields, establish the final investment decision system for major projects, and tighten investment rules and assets supervision.

Under the "New Normal" scenarios, the Company will continue to be highly accountable to shareholders and overcome challenges through reforms and innovations. It will expedite the transformation process, launch a drive for innovations and continue to build PetroChina as a world-class international energy corporation.

Note: The four operating segments of the Company are Exploration and Production, Refining and Chemicals, Marketing as well as Natural Gas and Pipeline. Overseas operations do not constitute a separate operating segment of the Company. The financial data of overseas operations are included in the financial data of the respective operating segments mentioned above.