REPORT DESCRIPTIONS. CNOOC Annual Report Contents BUSINESS CHAIRMAN S LETTER 02 PRESIDENT S LETTER 04 MAIN ACHIEVEMENTS 06 ABOUT US 08 MANAGEMENT

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2 REPORT DESCRIPTIONS Reporting Scope: The entire China National Offshore Oil Corporation (CNOOC) group of companies. Reporting Period: January 1 December 31, Considering the consistency and comparability of the disclosed information, part of the information was extended with its disclosure time brought forward or backward. Principles of Preparation: To meet the needs of stakeholders and the general public, by disclosing key information on the Company in a true, objective, timely and comprehensive manner. Alternative Reference: China National Offshore Oil Corporation is hereinafter also referred to as CNOOC, the Company, the Corporation, we, our or us CNOOC Annual Report Contents CHAIRMAN S LETTER 02 PRESIDENT S LETTER 04 MAIN ACHIEVEMENTS 06 ABOUT US 08 CORPORATE GOVERNANCE BUSINESS Oil and Gas Exploration and Development 30 Engineering and Technical Services 33 Refining and Marketing 36 Natural Gas and Power Generation 39 Financial Services 42 Internationalization 44 MANAGEMENT Data Used in the Report: All disclosed financial data or information related to the Company is the final accounting data audited by third parties. Unless otherwise specified, all amounts are expressed in Renminbi (RMB). Information Sources: The Company s official documents, statistical reports and our subsidiaries fulfilment of responsibilities. All information has been reviewed by our management, supervision department and the various subsidiaries. Language: This report is published in both Chinese and English. In case of discrepancies, the Chinese version shall prevail. Accessibility: This report is available in print and electronic formats. The digital version can be downloaded from the Company s website at To obtain a print version of the report, please report@cnooc.com.cn. Resumes of the Board Members 12 Operation of the Board 14 Risk Management 16 Resumes of other Senior Executives 17 PERFORMANCE OVERVIEW Auditors Report 22 Consolidated Income Statement 23 Consolidated Balance Sheet 24 Consolidated Cash Flows Statement 26 Notes to the Financial Statements 27 Technology Innovation 50 Management Innovation 53 QHSE 54 Informatization Progress 62 Human Resource Management 63 Corporate Culture 67 Corporate Citizenship 69 MILESTONES GLOSSARY 75 AGENCY DIRECTORY 78 FEEDBACK 80 ABOUT THE COVER Ya 13-1 Gasfield production platform

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5 MAIN ACHIEVEMENTS MAIN ACHIEVEMENTS Total Assets (Unit: RMB 100 million) Operating Revenue (Unit: RMB 100 million) , , , , , ,116 Total Profit (Unit: RMB 100 million) Net Assets (Unit: RMB 100 million) , , , ,439 Capital Investment (Unit: RMB 100 million) Taxes & Bonuses (Unit: RMB 100 million) , , , % Total Profit in 2016 (Unit: RMB 1 billion) 10.5% 14.1% 26.3% Total Assets in % 7.5% Operating Revenue in % 23.6% Upstream Mid-and downstream Engineering technologies and services Others Upstream Mid-and downstream Engineering technologies and services Others Upstream Mid-and downstream Engineering technologies and services Others 06 07

6 PRESIDENT S LETTER ABOUT US China National Offshore Oil Corporation ( CNOOC ), the largest offshore oil & gas producer in China, is a mega state-owned company operating directly under the State-owned Assets Supervision and Administration Commission of the State Council of the People s Republic of China (herein referred to as SASAC in the Report). Our Vision Energy for All Development Goals International first class energy company with chinese characteristics The Company was founded in 1982 and is headquartered in Beijing. After 30 years of reform and development, CNOOC has become an international energy company with promising primary businesses and a complete industrial chain, and business covers more than 40 countries and regions. The Company has formed oil & gas exploration and development, engineering and technical services, refining and marketing, natural gas and power generation, financial services five main business segments, and its sustainable development capacity has been significantly improved. In 2016, it was ranked 109th in Fortune Global 500 and 30th in Petroleum Intelligence Weekly (PIW) s World s Top 50 Oil Companies, respectively down by 37 slots and up by 2 from the previous year. By the end of 2016, Moody s and Standard & Poor s rated the Company with credit ratings of Aa3 and A+. Development Principles Cooperation, steadiness, and differentiation Main Business Oil & Gas Exploration and Development Exploration Development Production Core Development Strategies Synergetic development strategy Technology-driven strategy Talent development strategy Cost-Priority strategy Low-carbon green strategy Corporate Philosophy People-oriented, responsibilities, win-win benefits, credibility, innovation Financial Services Finance Company Trust Insurance Financial and Strategic Investment Finance Leasing China National Offshore Oil Corporation (CNOOC) Engineering & Technical Services Oilfield Services Offshore Oil Engineering Services Professional Services Natural Gas and Power Generation LNG Receiving Terminals Natural Gas Pipelines Natural Gas-fired Power Generation Urban Gas Supply Vehicle/Vessel Gas Natural Gas Liquefaction and Distribution Refining and Marketing Oil Refining Petrochemistry Chemical Fertilizer Business Development & Marketing 08 09

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8 CORPORATE GOVERNANCE Resumes of the Board Members Yang Hua Chairman and Party Leadership Group Secretary Born in May 1961, Mr. Yang Hua graduated from China University of Petroleum (the former East China Petroleum Institute) with a Bachelor of Science degree in Petroleum Engineering in August He received an MBA degree from Massachusetts Institute of Technology in May He is a Sloan Fellow of MIT and professor-level senior economist. Mr. Yang joined CNOOC in August 1982 and had served in a number of positions including Manager of Field Development Department of CNOOC Research Center, Deputy Chief Geologist and Deputy Director of Overseas Development Department of CNOOC, President of Overseas Oil & Gas Corporation Ltd., and Senior Vice President, Chief Financial Officer and EVP, President, CEO, Vice Chairman of CNOOC Ltd., and Assistant President of CNOOC. In April 2010, Mr. Yang served as Vice President and Party Leadership Group Member of CNOOC. In August 2011, he served as CNOOC Director, President and Party Leadership Group Member. In April 2015, he took positions of Chairman of the Board of CNOOC and Party Leadership Group Secretary. In May 2015, he served as Chairman of CNOOC. He served as the CEO of CNOOC in June 2016, and the Chairman of Board of Nexen Energy ULC. in October Liu Jian Director, President, Vice Secretary of Party Leadership Group Born in March 1958, Mr. Liu graduated from Huazhong University of Science and Technology with a Bachelor of Science degree in Marine Internal Combustion Design in January 1982 and received his MBA degree from Tianjin University in Liu Jian is a professor-level senior engineer. Mr. Liu joined Marine Petroleum Exploration Bureau in 1982 and successively served as Oil Platform Section Chief, Vice Director of Maintenance Center, Vice Mine Director. Since January 1994, he served as Vice Manager of Oil Production Company, Director of the Production Department of Bohai Corporation, Manager of Oil Production Company, and President of China Offshore Oil Co., Ltd. In July 1999, he was appointed as Deputy President of Tianjin Branch of CNOOC (China) Limited. In April 2001, he was successively appointed as Deputy President of Zhanjiang Branch of CNOOC (China) Limited and later President and Party Committee Secretary of Zhanjiang Branch. Since April 2003, he successively served as Senior Vice President of CNOOC Ltd., President of the Development and Production Department of CNOOC Ltd., and Executive Vice President of CNOOC Ltd., in November 2006, Mr. Liu was appointed as Assistant President of CNOOC. From January 2009 to September 2010, he also served as Vice Chairman of the Board, Chief Executive Officer, and Party Committee Secretary of COSL. In April 2010, Mr. Liu was appointed as Vice President and Party Leadership Group Member of CNOOC; in September of the same year, he served as Chairman and Party Committee Secretary of COSL, and resigned from the CEO post. Since November 2010, he has also served as Chairman of the Board of COOEC In August 2015, he held post of CNOOC Director, President and Vice Secretary of Party Leadership Group. In December 2016, he served as the Deputy Chairman and Chairman of CNOOC. Boon Swan Foo Outside Director Born in 1955, Mr. Boon Swan Foo holds an MBA from the National University of Singapore. He served as CEO of ST Marine & ST Aerospace, CEO & Deputy Chairman of ST Engineering Ltd, Managing Director of Singapore Agency for Science, Technology and Research, Chairman of Exploit Technologies Private Limited, Director of China-Singapore Suzhou Industrial Park Development Co., Ltd., Chairman of Singapore Changi Airport Enterprise Pte Ltd. Mr. Boon is the Chairman of Global Investments Limited and Allgrace Investment Management Private Limited, Director of Shin Corporation Plc, MIH Holdings Limited (South Africa) and Singbridge International Singapore Pte Ltd, Outside Director of Dongfeng Motor Corporation, Senior Advisor to Temasek Holdings (Private) Limited, Advisor to ST Engineering Ltd., Outside Director of China Huadian Corp. Mr. Boon also holds an Adjunct Professorship at the Nanyang Technological University. He assumed Outside Director of CNOOC in February Zhang Chengjie Outside Director Born in June 1953, Mr. Zhang Chengjie had served as Vice Party Committee Secretary of the CPC of North China Electric Power College, Vice President of North China Electric Power University (NCEPU), Party Committee Secretary of CPC of NCEPU Baoding, Vice Party Committee Secretary of the CPC and Secretary of Commission for Discipline of NCEPU. Mr. Zhang was then appointed as Deputy Director and Party Branch Secretary of HR Department of China Guodian Corporation, Director of HR Department, Assistant President, Vice President and Party Leadership Group Member of China Guodian Corporation. Mr. Zhang was appointed as outside director of CNOOC in April Xia Dawei Outside Director Born in 1953, Mr. Xia Dawei graduated from Changchun University of Technology with a Bachelor of Science degree in Engineering Management in 1982 and received Master s degree in Industrial Economics from Shanghai University of Finance and Economics in Mr. Xia started his career in 1969, and had been a visiting researcher at Osaka City University, Dean of the School of International Business Administration, Assistant President, Vice President and Executive Vice President of Shanghai University of Finance and Economics successively. Mr. Xia is currently President and Party Committee Secretary of Shanghai National Accounting Institute. He is a professor and an instructor for doctoral candidates Shanghai National Accounting Institute and an honorary professor of the Chinese University of Hong Kong. Mr. Xia also holds posts including Vice President of Chinese Industrial Economic Association, consultant of China Accounting Standards Committee of the Ministry of Finance, member of the Corporate Internal Control Standards Committee of the Ministry of Finance and member of the Expert Committee for Listed Companies of Shanghai Stock Exchange. Mr. Xia assumed Outside Director of CNOOC in February Ju Zhanghua Outside Director Mr. Ju Zhanghua was born in September He was previously a Vice President of China Huaneng Group and a Member of the CPC Huaneng Committee. Before that, he served in many positions in the company, including Deputy Manager of Administration Department, Manager of Securities and Financing Department, and Manager of Administration Department of Huaneng International Power Development Corporation. He became Manager of General Administration Department and Assistant President of Huaneng Group before he was appointed as Vice President of the company. Mr. Ju was appointed as Outside Director of CNOOC in April Chen Wei Employee Director Born in January 1958, Mr. Chen Wei graduated from China University of Petroleum (the former East China Petroleum Institute) with a Bachelor of Science degree in Petroleum Engineering in 1982 and received an MBA degree from Tsinghua University in He is a professor-level senior engineer. Mr. Chen started to work in 1976 and joined CNOOC in He successively assumed a number of positions including Vice Director of Development Department, Vice Director of Overseas Department, Vice Director of Information Department at CNOOC Research Center and then Vice Director of CNOOC Research Center, and General Manager of the Human Resources Department of CNOOC. In January 2002, Mr. Chen was appointed as Senior Vice President of CNOOC Ltd., he also served as General Manager of the Administration Department of CNOOC Ltd., General Manager of the Human Resources Department of CNOOC Ltd., Director and Party Committee Secretary of CNOOC Research Center, General Manager of the Technology Development Department of CNOOC, President and Party Committee Secretary of CNOOC Research Institute. In February 2012, Mr. Chen assumed Employee Director of CNOOC. Since March 2013, he has served as Assistant President of CNOOC, Executive Vice President of CNOOC Ltd., from February to May 2016, he held the posts of Employee Director and Assistant to General Manager in the Head Office of CNOOC, and the Executive Vice-President in CNOOC. In May 2016, he served as the Employee Director, Assistant to General Manager, General Counsel of CNOOC, and the Executive Vice-President, General Counsel and Compliance Officer of CNOOC

9 CORPORATE GOVERNANCE Operation of the Board Board Meeting Session Time Means Approved Proposal 9th Meeting of the Second Session of the Board of Directors April 21 On the Spot Audited and approved 8 proposals including 2015 Accounting Plan, 2015 Profit Distribution Plan, 2016 Employment Plan of Financial Audit Institution, 2015 Internal Control Appraisal Report, 2015 GM Report, 2015 Annual Report of the Board of Directors and Adjustment of the Board Secretary; debriefed four reports including Implementation of Decisions from Board Meetings, Main Operational Achievements in the first quarter of 2016, Company Cash Flow and Cooperation with Royal Dutch Shell. 10th Meeting of the Second Session of the Board of Directors June 21 Telecommunication Audited and approved the proposal of no longer employing Mr. Li Fanrong as Deputy GM of the Company. 1th Meeting of the Second Session of the Board of Directors July 1 Telecommunication Audited and approved the proposal on sponsoring programs. 12th Meeting of the Second Session of the Board of Directors July 21 On the Spot Debriefed 3 reports including implementation of decisions from board meetings, production and running of the Company in the first half year of 2016, and the operation in the first half year of 2016, and the seminar on international oil and gas industry outlook held by Wood Mackenzie & Company. The 20th meeting of the second session of the board of directors of CNOOC 13th Meeting of the Second Session of the Board of Directors 14th Meeting of the Second Session of the Board of Directors 15th Meeting of the Second Session of the Board of Directors 16th Meeting of the Second Session of the Board of Directors 17th Meeting of the Second Session of the Board of Directors 18th Meeting of the Second Session of the Board of Directors 19th Meeting of the Second Session of the Board of Directors 20th Meeting of the Second Session of the Board of Directors August 5 September 28 Telecommunication Telecommunication Audited and approved four proposals of no longer employing Mr. Wu Mengfei as Chief Accountant, employing Mr. Yuan Guangyu as Deputy GM, Mr. Chen Bi as Deputy GM and Ms. Wen Dongfen as Chief Accountant. Audited and approved proposal on investment programs. October 17 Telecommunication Audited and approved proposal on asset transfers. October 20 On the Spot Audited and approved the proposal of 2017 Plan of the Board of Directors, and debriefed 3 reports including the production and operation of the first three quarters in October 28 Telecommunication Audited and approved the proposal on profit distribution. November 14 December 2 December 20 Telecommunication Telecommunication On the Spot Audited and approved the proposal on financing and guarantee projects. Audited and approved the proposal on modifying the Articles of Association of CNOOC. Audited and approved 6 proposals including the Five-Year Rolling Development Plan from 2017 to 2021, 2017 Production and Construction Budget Plan, 2017 Tibet Aid and Poverty Relief and Public Welfare Donation Plan and 2017 Operation Budget (including Financing Plan). Special Committee Meeting In 2016, the Strategic Development Committee, the Nominating Committee and the Audit Committee of the Board of Directors held one meeting, one meeting and three meetings respectively. In 2016, the first meeting of the Strategic Development Committee of the Board of Directors was held on December 20, which audited three proposals including the Five-Year Rolling Development Plan from 2017 to 2021, 2017 Production and Construction Budget Plan and 2017 Operation Budget (including Financing Plan), and formed the audition opinions for the Board of Directors. In 2016, the first meeting of the Nominating Committee of the Board of Directors was held on April 21, which audited 2 proposals on the board secretary adjustment and formed the audition opinions for the Board of Directors. In 2016, the first meeting of the Audit Committee of the Board of Directors was held on April 21, which debriefed the report from external audit institution on 2015 final account audit and audited 4 proposals including 2015 Accounting Plan, 2015 Profit Distribution Plan, 2015 Internal Control and Appraisal Report and 2016 financial Audit institution Employment, and formed the audition opinions for the Board of Directors. In 2016, the second meeting of the Audit Committee of the Board of Directors was held on October 20, which debriefed 4 reports including the conduction of financial leasing, foreign projects and 2015 final accounting audit. In 2016, the third meeting of the Audit Committee of the Board of Directors was held on December 19, which debriefed 2016 internal auditing and 2017 internal auditing plan, audited 2 proposals on financial management, and formed the audition opinions for the Board of Directors

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11 CORPORATE GOVERNANCE Wu Guangqi, Vice President, Party Leadership Group Member Born in August 1957, Mr. Wu Guangqi is a professor-level senior economist, Certified Senior Enterprise Risk Manager. Mr. Wu graduated with a Bachelor of Science degree from the Ocean University of China and was a master of Party and Government Administration from the Party School of the Central Committee of CPC. He also held a Master s degree in Management from China University of Petroleum and a Doctor s degree in Management from Huazhong University of Science and Technology. Mr. Wu Guangqi joined CNOOC in 1982 and served as the Party Committee Secretary and Vice President of CNOOC Petro Tech Services, Director of General Office, Party Committee Secretary, Discipline Inspection Secretary and Chairman of Labor Union of CNOOC Research Center, Party Committee Secretary and Director of Ideological and Political Department of CNOOC, and Assistant President of CNOOC. In 2002, Mr. Wu was transferred and appointed as a temporary leading position by the Organization Department of the Communist Party of China Central Committee as the Deputy Director of the Engineering and Construction Department of China Three Gorges Project Corporation. In August 2004, he served as CNOOC Party Committee Leadership Group Member, and team leader of Party Discipline Inspection. In June 2005, he served as Director and Regulations Director of CNOOC. In December 2011, he served as CNOOC Vice President and Party Leadership Group Member. In October 2016, he served as the Vice President, Deputy Secretary of the Leading Party Members Group of CNOOC, the president of CPC CNOOC Party School, and the Party Committee Secretary of CNOOC in Beijing area. He now holds the posts of Member of the Council for National Society for Party Building Studies (Member of the Committee of Party Building Studies in Stateowned Enterprises, National Society for Party Building Studies), Executive Member of Research Institute for Party Building, Ideological and Political Work of central Enterprises, and Member of the Security Committee, State-owned Assets Supervision and Administration Commission of the State Council. Li Hui, Vice President, Party Leadership Group Member Born in October 1963, Mr. Li Hui obtained a Bachelor degree in foreign trade from University of International Business and Economics in August He is a senior international business engineer. From August 1987 to January 2000, Mr. Li Hui served in a number of positions in China National Metals & Minerals Import & Export Corp., including Deputy General Manager of the trade unit and President of its South American unit. Meanwhile, Mr. Li also served as Deputy General Manager of Beijing Economic-Technological Development Area from August 1998 to January From January 2000 to April 2010, Mr. Li served in Sinochem Group (named China National Chemicals Import & Export Corp. since October 2003). Meanwhile, he has served as Vice Director of Sinochem Oil Group, Assistant President of China National Chemicals Import & Export Corp, etc.; in May 2001, he was appointed as a Vice President and a Party Leadership Group Member of China National Chemicals Import and Export Corporation, and concurrently served as Director of Sinochem Oil Group and, General Manager of Sinochem International Oil Co. In April 2010, Mr. Li was appointed as a Vice President and a Party Leadership Group Member of CNOOC. From May 2011 to August 2016, he has also served as Chairman of the Board of China BlueChemical Ltd. And since November 2013, he assumed the position of Chairman of the Board of China Petrochemical Import & Export Co., Ltd. In December 2015, he concurrently served as Chairman of CNOOC Gas & Power Group Co., Ltd. In August 2016, he served as the Chairman of the Board in CNOOC Shanxi Energy Investment Limited, CNOOC-Datong Coal Mine Energy & Chemical Limited, CNOOC Inner Mongolia Energy Investment Limited and CNOOC Erdos Energy & Chemical Limited. Lv Bo, Vice President, Party Leadership Group Member Born in November 1962, Mr. Lv Bo received a Bachelor of Science degree in Management from China University of Mining and Technology and an MBA degree from China Europe International Business School in September Since 1985, he worked in the Ministry of Coal Industry, the Ministry of Energy and the Organization Department of the Communist Party of China Central Committee and served in a number of positions, including a Vice-Director-level official in the Personal and Labor Department of the Ministry of Energy, Vice Director and Director of the First Office of Economic and Technology Officials Bureau of the Organization Department, Director of the First Office of the Fourth Officials Bureau and Director of the Second Office of the Fifth Officials Bureau of the Organization Department. Mr. Lv joined CNOOC in 2002 and in the same year he was appointed as Director of the Human Resources Department of CNOOC. In November 2006, Mr. Lv became an Assistant President of CNOOC. In November 2007, he was appointed as a Party Leadership Group Member of CNOOC. In October 2008, he served as Party committee secretary directly under CNOOC. In April 2010, he was appointed as a Vice President and a Party Leadership Group Member of CNOOC. Since December 2012, he has also served as Chairman of the Board of CNOOC EnerTech. From May 2015 to October 2016, he served as a President of CPC CNOOC Party School. He served as the Chairman of the Board in Offshore Oil Engineering Co., Ltd. and China Ocean Oilfields Services (Hong Kong) Limited in November He has served as Chairman of the Board in COSL since December Yuan Guangyu, Vice President, Party Leadership Group Member Born in April 1959, Yuan Guangyu obtained the Bachelor degree of Engineering in Drill Engineering from the Development School in East China Petroleum Institute, and MBA of CEIBS. He is a senior engineer of professor level. Joining in CNOOC in August, 1982, he once acted as the Vice Manager of Bohai Oil Drilling Company, Vice General Manager of CNOOC North Drilling Company, Vice Manager of Operation Department in CNOOC, General Manager and Party Committee Secretary of CNOOC North Drilling Company, General Manager and Party Committee Secretary of COSL, President and Deputy Party Committee Secretary of COSL and CEO, President and Party Committee Secretary of COSL. In November, 2006, he was appointed as the Executive Assistant of CNOOC. In March, 2009, he was appointed as the Executive Vice-President of CNOOC. From April 2013 to June 2016, he successively took the positions of Head, Deputy Party Committee Secretary and Party Committee Secretary of Bohai Oil Management Bureau of CNOOC and General Manager and Party Committee Secretary of Tianjin Branch of CNOOC. In June, 2016, he was appointed as the Chairman of CNOOC, President of COSL and General Manager of CNOOC (China). In July, 2016, he was appointed as the Vice President, Party Leadership Group Member of CNOOC

12 CORPORATE GOVERNANCE Chen Bi, Vice President, Party Leadership Group Member Born in April 1961, Chen Bi is a Bachelor of Oil Production Engineering of the Development School in Southwest Petroleum Institute, Master of Petroleum engineer in Heriot-Watt University, MBA in the School of Economics and Management in THU and is a senior engineer of professor level. Joining in CNOOC in February 1982, he acted as the Deputy Manager of Drilling Engineering Department of South China Sea West Company, Deputy Manager of South China Sea Oil Exploration Company, Head and Deputy Manager of Development and Production Department of CNOOC, Deputy General Manager and General Manager of Development and Production Department of CNOOC, General Manager and Party Leadership Group Secretary of Tianjin Branch of CNOOC (China) Ltd., Vice President and Vice Executive President of CNOOC Ltd. and the Chief Safety Director of CNOOC. In July 2016, Chen was appointed as Vice President, Party Leadership Group Member and Safety Director of CNOOC. In August 2016, Chen also took the concurrent post of President of CNOOC Oil & Petrochemicals Co., Limited and China BlueChemical Limited. Wen Dongfen, Chief Accountant, Party Leadership Group Member Born in September 1964, Wen Dongfen is a Bachelor of Business Management in Shanxi Finance and Economics College and a senior accountant of professor level. She started to act as the Deputy Director of Financial Planning Department of Sinopec in December 2001, Deputy Director for the Financial Department of Sinopec in May 2008, Director of Financial Department of Sinopec in March 2009, concurrent President of Shengjun International Investment Limited and Deputy President of Sinopec Finance Limited from May 2012 to December In December 2015, she was appointed as the Chief Financial Director and Director of Financial Department of Sinopec. In July 2016, she became the chief accountant and Party Leadership Group Member of CNOOC. In August 2016, she took the concurrent post of President of CNOOC Insurance Ltd., CNOOC Investment Co., Ltd., CNOOC Finance Co., Ltd., Zhonghai Trust Co., Ltd. and CNOOC International Lease Finance Company. Zhong Qingming, Party Leadership Group Member, Party Discipline Team Leader Born in December 1963, Zhong Qingming received Bachelor degree of Political Economy of the Economics School, Zhengzhou University in 1987 and Master of National Economic Plan and Management of the Department of Economic Management, Jilin University. He started to work from July 1990 and once acted as the principal staff in the Case-Management Section of Ministry of Supervision, principal staff in the Research Section of Case Hearing Department of the Central Commission for Discipline Inspection, deputy-director-general-level Discipline Inspector and supervisor of Case Hearing Department of the Central Commission for Discipline Inspection, Deputy Director of the Research Section of Case Hearing Department of the Central Commission for Discipline Inspection, Director of General Office of Case Hearing Department of the Central Commission for Discipline Inspection, Director of Review Office of Case Hearing Department of the Central Commission for Discipline Inspection, Director of Second Review Office of Case Hearing Department of the Central Commission for Discipline Inspection, deputy-bureau-general-level Discipline Inspector, Special Supervisor and Director of Second Review Office of Case Hearing Department of the Central Commission for Discipline Inspection, deputy-bureau-general-level Discipline Inspector and Special Supervisor of Case Hearing Department of the Central Commission for Discipline Inspection, deputy-bureau-generallevel Discipline Inspector and Special Supervisor of the First Discipline Inspection and Supervision Department of the Central Commission for Discipline Inspection, deputy-bureau-general-level Discipline Inspector and Special Supervisor of the Fifth Discipline Inspection and Supervision Department of the Central Commission for Discipline Inspection, Deputy Director of the Seventh Discipline Inspection and Supervision Department of the Central Commission for Discipline Inspection, bureau-level Discipline Inspector, Special Supervisor and Deputy Director of the Seventh Discipline Inspection and Supervision Department of the Central Commission for Discipline Inspection. In December 2016, he was appointed as the Party Leadership Group Member, Party Discipline Team Leader of CNOOC. Xu Keqiang, Vice President Born in April 1971, Xu Keqiang achieved Bachelor degree of Oil and Gas Geology from Northwest University, Master degree of Coal Field Oil and Gas Geology Exploration in 1996 and became a senior engineer. He started to work in August 1996 and once acted as the Deputy Director of President Office Secretariat of CNPC, deputy-director-general-level and director-level Secretary of Office Secretariat of CNPC. He was appointed as the Deputy General Manager of CNPC International (Russia) in April 2003 and Deputy General Manager of CNPC International (Kazakhstan) in April And in May 2005, he started to take concurrent posts of Project General Manager in Kyzylorda and General Manager of CNPC International (Aidan). Then he was appointed as Deputy General Manger and Party Committee Member of CNPC (KZ) and General Manager of Aktobe Oil and Gas in September In March 2014 he was appointed as General Manager and Deputy Party Committee Secretary of CNPC Tuha Oilfield Branch and Director of Tuha Oil Exploration and Development Direction Department. In March 2017, he started to act as the Vice President of CNOOC

13 PERFORMANCE OVERVIEW PERFORMANCE OVERVIEW Auditors Report To the Board of China National Offshore Oil Corporation: GTCNSZ (2017) No.110ZA3483-T We have audited the accompanying financial statements of China National Offshore Oil Corporation ( the Company ), which comprise the consolidated and company balance sheets as at the year ended December , and the consolidated and company incomestatements, the consolidated and company cash flows statements, the consolidated and company statements of changes in owners equity for the years ended 31 December2016 and notes to the financial statements. Management s Responsibility for the Financial Statements The Company s Management is responsible for the preparation and fair presentation of these financial statements. This responsibility includes: (1) preparing these financial statements in accordance with Accounting Standards for Business Enterprises issued by the Ministry of Finance of thepeople s Republic of China, and fairly presenting them; (2) designing, implementing and maintaining internal control which is necessary to enable that the financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with China Standards on Auditing. These standards require that we comply with China Code of Ethics for Certified Public Accountants and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company s preparation and fair presentation of the financial statementsin order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressingan opinion on the effectiveness of the Company s internal control. An audit also includes evaluating the appropriateness of accounting policies used and reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion IIn our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated and company s financial positions of the Company s at 31 December 2016, and their financial performances and cash flows for the year then ended in accordance with the requirements of Accounting Standards for Business Enterprises issued by the Ministry of Finance of the People s Republic of China. Consolidated Income Statement For the year ended 31 December 2016 Items Current Period Prior Period 1.Revenue 437, ,079 Including: Operating revenue 435, ,209 Interest income 1,506 1,603 Premiums earned Fees and commissions income Total cost 440, ,587 Including: Operating cost 362, ,064 Interest expenses 2 8 Fees and commissions expenses 1 2 Net expenses of claim settlement Net provision for insurance contracts service Reinsurance expenses Taxes and surcharges 19,495 29,471 Selling expenses 5,559 3,745 Administrative expenses 14,314 14,254 Finance expenses 9,971 8,989 Impairment on assets 21,446 4,927 Other costs and expenses 7,431 9,943 Add: Gain from changes in fair value ( - for loss) Investment income ( - for loss) 5,782 12,121 Gain on foreign exchange ( - for loss) Operating profits ( - for loss) 3,036 40,877 Add: Non-operating income 8,743 5,862 Less: Non-operating expenses 1,249 1,667 4.Profit before tax ( - for loss) 10,530 45,073 Less: Income tax expenses 230 3,806 5.Net profit ( - for loss) 10,300 41,266 Net profit attributable to shareholders of the Company 11,642 28,959 *Profit attributable to minority shareholders -1,342 12,307 6.Other comprehensive income after tax: 12,025 7,230 Other comprehensive income not to be reclassified to profit or loss Other comprehensive income to be reclassified as profit or loss 11,978 6,992 7.Total comprehensive income 22,325 48,496 Total comprehensive income attributable to shareholders of the Company Unit: RMB million 19,803 33,540 Grant Thornton Certified Public Accountants *Total comprehensive income attributable to minority shareholders 2,522 14,956 Beijing, China Notes: * items for use in consolidation; items for financial entities only. 20 April

14 PERFORMANCE OVERVIEW Consolidated Balance Sheet Consolidated Balance Sheet(Continued) For the year ended 31 December 2016 Unit: RMB million For the year ended 31 December 2016 Unit: RMB million Items Closing Balance Opening Balance Current Assets: Cash 97, ,810 Financial assets at fair value through profit and loss 1,698 6,066 Derivative financial assets 1, Notes receivable 2,796 2,873 Accounts receivable 27,398 31,067 Advances to suppliers 6,376 10,666 Reinsurance premium receivables Reserve receivable for reinsurance 1,697 1,931 Interests receivable 495 1,289 Dividends receivable Other receivables 10,242 10,270 Securities purchased under agreements to resell 376 Inventories 29,769 28,141 Current portion of non-current assets 38,488 2,499 Other current assets 18,691 16,530 Total Current Assets 236, ,032 Non-current assets: Loans and advances 7,251 2,520 Available-for-sale financial assets 70,798 84,594 Held-to-maturity investments 4,183 21,009 Long-term receivables 5,832 4,302 Long-term equity investments 52,812 45,293 Investment property Fixed assets 209, ,216 Construction in progress 38,518 58,674 Construction materials 1,031 2,303 Fixed assets pending for disposal 8 20 Oil and gas properties 445, ,543 Intangible assets 17,717 18,129 Development disbursements 3 17 Goodwill 15,732 18,263 Long-term deferred expenses 4,007 4,370 Deferred tax assets 41,119 28,901 Other non-current assets 7,700 9,027 Total Non-current Assets 921, ,351 Total Assets 1,157,755 1,162,383 Notes: * items for use in consolidation; items for financial entities only. Items Closing Balance Opening Balance Current liabilities: Short-term borrowings 47,013 73,740 Deposits and placements from other financial institutions Financial liabilities at fair value through profit and loss Derivative financial liabilities Notes payable 1,976 1,359 Accounts payable 60,499 51,074 Advances from customers 8,425 8,490 Employee benefits payable 8,703 9,923 Taxes and surcharges payable 13,051 11,762 Inerest payable 2,263 2,207 Dividends payable Other payables 17,059 14,227 Reinsurance premium payable Reserve of insurance contract 2,265 2,496 Current portion of non-current liabilities 17,495 13,687 Other current liabilities 4, Total Current Liabilities 184, ,943 Non-current Liabilities: Long-term borrowings 47,155 57,905 Bonds payable 177, ,745 Long-term payable 1,812 3,051 Long-term employee benefits payable Grants payable Provisions 54,002 51,496 Deferred Income 5,174 5,185 Deferred tax liabilities 11,538 16,304 Other non-current liabilities 2 3 Total Non-current Liabilities 297, ,266 Total Liabilities 482, ,210 Equity: Paid-in capital 114, ,737 Capital reserve 31,889 31,593 Other comprehensive income 870-7,291 Specific reserve 1, Surplus reserve 312,891 23,354 General risk reserve 1,542 Retained profit 29, ,277 Equity attributable to shareholders of the Company 492, ,615 *Minority interests 182, ,559 Total Owners Equity 675, ,174 Total liabilities and owner s equity 1,157,755 1,162,383 Notes: * items for use in consolidation; items for financial entities only

15 PERFORMANCE OVERVIEW Consolidated Cash Flows Statement Notes to the Financial Statements For the year ended 31 December 2016 Unit: RMB million 1.Cash flows from operating activities: Items Current Period Prior Period Cash received from sales and services 475, ,175 Net increase in deposits and placements from financial institutions Cash received from premiums of original insurance contracts 1 Net amount of reinsurance business 972 1,519 Cash received from interests, fees and commissions 2,013 2,039 Taxes and surcharges refunds 3,238 3,505 Other cash receipts related to operating activities 7,008 14,082 Total cash inflows from operating activities 488, ,387 Cash paid for goods and services 292, ,455 Net increase in loans and advances 1,701 1,199 Net increase in deposits with central banks and other financial institutions 138-3,073 Cash paid for claim settlements on original insurance contracts Cash paid for interests, fees and commissions 3 9 Cash paid to and for employees 23,889 25,519 Taxes and surcharges cash payments 63,725 77,879 Other cash payments related to operating activities 10,803 16,864 Total cash outflows from operating activities 393, ,575 Net cash flows from operating activities 95, ,812 2.Cash flows from investing activities: Cash received from withdraw of investments 209, ,302 Cash received from investment income 6,983 9,813 Net cash received from disposal of fixed assets, intangible assets and other long-term assets 14, Net cash received from disposal of subsidiaries and other business units Other cash receipts related to investing activities 8,014 20,234 Total cash inflows from investing activities 238, ,931 Cash paid for fixed assets, intangible assets and other long-term assets 70,463 85,652 Cash payments for investments 190, ,993 Net cash paid for acquiring subsidiaries and other business units 1 50 Other cash payments related to investing activities 2,107 23,104 Total cash outflows from investing activities 263, ,799 Net cash flows from investing activities -25,112-93,868 3.Cash flows from financing activities: Cash received from investments by others 1,020 5,493 Cash received from borrowings 80, ,223 Other cash receipts related to financing activities 66 14,903 Total cash inflows from financing activities 81, ,619 Cash repayments for debts 118, ,875 Cash payments for distribution of dividends, profit and interest expenses 27,655 35,158 Other cash payments related to financing activities 1,590 20,321 Total cash outflows from financing activities 148, ,353 Net cash flows from financing activities -66,449-3,735 4.Effect of foreign exchange rate changes on cash and cash equivalents 1, Net increase in cash and cash equivalents 4,751 4,999 Add: Balance of cash and cash equivalents at 1 January ,844 79,845 6.Balance of cash and cash equivalents at 31 Decemer ,594 84, Company Profile China National Offshore Oil Corporation (hereinafter referred to as CNOOC or the Company ) is a state-owned oil company established on 15 February 1982 with the approval of the State Council of the People s Republic of China. According to the Regulations of the People's Republic of China Concerning the Exploitation of Offshore Petroleum Resources in Cooperation with Overseas Partners promulgated by the Chinese State Council, the Company is granted an exclusive right of operating the business of exploiting oil and natural gas resources in cooperation with partners offshore from the People s Republic of China. The Company is also an investment institution authorized by the state. 2. The Basis Of The Preparation Of Financial Statements The financial statements are prepared in accordance with the requirements of Accounting Standards for Business Enterprises Basic Standards, specific standards and relevant regulations (hereafter referred to as ASBE collectively). CNOOC Limited, COSL, CNOOC Insurance Ltd and other overseas subsidiaries of the Group are prepared in accordance with accounting standards of the country of incorporation. The consolidated financial statements have been adjusted according to relevant standards. 3. Significant Accounting Policies 1. Accounting Period The accounting year of the Group is from 1 January to 31 December. 2. Functional currency The functional currency of the Group is Renminbi ( RMB ). 3. Measurement basis The Group follows the accrual basis of accounting. The financial statements are prepared under the historical cost convention except for certain financial assets and financial liabilities. If an asset is impaired, provisions shall be recognized. Financial assets and liabilities at fair value through profit or loss, the Available-for-sale financial assets and derivative financial instruments are recognised at fair value. Inventories and fixed assets delayed in payment exceeding credit terms are recognised at present value of purchasing price. Inventories with impairment losses are recognised at net realizable value and the other assets are recognised at lower amount between recoverable amount and its fair value. Assete inventory profit should be recorded at the replacement cost. Non-current assets held for sale are recognised by the lower amount between fair value subtracting estimated expenses and original book value when satisfying the held-for-sale condition. Notes: items for financial entities only

16 BUSINESS BUSINESS Oil and Gas Exploration and Development 30 Engineering and Technical Services 33 Refining and Marketing 36 Natural Gas and Power Generation 39 Financial Services 42 Internationalization

17 BUSINESS OIL AND GAS EXPLORATION AND DEVELOPMENT CNOOC always puts oil & gas exploration and development high on its agenda in an innovative manner to stabilize and further its business development. Guided by the idea of seeking for new medium and largescale oil & gas fields, CNOOC makes extensive breakthroughs in the oil & gas exploration both at home and abroad, and takes the initiative to fulfill the responsibility of supplying oil & gas so as to continuously satisfy people s ever-increasing consumption demands for petroleum and natural gas. l Efficiently completed the rating of 4 large- and mediumscale oilfields including Kenli 16-1, Caofeidian 12-6/6-2, Penglai 20-2/20-3 and Liuhua l The deep water natural gas exploration in southeast Qiong Basin achieved new progress, successfully evaluated the Lingshui 25-1 structure and expanded the reserve scale of this structure. Oil and Gas Exploration In 2016, the Company strengthened the integration of exploration and development, allocated China seas with priority and balanced the mature zones, rolling zones and new zones, and concentrated on overseas high-quality blocks and conventional oil and gas resources. Meanwhile, the Company deepened the idea of value of exploration, with the main line of seeking large- and medium-scale oil and gas fields, properly reduced the ratio of high risk and high investment wells, and guaranteed the medium- and long-term sustainable development with relatively high workload. Furthermore, influenced by the sharp decrease of international oil price in 2016, the Company maintained a reserve replacement ratio of 8%, which was 145% after eliminating economic correction. In China seas, the exploration workload of the Company continued to be fully achieved. 115 exploration wells were explored. In addition, 17 unconventional wells were completed in China onshore. In 2016, 2,471 kilometers of 2D seismic materials were collected under self-operation, and 11,347 square kilometers of 3D seismic materials were collected under self-operation and foreign cooperation. The Company achieved 12 new discoveries in China seas and successfully rated 19 hydrocarbon-bearing structures. The success ratio of selfoperation well exploration in China seas reached 52%-69%. In 2016, the Company continued to conduct active exploration strategies in China seas and led to abundant achievements, which mainly include: Deepwater equipment l The integration of exploration and development was realized by using the current facilities and equipment, gained newly increased reserve in oilfields including Jinzhou 25-1, Caofeidian 6-4, Wenchang 13-6, Panyu 4-1, Xijiang 30-1 and Weixinan Oilfield Group. The above exploration achievements further consolidated the place of China seas as a core region for the Company and displayed the unique advantages of the Company in China seas. The Company drilled 14 wells, collected 9,613 kilometers of 2D and 23,980 square kilometers of 3D seismic materials overseas. In 2016, there were 2 new discoveries in overseas exploration and 6 successful ratings of hydrocarbon-bearing oil and gas structures. The main achievements include: l Successfully explored 5 appraisal wells in the Libra Project in Brazil, further confirmed the reserve scale. Ice resistance of an oilfield efficiency increasing. In addition, the Company further improved the operation efficiency and reduced exploration cost by strengthening geological study, improving operation standards and refining the operation links. Development and Production In 2016, the Company completed the production goal and the oil and gas output reached the target set at the beginning of the year. The Company organized operation resources and the construction went on well. Under the precondition of safety production, the development and production operation of the Company completed the annual development and l Liza Oilfield in Guyana was successfully rated, which expanded new bed series and reserve scale; Payara production goals centered with cost reduction and efficiency enhancement. Structure was successfully pre-explored again. In 2016, the Company produced million tons of crude l The exploration of Owowo West Structure in Nigeria achieved great success and was rated to be a large-scale uncompartmentalized oil and gas reservoir, which improved the economic value of this region. In 2016, the Company insisted on the idea of improving exploration management overseas, continued to optimize exploration asset portfolio and successfully transferred part of the rights and interests of overseas blocks while gaining the new exploration opportunities, which brought more benefit for the Company. The Company kept being improved in exploration deployment optimization, operation cost reduction and management oil and 24.5 billion m 3 of natural gas (including CBM). Among which, the domestic crude oil production was million tons and natural gas was billion m 3, while the overseas crude oil was million tons and the natural gas was billion m 3. The four new projects planned to be put into production in 2016 were all put into production on schedule. There are Kenli 10-4 Oilfield, Panyu 11-5 Oilfield, Weizhou 6-9/6-10 Oilfield Integration Adjustment Project and Enping18-1 Oilfield. The development and production of the Company is driven by innovation, led by effectiveness and highlighted by benefit and sustainable development. The major achievements in 2016 include: 30 31

18 BUSINESS l Continued to keep high production efficiency through delicacy management. l Consistently carried out special management on operation expenses, and notable result was achieved. The operation cost per barrel was decreased to 7.62 USD/boe which is the third consecutive year of oil price decrease. l Deeply optimized the technological plan for the development projects and achieved notable result in cost reduction and efficiency enhancement. l Decreasing the equipment and facility breakdown rate through the deep implementation of integrity management. Unconventional Gas Acceleration of the development and utilization of unconventional gas is of great strategic significance for energy structure optimization and energy supply guarantee. The Company tracked and researched the new development trend of unconventional gas in the whole world, meanwhile, based on the development idea of develop CBM, tackle tight gas, explore shale gas, the Company insisted on the principle of integration of exploration and development, integration of production and sales, integration of selfoperation and external cooperation, integration of tight gas and CBM to promote the exploration and development of unconventional gas. Relying on the technology advancement, the Company continued to intensify exploration and development, accelerated the development of unconventional gas industry and strived to create a new growth potential. Following the guideline of focusing on the key blocks to explore and invest, the domestic unconventional exploration was focused on tight gas, and the new bed series exploration has made breakthroughs in new zones. The tight gas reserves and production was increased, CBM production was stabilized and accelerated, the unconventional gas output continued to grow. Part of the well exploration and production integration in Linxing tight gas pilot test zone was advanced where exploration, fracture and operation were realized in the same year, and the daily output of wells in operation reached over 200,000 m 3, forming a rapid operation model where a combination of pipe gas sale, LNG sale and mediumpressure tank wagon is seen, which accumulated benefiting experience for the economic and high-efficiency exploration and development of tight gas. Notable results were also achieved in CBM exploration and development. North blocks in Shizhuang applied hydrodynamic wave and fracturing technology to shorten the gas breakthrough time, which built foundation for the construction of integration experimental base for the next step. Panhe Demonstration Project increased over 50,000 m 3 of daily output through the initiation of booster station compressor helical-lobe compressor equipped with border group valve and other measures. South region in Shizhuang South Project achieved the first CBM exploration permit and two gas gathering stations were built and on trial, which enabled the export sales for the CBM in this region, and projects in Liulin and Zaoyuan have been promoted smoothly as planned. In 2016, the Company realized CBM utilization equivalent to 940 million m 3, increasing by 7.8% compared to that of last year. In 2016, there were changes in the demand and supply of global natural gas, and the price of natural gas was sharply decreased, which brought extreme challenge to the profitability of unconventional gas. The Company confronted the challenge and carried out comprehensive coping strategy. Sales strategy has being constantly optimized, the connection between production and marketing was strengthened, and the online transaction was expanded. Insisting on benefit making by scientific research, one scientific research project and one demonstrative project independently undertaken by the Company were approved by the government. The idea of win-win in foreign cooperation has won great support, which efficiently promoted the progress of cooperation projects and achieved the income and benefit growth. ENGINEERING AND TECHNICAL SERVICES Oilfield Services China Oilfield Services Limited (COSL) has over fifty years of experience in offshore oil and natural gas exploration, development and production, with its business including geophysical prospecting, well drilling, oilfield technology and ship. With the most powerful offshore oil service equipment group in Asia-Pacific regions, COSL can provide sole business operation service as well as integrated packaged turnkey operation service. The business is expanded to six major areas of Southeast Asia, Middle East, America, Europe, Africa and Far East, covering over 30 countries and regions in the world. The equipment capacity continues to be intensified, the technological results keep emerging, and the internationalized operation level is greatly improved. COSL has become one of the largest comprehensive offshore oilfield service providers in the world. Deepwater operation capacity continued to be improved steadily. COSL built the whole set of deepwater equipment group and studied the whole technological system for deepwater exploration and development, trying to build the first class deepwater operation team. At present, it possesses the all-around exploration, development and Engineering & technical services sector is the solid foundation for the sustainable development of the oil & gas business. The Company adhered to cost reduction and efficiency enhancement through safe, quality and highly efficient operation, overall promotion of management, and risk control, highlighted technology innovation, and enhanced equipment capacity, so that technical level was significantly improved, important breakthrough was achieved in operation capacity, international competitiveness and influence was enhanced in Nanhai No. 6 drilling platform production service ability from shallow water to deep water. It is now managing and operating 44 drilling platforms, among which 7 are deepwater semi-submersible platforms, forming a complete deepwater echelon operation of 750, 1,500 and 3,000 meters. The brand reputation and client recognition in global market are further increased. In Southeast Asia, it won the drilling contract exclusively endowed by SAKA and the Indonesia Tropic integration technology service project. In Middle East, COSL won the bid for two-to three-year long-term operation contract of two platforms in IOEC and the drilling service contract from Oman DNO and entered directional well market for the first time. In America, it won the offshore drilling machine and shipping service contract from Pan Am, which would build a solid foundation for the integration contracting in the Gulf of Mexico. In Far East, four major operations of geophysical prospecting, drilling, oil technology and ship entered the marked comprehensively for the first time. The serialization and industrialization of independent research technologies and products were accelerated. In drilling and logging, COSL has realized the operation ability of well logging during drilling and direction drilling technological equipment for two major sizes of wells 12-1/4 inches and 8-1/2 inches. In drilling & completion fluids and well cementing, COSL successfully conducted independent research on four kinds of deepwater drilling & completion fluids technologies and five kinds of well cementing technologies, and it developed 30 kinds of core products, which steadily improved the operation ability in high temperature, high pressure and ultra deepwater environment. In terms of completion tools, it self-developed 42 kinds of top completing tools and 62 kinds of bottom sand control tools. Meanwhile, the drive-pipe well tool series of 9-5/8 inches and 7 inches were further improved

19 BUSINESS In 2016, it was selected into Top 500 Innovation Indexes of In 2016, the development of COOEC was widely accepted RMB 100 million of earnings. Relying on platinum network China A-Share Listed Companies and awarded with Violet by the capital market, and COOEC was selected as Top 100 technological advantage, CNOOC Taiyuan Precious Metals Gold Innovation Award In addition, it was chosen to Competitive Listed Companies of China by Tencent Finance Limited extended its industrial chain, developed value-adding be the 2016 Best Enterprise Management Team in Asia by and awarded the Pearl of Listed Company prize. business and realized rising against the slowdown market. world-famous financial magazine Institutional Investor and awarded the Best Investor Relationship Listed Company prize, and it is included into the component stocks of Hang Seng Sustainable Development Enterprise Index for five years successively. Offshore Oil Engineering Service Centered on the project construction of offshore oil and natural gas, LNG and others, targeted with practical and delicate implementation of the whole project process, cored with cost reduction and efficiency enhancement, as well as service upgrade, CNOOC Offshore Oil Engineering Co., Ltd. (COOEC) focuses on building the leading general contracting capacity of offshore oil project EPCI (engineering, procurement, construction and installation) within the Asia- Pacific region. In 2016, the workload of COOEC decreased rapidly, but the international project workload took almost 60%. 24 mediumand large-scale construction projects were implemented through the year, 126,000 structure tons of steel was processed, 8,900 of ship days were put into operation, 80 project milestones were totally completed and the engineering machinery completion were brought forward 155 days cumulatively. The operation ability and efficiency kept increasing. In 2016, the offshore projects were operated with high efficiency and stability, and the Weizhou 6-9/10 and other 8 projects were completed. Yacheng 13-1 Project realized permanent pressure tapping operation with the application of domestic tapping machine for the first time, the gas pipeline realized recovery production 36 days in advance. The Chengbei upgrading and reform project completed class-a offshore major operation risk management and control work of CNOOC, which created the new record in remold workload and difficulty. The international projects achieved notable results. In 2016, COOEC operated 7 international projects including Yamal Yamal Project module shipment Project in Russia at the same time. The Yamal Project made high-end Made in China products enter the Arctic Pole for the first time, which created the great performance of no accidents for 38 million working hours. The offshore platform of Burmese Zawtika 1B Project realized operation in advance and won high reputation from foreign owners. Meanwhile, the Brazilian FPSO Project was the first Petrobras project directly undertaken by COOEC, which created the new record of 11,800 sea miles of towing distance. The market expansion made new breakthroughs. In 2016, international market development of COOEC realized breakthrough with 179 signed/negotiated construction income contracts in total, among which, Qatar NAF EPCI Project was the first EPCI general contracting project independently undertaken in the whole Middle East market, Shell SDA Project was the first EU project executed in Qingdao. Technology-driven effect continued to be played. In 2016, 75 major scientific research projects of COOEC were carried out through the year, 132 pieces of patents and 19 software copyright registration permits were authorized. Over 40 technology innovation results including pressure tapping sealing technology were applied in production, which brought great economic benefit, and 2 scientific and technological platforms were preliminarily built, and the Ocean Engineering Technology Center was recognized as the national enterprise technology center, and the national level welding technique research and development platform was built smoothly. Professional Technical Services CNOOC EnerTech is dedicated in building an internationally competitive energy technology service company with coordinated development of diversified industries, which is integrated with technological research and development, product manufacturing and professional technology service and oriented by energy industry service. The businesses cover most links from upstream to downstream of the oil and gas industrial chain and is formed with four core business segments including energy technology services, FPSO production technology service, energy logistics service and HSE and energy saving, which make it an innovative enterprise with sustainable development ability and one-stop service. Withstood operation pressure and displayed new strength. In 2016, CNOOC EnerTech tried its best for promoting cost reduction and efficiency enhancement and completed its annual operation goal. Its Oil Extraction Companies operated various kinds of offshore facilities with safety and high efficiency and played the mainstay effect in oilfield production, meanwhile, Hai Yang Shi You 301 made foreign breakthrough and the operation in Indonesia gained over RMB 100 million of revenue, and the smallscale FRSU market window was opened in Indonesia. The Safety and Environmental Protection Company boosted the deep cooperation with the domestic and foreign famous enterprises. The third-party safety service model for government purchasing was popularized. Through integration of production increasing and general contracting, its Engineering Technology Company made breakthroughs in emerging market. Its Equipment Technology Company accelerated the strategic transformation of equipment operation and maintenance industry, and the storage tank business entered the middle and downstream market of refining. The research institutes in Tianjin and Changzhou solidified the old market and won the new market with technology transformation at the same time, keeping over Management innovation discovery showed its new drives. The deep blue innovation plan and oil circle project of the Engineering Technology Companies, the sparkle plan of the Safety and Environment Protection company, entrepreneurship competition of the Information and Technology Company and other plans played great demonstrative effect, which further activated the motivation for the staff to start new business. The effect of scientific and technological result was remarkable. Through major water treatment special project, it actively promoted the transformation from asset-driven to technology-driven. The Equipment Technology Company independently developed 8-inch leakage flux inner inspector and inner inspection data processing software, with an advanced international level. The engineering technology companies successfully developed integrated window sidetrack drilling tool, which filled the shortage of China offshore oil technology and is of great prospect. The Cener Tech Tianjin Chemical Research & Design Institute Co.,Ltd independently developed the whole set of technology for aromatic hydrocarbon production with inferior diesel, which caused significant influence on oil refining. Hai Yang Shi You 113 FPSO 34 35

20 BUSINESS REFINING AND MARKETING The refining and marketing segment plays an important role in the industrial value chain and helps CNOOC stick to the market-oriented reform direction, realize the scale economy effect, optimize the structure of energy products, and develop into a world class energy company. In 2016, the Company basically completed the reform and restructure of refining industry and formed the refining industry segment integrated with production, sales and scientific research, market operation, professional management and group operation. Refining and Petrochemistry In 2016, focusing on the theme of reform and innovation, mechanism transformation, structure optimization, quality and benefit increasing, CNOOC Oil & Petrochemicals Company comprehensively completed various production and operation tasks and the overall level of safety production maintained steady. CNOOC Oil & Petrochemicals Company insisted on the maximization of overall value in refining chemical industry, fully played the advantage of production and sales integration, carefully organized production and operation, practically improved sales ability and drove the industry to a connotative development road. Annually, million tons of crude oil was processed, 7.38 million tons of refined oil products, 1.07 million tons of ethylene, 2.25 million tons of sodium carbonate, 8.47 million tons of asphalt and 750,000 tons of lubricating oil were produced. CNOOC Oil & Petrochemicals Company strengthened production plan management, made crude oil resource jointing balance, production plan, sales arrangement and construction commencement and shut-down management and confirmed the high-efficiency operation of the equipment. The product structure was adjusted by market. 540,000 tons of high value-added naphtha, 150,000 tons of jet fuel and 1.02 million tons of white oil was increasingly produced. Re-exportation business of refined oil product processed with giving materials was actively developed; the annual The Phase II Project of Huizhou Refinery CSPC refined oil product export reached 2.25 million tons. Huizhou Refinery expanded 8 kinds of crude oil suitable for refining, which greatly reduced the crude oil processing cost, Daxie Petrochemical and Orient Petrochemical increased production load through foreign purchasing of ethylbenzene, which effectively utilized the spare capacity of styrene device. China Offshore Bitumen Co., Ltd. increased production in high-grade, high value-added rubber oil, transformer oil and special asphalt product in asphalt lubricating oil business, ascending one of the first class domestic transformer oil manufacturer so as to increase product value. CNOOC Oil & Petrochemicals Company completed the refined oil quality upgrading task in advance under great pressure. The quality upgrading plan of 7 oil products was running smooth, whose quality and progress achieved full appreciation from the National Energy Administration. Among which, the acid-containing heavy oil integrated utilization and product upgrading project of China Offshore Bitumen Co., Ltd., safety environmental protection and clean fuel upgrading project of Zhongjie Petrochemical, distillation integrated utilization project of Daxie Petrochemical and integration project of Taizhou Petrochemical were all put into operation. And the Huizhou crude oil reserve project reached 97% of completion exceeding the plan. The Phase II Project of Huizhou Refinery was completed and rich international cooperation results were achieved. Based on the successful cooperation with the Shell in the first phase of the project, the company further expanded the cooperation with Shell to jointly construct the biggest ethylene production base. This project innovated the international cooperation management model, introduced advanced foreign technologies, upgraded integration value and formed Banyan Effect for the industrial park, which was listed into the Demonstrations for Introduction of Social Capital of Central Enterprises in Major Projects. On November 1, 2016, the project was delivered and the related industrial and commercial registration changes and staff transfer were all completed. Meanwhile, the new management structure and mechanism from CSPC after cooperation expansion was implemented

21 BUSINESS With an emphasis on the safety and environmental protection ideas of safety first, people-oriented, facility well-equipped, environmental protection upmost, CNOOC Oil & Petrochemicals Company strictly implemented the responsible subjects, strengthened safety risk control and management, conducted hazards investigation, carried out special rectification, strengthened emergency disposal, and refined oil product sales and marketing network covering two deltas and one bay (Yangtze River Delta, Pearl River Delta and Bohai Bay) and expanding along one river and two railways (the Yangtze River, Beijing-Guangzhou and Beijing- Kowloon Railway) to central China. In addition, CNOOC Oil & Petrochemicals Company realized the sales of oil product and chemical product up to million tons, among which NATURAL GAS AND POWER GENERATION Accelerating the development of natural gas and power generation is not only in line with the national strategy of energy consumption structure adjustment, but also a practical way for the Company to conduct low-carbon motion, respond to Paris Agreement, correspond to energy revolution, supply clean energy and promote green development. Natural gas and power generation has become a significant plate in the mid- and downstream chain of the Company and shows the greatest growth potential. therefore, it realized the overall stable safety production. the sales of oil product was up to million tons. Marketing In 2016, CNOOC Oil & Petrochemicals Company reorganized refining and chemical sales system. With production enterprises being the resources radius, it founded three region sales companies including South China, East China and North China and practiced the optimized overall planning of resources, market and benefit in regional market, as a result, it realized the operation system of close to market, close to refining plant, close to government, improved the management and operation efficiency of production and sales integration and finally formed the With the digging into market potential and improvement in its direct selling capacity, the Company increased sales volume per station and total retail volume of the service station. And it also won favor from more customers with high-quality oil, upgraded visual image of service station and considerate services. The Company accelerated the construction of the service stations, making the total quantity of service stations under control reached 828. Meanwhile, it kept enriching the product categories and gradually expanded the service network of terminal products including asphalt, lubricating oil, fuel oil and others. A CNOOC service station Hainan LNG delivery In response to global warming, natural gas is getting more and more important as key low-carbon clean energy. In 2016, CNOOC Gas & Power Group strengthened the strategic study on the natural gas, pushed forward the optimized and coordinated development of industrial chain and actively participated in studying and making significant policies including the national oil and gas system reform, the national 13th Five-Year Plan of Natural Gas, TPA of the natural gas, infrastructure, decentralization of newly-built LNG terminals and the supervision and audition of pipeline transportation price cost. With an emphasis on the Yangtze River Delta, Pearl River Delta and Bohai Bay, CNOOC Gas & Power Group continued to expand the natural gas supply network, construct LNG receiving terminals and build the coastal natural gas channel to provide clean energy for the sustainable development of the surrounding economy. In 2016, the natural gas business of the 13th Five-Year Plan achieved a great start, with million tons of LNG import volume and 21.5 billion kwh of power generating capacity. By the end of 2016, the natural gas business of CNOOC was distributed in 20 provinces and 90 cities in China. Meanwhile, 7 LNG receiving terminals were put into commercial operation and the annual LNG receiving capacity reached 27.8 million tons with 206 service stations, and the natural gas long-distance land transportation pipeline reached 4,513 kilometers. The development and sales of natural gas market kept improving steadily. The Company successively intensified 38 39

22 BUSINESS Main power house of Zhuhai Power Generation decreased the utilization of local coals and contributed actively to the local green ecology. CNOOC Gas & Power Group actively built completed natural gas industrial chain service system and actively expanded the internal and external technology service market. Meanwhile, the means for creating technological achievements were diversified. The self-owned core technology big-scale storage tank was applied in two projects including Fujian LNG5/6# tank and Tianjin Replacement Construction, which brought forward the general contracting capacity construction of CNOOC in LNG industry. With its own technological advantages, team design and building capacity and high-quality construction performance, big-scale LNG Full Containment Storage Tank technology entered the domestic and overseas market and made a powerful step in engineering technology service field, and the operation of Fujian maintenance center has effectively upgraded the emergency rescue capacity of Fujian and east Guangdong. Meanwhile, the gas turbine operation and maintenance service went abroad for the first time, which accumulated experience and cultivated talents for the overseas project management. Gas station the market development, actively sought for new increasing points in natural gas industry and prospectively conducted innovative sales models study including electricity sales company, natural gas distribution energy and Internet+. While keeping the natural gas market advantages in southeast coast, it kept extending to north and inland China, realizing the expansion from coast to inland and from firsttier to second-tier cities. In 2016, the sales of natural gas of the resource pool of CNOOC Gas & Power Group increased substantially with the annual sales of 14.8 billion m 3 and 19% of year-on-year growth. In the meantime, the regional sales increased rapidly, the liquid distribution of LNG achieved relatively great performance. In addition, through the strengthening of communication and coordination, participation of transaction in Shanghai Oil and Natural Gas Transaction Center, setting up internet sales platform, flexible pricing and other measures, the Company expanded the LNG market comprehensively. The annual liquid distribution of LNG sales of the resource pool reached 2.41 million tons with 37% of year-on-year growth. The natural gas power generation remained in safe and steady operation. The Company guaranteed the safe and stable production and operation. It actively conducted the power direct supply and power sales company research at the same time. Zhongshan Jiaming Power Plant and Hainan Power Generation actively coordinated with the government to increase power generation quota and kept the leading position in the whole province. Zhuhai Power Plan, Shenzhen Power Plant and Putian Power Plant continued to optimize operation model, reasonably arranged maintenance, and actively tried new energy saving methods and deepened the potential digging, thus all economic indexes were increased. CNOOC Gas & Power Group tried their best to fulfill the political and social responsibility as a central enterprise. Trade and related receiving stations fully played their LNG emergency supply guarantee advantages to fully complete the emergency supply guarantee task in Guangdong, Zhejiang, Tianjin and other cities through emergency resources allocation, regional cooperation, staff allocation strengthening and other measures, which vigorously LNG tank car unloading at terminal stations 40 41

23 BUSINESS FINANCIAL SERVICES CNOOC Finance Co., Ltd. CNOOC Finance Co., Ltd. kept zero record of nonperforming assets and bad loans. For the qualified group units, the service coverage rate has reached 93% and the clients are distributed in 107 cities of 28 provinces. In 2016, CNOOC Finance Co., Ltd. completed 224,000 settlements with the amount of RMB 2.34 trillion, and the average daily self-support credit loan balance reached RMB billion, which was 39.83% higher than last year, and the self-support credit loan balance by the end of the year was RMB 31.6 billion, 26.56% higher than the beginning of the year. The annual foreign exchange business income was RMB million with 29% of year-on-year growth. The annual operation revenue was RMB billion, which realized RMB 1.13 billion of profit after provision. By December 31, 2016, the total assets of financial company reached RMB billion. Self-support deposit and loan balances reached the highest level in the history. Zhonghai Trust Co., Ltd. By the end of 2016, Zhonghai Trust Co., Ltd. s total assets reached RMB billion and net assets reached RMB Based on the Company s industrial development, our financial services focus on the combination of industry and finance, strengthen the risk control, actively innovate financial products and service models, expand the service network, optimize information system, strive to improve our financial service brand, and keep the quality of financial capital and profitability constantly increased billion, with the newly increased non-performing assets kept to be zero. The trust business was conducted steadily. At the end of the year, it maintained 380 trust plans and the trust assets reached RMB billion. It realized RMB billion operation revenue, RMB billion total profit and RMB billion net profit. It continued to improve the entity economy efficiency of financial services and accumulatively conducted RMB billion asset securitization project, keeping a leading position in the industry. Zhonghai Trust Co., Ltd. provides high-quality service for group units to improve capital benefiting level. With the lowered oil price, it actively explores better financial service supporting model to assist the group units to reduce financial expenses and improve surplus fund income. Based on the analysis and judgment on macro economy, currency policies and other factors, it conducts reasonable assets allocation and grasps the investment pace to provide highquality capital management service for CNOOC enterprise annuity and make stable increasing for the net value of enterprise annuity trust. It was also rated as the class-a trust company by China Trustee Association. located to assist CNOOC to expand overseas business, and plays the synthetic effect of production and financing, decreases insurance cost for the insuring units and realizes coordinated development with the group entity industry, while accelerating indemnity recovery to help the insured units to recover production as soon as possible. By the end of 2016, CNOOC Insurance Ltd. s total asset reached RMB billion and net assets reached RMB billion with 15% of year-on-year growth. The capacity of under writing and corresponding to major disasters also continued to be intensified. In 2016, CNOOC Insurance Ltd. kept great operation performance and the total profit was beyond expectation, which provided strong guarantee to the development of group main businesses. CNOOC Investment Co., Ltd. In 2016, through intensifying strategic management and strengthening stock value management, CNOOC Investment Co., Ltd. managed 15 stock rights and conducted 2 private equity investments on behalf of CNOOC. It managed the holding assets through equity dividend, audition participation of three conferences proposals, asset disposal loss stopping and other ways, continuously kept great performance in asset quality, stock operation and management structure. By the end of 2016, CNOOC Investment Co., Ltd. reached RMB billion total assets and RMB billion net assets and RMB 178 million total profit. CNOOC International Lease Finance Company Directed by the management guideline of rely on CNOOC, serve high-quality customers, compliance with laws and regulations, conduct sustainable and steady development, CNOOC International Lease Finance Company lays a solid foundation to conduct business innovation, strengthen risk prevention and control. Through the innovation of business modles, designing of diversified leasing products, construction of multiple forms of risk control structures, it provides low-cost financing for the internal system units and vigorously supports entity economy to reduce financing cost and effectively controls the risk. Confronted with new normal economy, CNOOC International Lease Finance Company actively innovates leasing models and makes great effort in market expansion. The financing quality and level are improved and the great credit is built. With full use of policies in the Shanghai Free Trade Zone, it achieved the new business qualification for investment+leasing. In 2016, CNOOC International Lease Finance Company signed 41 leasing contracts with total contract amount of RMB 25.1 billion, among which, the internal system project loan was RMB 13.6 billion while the external loan was RMB 8 billion. It has realized operation revenue RMB 913 million and total profit RMB 302 million with 52.52% of yearly growth and zero non-performing assets. Financial team CNOOC Insurance Ltd. CNOOC Insurance Ltd. fully implements the group s development strategic deployment, executes the centralized insurance policies of CNOOC and fully plays the professional functions of risk management to contribute itself to group balancing, insurance cost reduction and risk control and distribution, and finally realizes the effective integration of production and finance. It supports industrial development and provides vigorous insurance support for the overseas projects in sensitive political regions where they are 42 43

24 Internationalization CNOOC focuses on the noticeable benefits and utilizes the innovative management to continuously deepen cooperation overseas, optimize its business arrangement and strengthen the soft power, steadily upgrades foreign business management level, pursuits economic output and improves foreign assets value and finally realizes the sustainable development of the overseas business. Business Overseas In 2016, CNOOC paid high attention to the stable operation of overseas business, kept optimizing overseas business management mechanism and kept great operation performance. The overseas assets contributed to 38.8% of the total assets by the end of year. CNOOC Ltd., continued to be well recognized by the international capital market. It continued to be listed in the annual Platts Energy Top 250 and was awarded again the honorable titles of The Best Investor Relations Company (China), The Best Corporate Governance, The Best CEO in Asia (Investor Relations) by the journal Corporate Governance Asia in In addition, it was awarded the titles of Annual Enterprise Awards-Platinum Award by The Asset and The Listed Company with the Most Valuable Brand Value of Golden Bauhina Awards in Ta Kung Pao Newspaper. The CNOOC President Yang Hua won the prize of The Most Influential Leader of the Listed Company of Golden Bauhina Awards in Ta Kung Pao Newspaper. In 2016, the overseas crude oil output of the Company was million tons, and the natural gas output was billion m³. COSL highlighted the overseas business. The company entered three new markets in Russia, Saudi Arabia and Oman respectively and newly signed 128 overseas contracts with the total contracts amount up to RMB 4.41 billion, in which 10 contracts boast the contract amount of over RMB 100 million. extra long distance international sea towing operation with the voyage for about 11,800 sea miles, which set a new record in the towing distance of COOEC. CNOOC EnerTech basically completed overseas market deployment. In 2016, the overseas external system income took 54% of total overseas income. it has founded 13 holding subsidiaries overseas, whose business covered over 20 countries. The Company successively pushed out 15 management regulations and methods and led the overseas companies to set up corresponding internal control and management methods and details. There were many highlights in overseas market, realizing two breakthroughs: large ship plate in Southeast Asia market, which was operated smoothly and laid great foundation for further cooperation afterwards and the Singapore branch had made breakthrough in logistics business, accumulated the experience in logistics organization and resources integration. CNOOC Gas & Power Group operated its international business steadily and soundly. The total annual LNG imports were million tons with the year-on-year growth rate of 26%, reached a historic high. It has constantly deepened the cooperation with the resource parties and other buyers. Overseas staff presence COOEC has constantly achieved good results in the international projects. The company is operating 7 international projects. The Yamal Project has set the record of safety without accident for 38 million working hours. The Burmese Zawtika 1B Project was put into operation ahead of schedule. The FPSO Project in Brazil has completed the 44

25 A3 C18 B9 A18 B14 C1 B11 C20 D13 C21 D8 B3 A9 A12 D7 C16 D11 A14 B4 D16 A7 C9 B15 C7 D1 C13 B5 D12 D4 B12 C10 B16 C19 B10 D17 C6 B7 A16 C25 D2 C11 A4 B8 C14 C15 A10 A5 C24 A2 A6 A15 D3 C22 C2 B1 D14 C17 D6 C23 A1 C4 B6 D9 D15 A17 A11 C12 A19 D10 D18 C3 D5 C5 B2 A8 C8 A13 A20 B Africa Oceania Europe Asia North America South America 1. Algeria 2. Nigeria 3.Equatorial Guinea 4. Gabon 5. Congo (Brazzaville) 6.Angola 10. Egypt 11. Uganda 12.Kenya 15. Madagascar 33. Australia 34. Papua New Guinea 35. New Caledonia 36. New Zealand 7. UK 8. Iceland 9. Netherlands 13. Norway 23. Russia 14. Saudi Arabia 16. Iraq 17. Kuwait 18. Qatar 19. The United Arab Emirates 20. Oman 21. Pakistan 22. India 24. Myanmar 25. Singapore 26. Thailand 27. Vietnam 28. Malaysia 29. Brunei 30. China Hongkong 31. Indonesia 32. South Korea 37. Canada 38. United States 39. Mexico 40. Ecuador 41. Colombia 42. Argentina 43. Trinidad and Tobago 44. Guyana 45. Brazil CNOOC Ltd. COSL COOEC CNOOC EnerTech A1. Indonesia A2. Gabon A3. Iceland A4. Nigeria A5. Guyana A6. Congo (Brazzaville) A7. Algeria A8. Australia A9. Canada A10. Trinidad and Tobago A11. Papua New Guinea A12. United States A13. Argentina A14. Iraq A15. Uganda A16. Mexico A17. Colombia A18. UK A19. Brazil A20. New Zealand B1. Singapore B2. Australia B3. Canada B4. Iraq B5. The United Arab Emirates B6. Indonesia B7. Mexico B8. Thailand B9. Norway B10. Myanmar B11. Russia B12. India B13. New Zealand B14. UK B15. Saudi Arabia B16. Oman C1. Netherlands C2. Kenya C3. Madagascar C4. Indonesia C5. Australia C6. China Hong Kong C7. Saudi Arabia C8. New Caledonia C9. Egypt C10. India C11. Nigeria C12. Brazil C13. Qatar C14. Thailand C15. Vietnam C16. Iraq C17. Brunei C18. Norway C19. Myanmar C20. Russia C21. Canada C22. Uganda C23. Malaysia C24. Equatorial Guinea C25. Mexico D1. Kuwait D2. Nigeria D3. Uganda D4. Pakistan D5. Australia D6. Malaysia D7. United States D8. Canada D9. Indonesia D10. Brazil D11. Iraq D12. The United Arab Emirates D13. Russia D14. Singapore D15. Ecuador D16. South Korea D17. China Hongkong D18. Angola

26 Europe The Middle East Libya Italy Turkey Russia Iraq Uzbekistan Kazakhstan Tajikistan Japan CNOOC products win Great Prestige in the World As an international energy company with a complete industrial chain, CNOOC provides products and services both at home and abroad. CNOOC ranks 16th in the Top 50 Global Oil and Gas Brands in 2017 released by Brand Finance, a brand appraisal agency, thereby demonstrating its brand value. South Korea Hong Kong Vietnam Singapore The Company-owned brands of CNOOC 36-1, Haijiang, Awode, Yuandu, Baiqing and Zhonghai Jinzhou enjoy a very high reputation in the international market, in which the CNOOC 36-1 asphalt was ever used for the construction of the Brazil s Olympic Stadium, the Haijiang lube has made great contribution to the construction of multiple projects of The Belt and Road Initiative, the Awode coating has been applied to several strategic projects of Russia, Pakistan and other countries as a high-end coating, the marine chemicals of Yuandu and Baiqing are sold well in more than 10 countries, and Zhonghai Jinzhou pipelines have been exported for more than 30 tons. CNOOC service brands include COSL, COOEC, and etc. The service includes the exploration, development, and production of conventional and nonconventional oil and gas fields. The business scope covers offshore and onshore services and products. Operation service ability covers shallow and deep water. North America Canada Brazil Uganda Pakistan Malaysia USA South America Africa Angola South Africa Iran Oman India Indonesia Australia Diesel Jet fuel Gasoline Asphalt Lube Urea Demulsifier Water Clarifier Defoamer Coating for Colored Sheets Nuclear Power Coatings Sodium Carbonate Sodium Nitrate, Sodium Nitrite Calcium Chloride Pipelines Catering Barrack

27 BUSINESS International Trade CNOOC Petrochemical Import & Export Co., Ltd. implements the development strategy of integration of sales, trading, storage, operation and financing, pays high attention to trade quality improvement and actively and effectively expands market, therefore, its overseas trade makes new high. Processing exporting trade helps the Huizhou Refinery products to increase value in exporting, and five business segments, including oil and gas sales, oil products trading, storage operation, cruise transportation and financing, keep great development trend. In 2016, CNOOC Petrochemical Import & Export Co., Ltd. kept to deepen international oil product market and strengthened internal and external integration operation. In addition, key indexes like trade volume and total profit created new historic high. The annual trade volume exceeded 80 million tons. The sales income was nearly RMB 180 billion, and the total profit set a new record and realized the best performance since the company was founded. Sales business vigorously upgraded oil and gas value. CNOOC Petrochemical Import & Export Co., Ltd. fully played its advantages in sales and trading integration, actively expanded market and effectively broadened sales channel. It conducted natural gas market research and judgment and gas price negotiation to create new benefit, and applied innovative cascade rate settlement and decreased sales cost. The oil product trade industry made new high. The crude oil trade aimed at the resources need of the Phase II Project of Huizhou Refinery in advance and signed cooperation framework agreement with foreign oil Companies. It also vigorously served refining market to build core client resource, and its refined oil product grasped the processing trade to realize win-win development and the trade profit made a historic high. Its chemical products realized highest trade volume and best revenue. Its Singapore branch realized the best performance in history based on production and supply guarantee promotes trade. successfully put into operation, which efficiently pushed the healthy and coordinated development of the sales, trade, storage, transportation and finance integration strategy of CNOOC Petrochemical Import & Export Co., Ltd. The shipping companies invested by CNOOC Petrochemical Import & Export Co., Ltd. mainly actively served the whole of offshore crude oil production, focused on improving governing level, and intensified market expansion and increased delivery income in the precondition of safety production, which made huge contribution to the offshore oilfield production. With the full use of the associate attributes of trade and finance, CNOOC Petrochemical Import & Export Co., Ltd. conducted elaborate financial management and prudently selected financial products through expanding financing channels, made financial combination and cooperated with financial institutes for special financing products and finally achieved stable financial benefit. CNOOC Petrochemical Import & Export Co., Ltd. implemented the idea of Know It All, Strict Control and Semi-Bearing and realized zero major risk through the whole year. The new trade system was launched by schedule, which greatly improved the level of futures and paper, broker reconciliation and quantitative risk management. Trade Volume of CNOOC Petrochemical Import & Export Co., Ltd. (unit: ten thousand tons) 2016 年 8, 年 5, 年 5,361 The connecting pipeline project of Daxie Storage and Daxie Petrochemical was completed and put into use, positioning to long-term client. The integration project in Yantai was 47

28 MANAGEMENT MANAGEMENT Technology Innovation 50 Management Innovation 53 QHSE 54 Informatization Progress 62 Human Resource Management 63 Corporate Culture 67 Corporate Citizenship

29 MANAGEMENT TECHNOLOGY INNOVATION Technology innovation is a strategic engine for an enterprise s sustainable development. Serving as a global energy company, CNOOC is championing efforts to supply high-quality energy and exploring newtype marine energies continuously based on the oil & gas businesses and driven by the technology innovation, with a view to providing an inexhaustible driving force for sustainable development of the Company. R&D investment (unit: 100 million) 2016 年 2015 年 2014 年 and approved, among which the Xinjiang drilling test platform project completed the 4-well platform trial run drilling operation, conducted over 20 scientific research equipment and instruments test and training for over 600 people. High temperature and high pressure oil & gas development experimental platform project developed several experimental technologies including rock-electricity- Authorized patents pressure simultaneous analysis at 200, MPa, which The Company vigorously implements science and annually, among which RMB 2.06 billion was for R&D, (unit: piece) have been applied for over 1,500 times. The horizontal technology drive strategy. According to the scientific and contributing to 1.1% and 0.47% of the main operation well test capacity construction project of mult-iple-branch technological working idea of arrangement, highlight, business revenues respectively. Top-level designs of 年 834 diversion moderate sand control research and development normalization, upgrade, the Company fully plays the major scientific and technological projects of the 13th Five 年 999 condition platform built the first horizontal test well JJSY- motivation and leadership of scientific and technological Year Plan were completed, which further focused on the 2014 年 833 2H in China. The horizontal section of JJSY-2H was 401 innovation, strives to make technological breakthroughs, core technology breakthroughs including high-efficiency meters which can meet the requirements of horizontal successively deepens the scientific and technological system and mechanism reform, comprehensively upgrades development of heavy oil, exploration and development of deepwater oil and gas fields, exploration and development Issued technological standards (unit: item) tools and technological test. The project of tight oil and gas reservoir exploration and development created a set scientific and technological management, then the scientific of offshore low-permeability natural gas and onshore of mature experimental technical systems with tight oil and and technological innovation mechanism is continuously unconventional oil and gas and other fields, brought 2016 年 108 gas reservoir exploration and development. The project improved and the independent innovation capacity is forward the implementation of scientific and technological 2015 年 135 of submarine pipeline high-efficiency welding technology obviously strengthened. In 2016, the Company implemented the 13th Five-Year Scientific and Technological Plan plans. It has arranged the organization and management of various levels of scientific and technological projects 2014 年 166 and welding joint ECA evaluation technology platform independently developed submarine pipeline high-efficiency and top-level design of major scientific and technological projects, deepened the scientific and technological innovation operation mechanism study, successfully held including major national special projects, key national research and development planning projects and CNOOC major technological and scientific projects, meanwhile, Scientific and technological awards (provincial and above) (unit: item) welding technology including X65, CRA and X70. Scientific and Technological Innovation the 8th Science and Technology Conference and the first 1,151 scientific research subjects at different levels were 2016 年 35 In 2016, 35 innovation results were awarded with provincial innovation meeting of CNOOC, strengthened various functional work management cored with scientific and technological project management, which have all achieved conducted through the year, including 96 national and provincial projects, 416 company-level projects and 639 subsidiary projects. It has innovated project approval and 2015 年 2014 年 and above level prize, among which 2 were national scientific and technological prizes, 11 were provincial scientific and technological prizes and 22 were industrial scientific and great result. Management of Scientific Research Project With continuous and stable scientific and technological capital investment, CNOOC invested RMB 4.78 billion pre-audition method, conducted strict checking on project approval of new tasks, in 2016, it has applied 100 tasks while 68 tasks were actually approved. Establishment of Scientific Research Platform The construction of CNOOC top-level design of the scientific Scientific and technological paper (core journal) (unit: piece) 2016 年 2015 年 2014 年 technological prizes. Key Breakthroughs of Deepwater Oil and Gas Geological Theoretical Technology Innovation and Exploration in North Continental Margin of South China Sea won the second prize of National Scientific and Technological Progress Award. A Deolefin Catalyst Manufacturing Method won the 18th Outstanding China Patent Award. 834 patents were authorized including 452 invention patents. Meanwhile, the Company completed the integration of standardized Sci-Tech investment (unit: 100 million) 2016 年 2015 年 2014 年 research condition platform has been completed, which formed the list of 14 key platforms construction deployment including earth physical key laboratory. In 2016, the scientific research condition platform construction achieved a series of results, 6 projects including Xinjiang drilling test platform construction were successfully inspected modification projects, upgraded standard quality and level, integrated 107 single standards to 75 with 30% of integration rate. 108 technological standards were issued (among which 17 national standards, 30 industrial standards and 61 enterprises), two international standards- module drilling machine and pipeline integrity management were promoted

30 MANAGEMENT International Technology Exchange International technology exchange is a significant platform for the Company to build scientific and technological innovation soft power. The conduction of foreign scientific and technological exchange is of advantageous effect for introducing foreign advanced technologies, promoting core research level and expanding the visions of researchers. In 2016, the Company closely met the developmental need of industry, actively organized and participated in 31 international and domestic communications, among which 12 were international and 19 were domestic. 3,055 people were participated accumulately. MANAGEMENT INNOVATION Management innovation is an essential guarantee for companies to strengthen their competitiveness and achieve sustainable growth. Under the current complex environment of scientific and technological evolution and profound changes in the operating environment, CNOOC must grasp new trends and requirements of management innovation, make continuous management innovation, and incorporate the innovation in the whole management process. technologies of CNOOC, upgrading company scientific Main Achievements in Scientific Research Name of Achievement Key vector processing technologies for multicomponent seismic data. Interpretation technology of time-lapse seismic difference. The research achievement on paleogene clasticcarbonate deposits high quality reservoir and analysis on its exploration potential in Bohai offshore. Comprehension interpretation and evaluation technology of well logging at water flooded layer based on the dynamic mixed conductive model. Independent development of large flow downhole oil and water separation technolgy with the processing load of 12 million m 3 per day. Predication technology of driving and pulling of the pile in self-elevating drilling platform. Intelligent testing and regulation technological achievement of water injection well in the offshore oilfield. Key technological achievement of debriscarrying drilling of high angle deviated well. Independent development of integrated casing sidetracking tools. Successful development of production and application technology of TS series oilfield water treatment chemicals. Independent development of TH series hydrogenation catalyst. Successful development of the first domestic submersible pump in large-scale LNG storage tank with self-owned intellectual property. Independent development of mid-low grade phosphorite selection technology and technique optimization. Scientific and Technological Tackling Result Completed the seismic data processing in Bohai and Weixinan region over 200 km 2 and the imaging was significantly improved. Successfully applied to the time-lapse data processing of Xijiang 24-1 Oilfield, the consistency of the time-lapse seismic marker layer reached 96%. Guided the projects of Lvda 16-3N, Bozhong 27-2, and Kenli 16-1 to achieve the key exploration goal. Applied to the evaluation of the oilfield water flooded reservoir of Weizhou 12-1, realized the target of less than 15% of moisture content in the early production and successfully guided the adjustment of drilling of the oilfield of Wenchang 13-1/2. Successfully applied to Bohai Oilfield, broke the international technical monopoly and filled the domestic gap in this field. Applied in the field operation of 8 oil and gas fields in the waters at home and abroad and 5 preliminary research projects. The on-site application prediction result consistency was over 94%. Applied in 4 wells of Bohai Oilfield with the testing and regulation efficiency increased for more than 5 times. Successfully applied in 14 high angle deviated wells in Jinzhou 25-1 Oilfield with the drilling operation safety increased greatly. Broke the foreign technical monopoly and reduced the operation cost for more than 20%. Widely applied in multiple oilfields like Liuhua Oilfield, created total production value of RMB 300 million and taxation of profit of RMB 110 million and saved over 30% expenses. Applied in the internal and external refineries of the systems like Zhoushan Petrochemical. Applied in the Guangxi LNG projects, reduced expenses over 30% compared with imported devices. Improved phosphorus resource utilization rate. CNOOC intensifies the idea of leading development with innovation, practically transforms the innovation idea into the Company strategy, system, procedure and culture and gathers the inexhaustible driving force for the Company development. In 2016, CNOOC held the first innovation meeting and made significant deployment for promoting the scientific and technological innovation, management innovation and business model innovation in new trend. Management Innovation Achievements Since CNOOC issued the Management Method of CNOOC Modernization Achievements Management, the innovation achievements for business management modernization has been kept emerging. By the end of 2016, the Company rated totally 218 outstanding enterprise management achievements at Compay level, applied and won 92 industrial awards and 28 national awards (11 first prizes and 17 second prizes). In 2016, the Company rated 25 business management modernization outstanding achievements at Company level. Applied and won 11 ministerial level management modernization innovation achievements, including 2 first prizes, 5 second prizes and 4 third prizes. The applied management result of Construction and Implementation of Comprehensive Energy-Saving Management won the second prize of the 23rd national business management modernization innovation achievement (national-level). Quality and Benefit Year 3.0 In 2016, the Company deepened the conduction of Quality and Benefit Year 3.0 activity cored with quality improvement and efficiency increasing and promoted the cost reduction and efficiency increasing by the requirements of refined, dedicate, deep, practical. It has further improved the enterprise management level and helped the corporate realize the cost reduction and efficiency enhancement target, fully completed the main production and operation tasks of the whole year. Through value exploration, design optimization, new techonlogy, new material, new technics, standalization, localization, facilitation and refined production, CNOOC pushed the whole process cost reduction, the discovery cost per barrel reached a new low in the past ten years. COSL, COOEC and CNOOC EnerTech vigorously expanded twoforeign markets and strengthened organization with upstream business CNOOC Oil & Petrochemicals Company and CNOOC Gas & Power Group coordinated resource allocation, optimized the product structure, actively expanded market and achieved new progress. CNOOC Petrochemical Import & Export Co., Ltd. and the financial segment actively promoted production and finance integration and innovated business models to provide qualified service for the main operation. The headqueter departments played their organized direction and coordinated support function through style changing, quality strengthening and efficiency improving. The Quality and Benefit Year activity achieved over RMB 10 billion of cost reduction and efficiency enhancement for successive 3 years, which made great contribution to the production and operation performance. In addition, the Company also compiled the book: Trend Reading, Confidence Building, Bravery Tackling-Quality and Efficiency Increasing / Trend Mission Education Manual for Quality and Benefit Year and held 8 Home and Dream themed tour report activities, which conducted vigorous promotion and advertisement on the great experience in the activities and explored to build the cost reduction and efficiency enhancement long-term mechanism

31 MANAGEMENT QHSE Quality Management CNOOC attaches great importance to employees physical and mental health, commits itself to creating safety production environment for its employees through scientific management and efficient methods, and devotes to providing the society with higher quality products and marketing services in safe, efficient and environment-friendly manners, so as to contribute its values to realize sustainable development of the society and environment. In the control of quality, CNOOC adheres to the directives of people-oriented, safety first, honest and law-abiding, reinforcing foundation, innovation-driven and winning with quality. It pursues the quality objectives of excellence and leading to satisfy clients, and implements the general requirements of emphasizing basis, ensuring safety, stressing quality and increasing benefits, so as to fully establish a quality management system and culture, build quality management information system, issue and practice CNOOC 13th Five-Year Quality Plan and continuously upgrade quality management level. CNOOC Among which the Hai Yang Shi You 981 drilling platform obtains complete certifications for its products and of the Drilling Department of COSL won the second China services, conducts strict quality supervision and control and Quality Award, becoming the only winning unit in frontline constantly improves the quality of its products and services, teams. COOEC and Zhuhai LNG Terminal of CNOOC Gas & establishing a good reputation in the international market. Power Group won the Advanced Enterprise with Excellent CNOOC identifies quality risks and clearly recognizes quality Performance Model for State Implementation from China priorities. In 2016, the Company held quality management Quality Association, and the Oilfield Chemical Department meeting and two terms of lab management trainings to of COSL won the Quality Benchmarking Enterprise from conduct benchmaking research and form comparison the National Petroleum and Petrochemical Industries analysis report for implementation. Association. product quality special movement to guarantee the product quality. It also implements QC group activities, technical competitions and so on to strengthen the quality awareness of all staff, focuses on cultivating Spirit of Craftsmanship and strengthening quality training to improve the professional quality and competence of staff. CNOOC solidifies construction of brand management system and devotes to building an internationally renowned brand. By refining the core values of CNOOC brand and revising the Company image brochure, the Company comprehensively unifies both brand cultural connotation and image, and improves the world s recognition on CNOOC brand. CNOOC 36-1 asphalt, Haijiang lubricant, Awode painting, Yuandu salty products and Lishen batteries, as well as Fudao, Tianye and Sakefu fertilizers have been recognized by the society. China Oilfield Services Limited (COSL) becomes an international renowned brand. CNOOC endeavors to launch quality management training to strengthen quality management consciousness. Through quality management training with various forms, rich content and clear classification, the Company not only enhances employees awareness of quality management, but also improves suppliers and contractors awareness of quality management, so as to increase their quality management level. Occupational Health Adhering to the core QHSE philosophy of peopleoriented, CNOOC always puts the safety and wellbeing of its employees at the forefront. We unremittingly strengthen the occupational health management, actively improve the operation environment, focus on the identification, analysis and control of occupational disease hazard factors in workplaces and popularize occupational health promotion activities, so as to ensure the safety and health of the employees in an all-around way. CNOOC focuses on the physical and mental health and promotes health of its employees. Through Health Embraces CNOOC health management system for all its employees, the Company calls on all employees to participate in walking and body building activities. It also Dongfang 1-1 Gasfield Spring Festival celebration CNOOC implements special quality examination and improves product quality. CNOOC conducted special audition and approval on 6 labs, conducted wholecoverage, whole process, identical-standard special quality audition and approval on 44 service stations in Hunan Province, self-checked 480 service stations, 58 oil depots, 27 transportation teams and discovered 1,534 issues, and formulated and implemented the rectification plans. CNOOC has carried out quality management activities and won various national awards. In 2016, the achievements of the Company emerged one after another in various quality activities, and three important national awards were gained. CNOOC promotes the activities of quality management groups to strengthen the quality culture constructions. In 2016, CNOOC continued to promote quality theme activities of QC Group to highlight its achievements of quality culture constructions. 7 QC quality groups won the National Excellent QC Team awards and 259 primary QC groups won Industrial QC Group awards. CNOOC also launches Quality Month activity and promotes Spirit of Craftsmanship. The Company strengthens quality advertisement and creates atmosphere for pursuing quality, it intensifies quality risk control and formulate counter measures and carries out supervision spot checks and key 54 55

32 MANAGEMENT launches basic mental health information services, and continues to expand the stress management and mental health services to the offshore employees at departments of headquarters and institutes. In China waters, CNOOC continuously launches stress management services for employees working on its 77 offshore and onshore units to positively release the pressure of employees and effectively contribute to health promotion. certification. It also compiled the test data bank for CNOOC enterprise leaders and safety staff and successively organized 8 terms of trainings and assessment for enterprise leaders and safety staff with 1,986 people trained in total. 10 safety online education courses were developed and about 74,000 people signed up for learning with 87% completion rate. At present, 76 safety object training classrooms were put into use and 1,842 terms of trainings were held through the year Work Safety CNOOC always implements the principle of safety first, prevention first, comprehensive management and constantly strengths safety management system construction, intensifies key preventions and controls and works hard to create first-class safety production management to provide a safer working environment for its employees and contractors. CNOOC has carried out occupational health monitoring and evaluation work, and improved health service quality. In 2016, 44 occupational hazard pre-assessments projects and 54 occupational hazard prevention measures were conducted by CNOOC, meanwhile, the regular inspection of on-site occupational hazard factors realized all-around coverage and the occupational health inspection rate for the staff who contact with occupational hazard factors reached 99.9%. Operational Safety CNOOC puts operational safety as the base and lifeline of its sustainable development. Adhering to the core value ideas of safety first, environment utmost, people-oriented and equipment intact in environment protection and safety, CNOOC constantly improves its safe production guarantee system, enhances safety control in areas of personnel, production process and emergency response, and builds a company with inherent safety. Safety Culture CNOOC advocates code of conduct for field operation, including Conduct on Safety Signs and Five To-dos and Five No-nos. Through conducting various forms of safety education activities and strengthening safety basis management, CNOOC constantly builds special safety culture and the employees transform the safety culture into their self-awareness and practical behaviors, so as to effectively guarantee the implementation of safety culture and the personal safety of employees. In 2016, CNOOC improved safety training system construction. CNOOC conducted the whole process supervision from outline, textbook, question bank, training and assessment to with 60,000 people completing the training. In 2016, CNOOC advocated the implementation and deepening of CNOOC Safety Marking Behaviors Guide and extended to the primary levels. CNOOC conducted Three- Ones activity and promoted the implementation of safety marking behaviors for leaders, organizations and staff through One Behavior Suggestion, One Time Supervision and Inspection and One-Week Behavior Monitoring. In 2016, CNOOC held the essay contest of Safety Management in Frontlines to summarize and refine the frontline safety management experience and promote and advocate effective safety management measures. 172 essays were received and 61 of them were published on the China Offshore Oil Press. CNOOC also organized Safety Production Month activity. During the activity, the subsidiaries held 2,884 safety production-themed seminars and 72 online interviews, 56 forums, and released 638 comments and experiencing articles. They conducted 174 special editions and columns for publicity, released 51,936 publicity materials, set up 2,630 panels and placards, and accepted 1,727 people for consulting. They held 78 speech contests and made 241 cultural works and 2,017 pictures, and held 1,281 training lectures, 281 competitions, 81 exhibitions and 3 art shows. In addition, it organized 539 inspection teams to deepen the safety inspection in 1,027 frontline units. CNOOC actively leads the safety management of the cooperation partners. CNOOC and partners jointly organize safety day themed activities and improve the safety awareness of the staff and promotes safety management through safety education video, accident case sharing, team games, individual safety commitment and so on, to increase the safety awareness and promote safety management. In 2016, CNOOC continued to strengthen the QHSE system, adhered to systemic management model and upgraded the whole version of QHSE internal control system. CNOOC modified 45 regulation documents and abolished 8 regulation documents. It transformed 10 documents including overseas project HSE management plan, public health event management and accident management into the QHSE internal control regulations, and issued 6 management requirements including maintenance, start up and shut down, gas and service stations and dangerous chemicals tank. CNOOC strengthens safety supervision measures to effectively prevent major accidents from happening. CNOOC conducted the risk level control and management for overseas production facilities and downstream enterprises, promoted the construction of downstream enterprise risk level control and management system, and built comprehensive risk monitoring indexes including well control monitoring, project construction major operation risk supervision and control and etc, and strengthened frontline safety management, pushed to build the post responsibility list, improved onsite tour check system and upgraded the on-site safety protection guarantee ability. And it also tackled on the hazards modification of oil and gas transportation pipelines, continued to promote the rectification of pipeline hazards and guaranteed to uncontrollable risk or leakage in different stages for the whole life cycle, continued to focus on the key spots, critical links and high-risk points for dangerous chemicals safety management and promoted the high risk link safety management like dangerous chemical storage tank, special operation and maintenance. CNOOC arranges the annual audition and inspection to promote QHSE management. CNOOC organized to audit the HSE management system of 8 units, conducted the special auditions on quality, self-owned railways, diving contractors First emergency drill before Yuedong LNG trial run and others, completed 6 whole-system safety check like CNOOC safety production special supervision, organized special inspection on the QHSE risk of 6 specified units, and organized 885 units involving with on-site operation to complete self-inspection with information system to urge the implementation of rectification. Cored with strengthening safety production system construction, CNOOC grasps the key points of overseas key and new projects and concerns about the major changes and potential risks in the process of different overseas operations to provide effective and timely risk pre-judgment and technical support for the overseas units to guarantee the overseas projects to realize intrinsic safety. In 2016, CNOOC further promoted its subsidiaries to build and improve the HSE management plan by regular tracking of overseas project HSE risk and progress. CNOOC organized the HSE audition of head office of Nexen in Calgary Canada and Long Lake oil sands facilities, conducted safety audition on the CNOOC Southeast Asia SES Oilfield extending project facility evaluation, and conducted pre-production safety inspection on QHSE management in Iraqi Missan Oilfield and new project. It also paid high attention to the overseas security and strengthened the business communication with international security and emergency rescue forces, which effectively promoted the construction of overseas security information collection and pre-warning mechanism

33 MANAGEMENT Emergency Management Based on hazard identification and risk analysis, CNOOC constantly improves the management system constructions, integrates emergency management information system, develop emergency management APP, improves ICS system construction and intensifies emergency training and drills to increase its systemic risk prevention capability and minimize the impact of emergencies. In 2016, CNOOC strengthened the construction of emergency maintenance bases and teams, promoted the Phase I Project of the South China Sea Base, the Phase II of Tanggu sea pipeline maintenance center and Fujian pipeline maintenance center for COOEC to be included into national plan. CNOOC continued to conduct typhoon prewarning and emergency disposal, there were 25 typhoons in northwest Pacific Ocean and South China Sea, among which 13 typhoons influenced the regular production and operation. To avoid influence of typhoon, CNOOC timely activated emergency plan and applied 779 helicopters, 62 ships and 16,732 safety operation staff which successfully prevent any casualties. Environmental Protection With the principle of developing a green, low carbon, clean and renewable economy in mind, CNOOC makes great efforts to become a resource-conserving and environmentfriendly company. Based on the control principles control after the event is inferior to control during the event, control during the event is inferior to control before the event, and control before the event is inferior to whole process control, CNOOC has continuously improved its environmental management system, constantly enhanced the whole process environment management for its projects and incorporated environment protection into its routine production and core issues globally in need of resolution, so as to reduce greenhouse gas emissions and protect the environment. As a responsible international energy corporation, CNOOC attaches great importance to the work of tackling climate change. It is the first central enterprise which has completed carbon self-inspection as per international standards. In 2016, the Company actively responded to climate changes. It has been reducing greenhouse gas emissions through developing carbon emission monitoring and verification technology besides constant research on CCUS. It strengthens carbon interrogation and promotes carbon trading, conducting carbon self-inspection according to the newly-launched 24 standards, so as to have a clear idea of the current situation. Multiple Chinese Certified Emission Reduction(CCER) projects were allowed to enter into the carbon market. The total amount of CCER exceeded 1 million tons. Energy Conservation and Emission Reduction Guided by the main ideology of green development, low carbon and innovation, CNOOC always advocates green and low-carbon production, living and consumption patterns. It controls energy consumption of new projects from the source through exploring energy conservation potentials of the existing facilities, planning energy distribution within the region and continuous investment of the special fund of energy conservation and emission reduction. It promotes the work of energy conservation and emission reduction depending on technical progress. It also uses energy conservation and emission reduction management Whale sharks visit Weizhou Oilfield information system to carry out energy conservation and emission reduction work in the various links of implementing production, products circulation and consumption. In 2016, the Company strictly complied with the requirements set out in the new Environmental Protection Law to intensify the supervision and inspection of environmental protection, energy conservation and emission reduction. Moreover, it established the monthly tracking and feedback mechanism, tracked and settled 50 environmental hazard events and specified the responsible units and personnel to make correction within a definite time. It formulated and revised five energy conservation standards and conducted the overall revision of the systems, regulations and detailed rules of energy conservation management. It carried out Energy Efficiency Frontrunner and advanced energy conservation campaigns of 12th Five-Year Plan and the training activity of energy conservation management personnel. It organized promotional activities by the names of Energy Conservation Week and National Low Carbon Day. It concentrated in conducting energy audit, Green Factory, formulation of the construction scheme of energy management centre, optimization of energy system, investigation of the boiler energy conservation potentials, renovation of variable frequency pump and water and electricity conservation of circulating water system to promote the overall improving of the energy conservation. In 2016, CNOOC was awarded the 4th term of Excellent Energy Conservation and Emission Reduction Enterprise issued by State-owned Assets Supervision and Administration Commission (SASAC) as its 30 affiliated key energyconsumption units all accomplished the Ten Thousand of Enterprises energy conservation task assigned by National Development and Reform Commission(NDRC). The Establishment and Implementation of Comprehensive Centre in the oil and gas industry of China. Moreover, the Company implemented 52 energy conservation projects and invested RMB 406 million for the whole year. As a result, it saved 230,000 tons of standard coals and contributed continuously to the ecological civilization construction. In 2016, the annual comprehensive energy consumption of CNOOC was million tons of standard coal, the energy consumption of production value per ten thousand yuan was ton of standard coal (comparable price in 2015). In 2016, five units under CNOOC, including Huizhou Refinery Branch, were awarded the Energy Conservation Advanced Unit of the petroleum and chemical industry of China. CNOOC Energy Conservation and Emission Reduction Monitoring Centre and CNOOC Energy Conservation & Environmental Protection Service Co., Ltd. were awarded the Excellent Service Unit of Energy Conservation in national petroleum and chemical industry. The Company takes Energy Efficiency Frontrunner activity as a longterm mechanism. The ethylene, methanol and synthetic ammonia of the affiliated enterprises were each awarded the honourable title of Energy Efficiency Frontrunner. CSPC was awarded the title of Energy Efficiency Frontrunner in 2016 national ethylene industry and ranked second. With great importance attached to the policy of focusing on resource development and energy conservation and prioritizing conservation, and based on the core of improving the utilization rate of water resource, CNOOC places emphasis on technological progress and innovations, increases efforts on technology reforms, intensifies supervision management, strengthens wastewater comprehensive treatment and recycling, and enhances water resource management in the round. operations. As a result, CNOOC effectively reduces the environmental risk hazards, becomes a resource-conserving and environment-friendly company and realizes sustainable development as well for the environment. Tackling Climate Change As global warming is increasing, it has become one of the Energy Conservation Management won the first prize of national petroleum and petrochemical Excellent Achievement of Enterprise Management Modernisation. The energy conservation and emission reduction monitoring centre of the head office was rated by Ministry of Industry and Information Technology as the only one Industrial Energy Conservation and Green Development Assessment In 2016, CNOOC clarified the water conservation tasks and targets to all subsidiaries and promoted the implementation of water conservation. CNOOC actively conducted water conservation advocating and strengthened danger awareness of water resource and water conservation, organized a series of water conservation management and technology measures to realize water-saving, implemented 58 59

34 MANAGEMENT Zitongmu Village in Weizhou Island. It has carried out the village road reconstruction, centralized construction of waste water and rainwater and environmental protection campaign among others. It has protected the biological resources and ecological environment of Weizhou Island and the surrounding sea area, improved the villagers level of awareness of natural environmental protection and made a positive contribution to the construction of beautiful Weizhou Island. Chinese White Dolphins belong to the first level protected species in China, and are listed in the near threatened Release hobby species by IUVN. Influenced by human activities, their number and diversity are continuously reduced. Their production technical optimization and continued to decrease the fresh water consumption for unit product, and saved valuable water resources through reusing of reclaimed water, sea water desalinization and other measures. CNOOC consumed 84 million tons of fresh water through the year and realized 674,000 tons of conservation. Ecological Protection As a proactive advocate for the protection of marine ecological environment, CNOOC always attaches great importance to the protection of biodiversity in the area surrounding the operation zone. Protecting the environment is the Company s unwavering commitment during all phases of a project life cycle. In order to maintain a harmonious balance between the economic projects and ecological environment, the Company always makes it a point to pre-assess environmental risks, so that it can identify the environmentally sensitive targets in the vicinity of the project and avoid environmental risks. In addition, through the platform of CNOOC Marine Environmental and Ecological Protection Public Welfare Foundation, we have actively committed ourselves to the ecological diversity research and protection project, promoting resource restoration and environment improvement in the area where the project is located and establishing characteristic projects, such as protection of larga seal and enhancement and releasing. In the meanwhile, the Company has positively participated in environmental protection compaigns, making efforts to create better ecological conditions for building a beautiful China. CNOOC has carried out the three-year project of Bohai Sea penaeus orientalis enhancement capacity research. It has thrice launched comprehensive investigation on Bohai Sea s nekon, benthos and plankton, etc., besides embarking on a voyage of basic productivity survey. Through such extensive basic researches, it has determined the evaluation method of penaeus orientalis enhancement capacity based on Ecopath model. The protection and research of various larga seals in the Dalian Larga Seal National Nature Reserve has become the characteristic ecological protection project funded by CNOOC for four consecutive years during which the Company conducted more than 30 times animal rescue activities and successfully rescued 11 larga seals and one finless porpoise. It assists the construction of Lvshun Shuangdao Larga Seal Monitoring Station and has completed the construction of holding pond of larga seals with volume of 300 m 3 to provide hardware basis for the protection of larga seals. It also raised awareness on larga seal protection through releasing activities and popular science campaign at the scenic spots, communities, fishing zones and school districts. Moreover, it has been continuously carrying out the scientific research of investigation and observation of larga seals distribution on the ice and larga seal physiological research, among other activities. Distribution and protection of the finless porpoise population quantity, breeding migration in the Huanghai Sea and the Bohai Sea. The finless porpoise is listed among the Class II Endangered and Protected Wildlife Species of China and in Convention on International Trade in Endangered Species of Wild Fauna and Flora, and faces the severe living condition under the double pressure of deteriorative ecological environment and overfishing. In order to grasp the population dynamics of finless porpoise group and its individual behaviour in the Huanghai Sea and the Bohai Sea, CNOOC formulated the constructive strategy of protecting finless porpoise and funds to conduct a 5-year research project. Research on protection and restoration technology of typical coastal zone ecological environment and resources in Shandong. The Company has organized to conduct the species selection for key biological resources remediation. It researches the key technology of remediation of the coastal wetland vegetation and constructed the science popularisation exhibition room of marine ecological environmental protection. It carries out further study on the current situation of genetic resources of the biological remediation species in Shandong typical sea areas to make the protection policies of coastal wetlands and vegetation. The construction project of eco-village in the beautiful Weizhou Island. CNOOC positively supports the healthy development of villages in the Weizhou Island, financing and planning the layout of environmental protection facilities of population in Pearl River Estuary and Xiamen appears differentiation in genetics. CNOOC proposes to make constructive protection strategies for the protection object of Chinese White Dolphins in the water areas of Fujian, Guangdong, Hainan and Guangxi. It comprehensively masters the information of population quantity and distribution range of them in China sea area and then defines the potential and key habitats of them. It is planned firstly to take one year s time to conduct the small population dynamic monitoring and risk assessment of them in Xiamen City, and Shantou City, etc. and then complete the investigation of their distribution range and core habitat. Nexen assisted in the protection of ancient mankind historical sites. The protection of biological diversity not only refers to the protection of other plants and animals, but also covers the protection of human s culture and lifestyle and understands the human being s way of life and influence in the natural environment as a biological population. In an archaeological activity in 2016, the archaeologists discovered the relics of ancient human activities near the Nexen s assets in British Columbia, Canada. After learning the news, Nexen immediately sent a team formed by environment experts and surface land experts to actively assist the archaeologists to unearth and protect the historical sites and was highly appraised by the archaeological team

35 MANAGEMENT INFORMATIZATION PROGRESS CNOOC continues to adhere to the policy of application driven by business, innovation led by information technology and actively implements the innovation-driven development strategy of the enterprise based on the construction principle of Platform Profound and Application Simplifying, deepens IT and business integration and conducts a series of fruitful achievements in application foundation tamping, Internet+ innovation development, overseas business sharing support, information security guarantee and other aspects. HUMAN RESOURCE MANAGEMENT CNOOC firmly believes that employees are the most valuable resource for its sustainable development and upholds the people-oriented and caring for employees concept. The Company fulfills its responsibilities to employees, respects their legal rights and interests, improves their professional development, improves their working environment, cares for their physical and mental health, and promotes the integration of local and foreign employees, so as to realize common development in the Company and its employees. Enhancing Fundamental Capabilities CNOOC released the 13th Five-Year informatization planning, raised to put great effort on the construction of Interconnected CNOOC based on the constant promotion of Digital CNOOC, and actively moved to Smart CNOOC. Based on Two sites Three centers idea, after four years of design and construction, five green energy saving data centers and campus infrastructure network in Beijing, Shanghai, Tianjin and Shenzhen all completed and put into operation for resource sharing and integration. CNOOC gradually promoted the transformation from traditional shaftwell to common service platform of cloud architecture. In the meantime, the group cloud management platform, Domino cooperative office platform and mobile application development platform went online successively and the common service platform capacity was preliminarily verified. The integration of informatization and operation management business initiated the implementation of group contract management system and scientific and technological management system, promoted the statistical system construction based on data analysis and the selection of group financial sharing center, promoted the group fund management system to support the business for better achievement of group management and control. gas consumption business and by completing with its cross-business card application construction. Also, 53 gas stations of the CNOOC Gas and Power Group implemented the system, which made CNOOC the first enterprise which realized the sharing set of retail management system between gas station and oil station from the group level in the industry. In the field of terminal sales, CNOOC conducted cooperation with the third party internet companies and completed the CNOOC e-commerce platform application construction. Quickening Overseas Resources Sharing Based on successful trial construction and stable operation in Singapore Asia-Pacific center, CNOOC summarized the experience and selected Dubai as the core joint to conduct the construction in the Middle East and African region in Far East by the local conditions. CNOOC also conducted overseas customized version development on call center, operation and maintenance service management ITSM and other systems. Safeguard Information System Security CNOOC completed shut-off of 116 outlets and fortification of current outlets, which made the on-line behaviors more controllable and secure; through the deployment and Employee Salary and Benefits The Company adheres to the principle of gender equality and equal pay for equal work, and treats the staffs equally without discrimination in terms of recruitment, training, promotion and salary, regardless of race, nationality, faith, gender, age, marital status and special legal protection. CNOOC strictly complies with the applicable laws and policies of the jurisdictions where it operates, and on basis of the principles of market labour management, monetization of allocations and socialization of benefits, gradually establishes a distribution system which matches the market mechanism and is closely connected to value contribution, and forms a standardized and competitive salary and benefits framework. The Company establishes a comprehensively effective employee welfare system, and constantly increases the multiple layers, dimensions and comprehensiveness of employee insurance framework. Besides social basic insurance (endowment insurance, medical insurance, employment injury insurance, unemployment Staff presence Staff presence insurance and maternity insurance), the Company also provides supplemented insurance (personal accident insurance, commercial supplementary medical insurance, and juvenile children supplementary medical insurance) and occupational pension and housing allowance. CNOOC also provides physical examination, special physical examination for special types of work, paid leave, difficulty assistance, emergency relief, critical illness relief and various other benefits as part of our efforts to help them solve any worries that employees may have. By the end of 2016, the workforce reached 106,000. Promoting Internet+ Innovation Application CNOOC promoted the innovation of Cloud computing, Big Data, IoT and Mobile and other new technologies, enabled and enhanced the business by providing private cloud capability; meanwhile, CNOOC set up mobile application development platform to achieve the mobile access of collaborative OA and other system, and verified the quick updating and development ability of mobile applications. What s more, the CNOOC card was extended to natural optimization of dynamic password management platform, CNOOC established cluster disaster recovery structure and improved the reliability, completed the deployment of head offices and of main secondary level unit, carried out the internet and information security risk evaluation on 8 local area networks, security monitoring on 5 regional internet outlets and a new round of third-level information system security appraisal, conducted on-site inspection on the network and information system safety orperation of nearly 20 units as well. Career Development CNOOC complies with a scientific talent strategy, treats its employees as its wealth, and strives to create a fair and open promotion environment and clear career development paths. CNOOC has designed three career development accesses: management, technology and work, besides establishing a training system of four in one with respect to selection, training, assessment and promotion & qualification authentication

36 MANAGEMENT CNOOC adheres to the overall idea of controlling total promotes exchanges between department at headquarters The Company effectively promotes skill appraisal. We have amount, adjusting structure and improving qualification, and frontline cadres. CNOOC makes full use of multiple organized the development or revision of test libraries on steadily makes the human resource planning in the 13th opportunities of rotation and exchange, front line training, 12 types of work, laying a solid foundation for training and Five-Year Plan period, constructs a dynamic human local secondment and aiding constructions in areas under appraising skilled employees. In the meanwhile, appraisals resource management system, and forms human resources harsh conditions, which select young managers to practice of junior, semi-senior, senior, technician and senior technician policies and systems of strategic planning, leadership and work under harsh conditions and undertake urgent, levels were organized for 70 types of work, with the number management, talent development, employment and hard, dangerous and major tasks and work at the frontline. of appraisals totalling 8,490 person-time. compensation performance. CNOOC realizes full coverage of e-hr system which increases the working efficiency. CNOOC standardizes the recruiting and management of employees, strictly controls recruiting quantity and quality, builds a worker transfer platform for employees, and promotes reposition and settlement and connection of supply and demand for employees in the reorganized units, effectively utilizing internal human resources. CNOOC continuously deepens the reform of the cadre and personnel system. The Company founds the headoffice talent leadership group and builds head-office party member contact experts system to actively promote the reform of talent utilization and assessment guarantee mechanism. It increases its efforts for cadre selection and exchanges, pays attention to training of young cadres and The Company enhances the level of competitive selection and strengthens inspecting and examination; CNOOC also enhances efforts to train, select, exchange, supervise, control cadres and hold those in charge accountable, improves the selection and appointment quality of managers and maintains the purity and capabilities of leading cadres. Professional Expertise The Company actively participates in the selection of national high-end talents. In 2016, as many as 19 individual candidates were recommended for special government allowance, 4 individual candidates for national technical experts, 3 candidates for participating in Central Enterprise Outstanding Young Talents Support Plan, 2 candidates for Chinese Skills Award, and one was selected as a scientific and technological Offshore frontline staff presence Skill competition innovation leading talent for Ten-Thousand Talents Program. It selected technical and skillful experts, as well as 38 people as the third batch of Headquarters technical experts, and 17 people as the third batch of skillful experts in the affiliated units of the Head Office. The Company continues to promote the scientific and technological young talents cultivation project and provide dual tutors to the first batch of 136 young talents. It organized two periods of trainings for them and held five professional young talent forums of exploration, development, drilling and well completion, offshore engineering, refinery & petrochemical and gas power to provide the opportunity for the young talents to communicate with the high level experts and rapidly develop them to be professional technical leaders and medium- and high-end technical management talents, so as to realize the strategic succession of talents in the Company. The Company reinforces management on occupational qualification. We improve the certification policies of internal occupational qualification, perfect occupational qualification management system, and strictly implement Company s Management Rules of Professional Technical Qualification as well as 6 supporting detailed rules, constantly improving talent evaluation level. In 2016, 646 individuals were qualified for the positions of senior technical professional. In terms of exploration, borehole and drilling and completion operation, 25, 62, 7, 9 and 439 individuals were qualified for senior general supervisor and general supervisor, senior project manager or above level, senior project manager and project manager and below level positions, respectively. The Company attaches great importance to the cultivation and selection of high-skilled talent by holding technician innovation training class and organizing skills and innovation exchanges. We actively participated in national and industrial skill competition with the outstanding achievements. Therein, four individuals, including Chen Keying from CNOOC Ltd., Zhanjiang branch, were awarded the title of national technical experts. Moreover, the competitors dispatched by the Company were awarded No.1 individual for two items, No.2 and No.3 individual for one item and second group prize in 2016 (the 4th) Jiake Cup International Welding Skills Competition. Employee Training CNOOC actively promotes the learning organization constructions, and encourages employees to set up the concept of lifelong learning. CNOOC improves the talent training system at different levels and stages, broadens training plan and enlarges training investment systematically, creating a platform for capability building and potential development of employees. CNOOC training focuses on long term training and highlights short term efficiency at the same time. CNOOC adheres to the principle of up for strategy and down for performance and continues to conduct long-term cultivation on key groups. CNOOC continues to implement Key Training Plan. For the semi-senior and senior management talents, through subdivision of professional talents, CNOOC carries out targeted training in rotation; for mid-age and young management talents, CNOOC carries out off-job training for three months, so as to train young management teams who are capable of shouldering important tasks; for highlevel technological experts, CNOOC comprehensively arranges professional and technological training sessions in 64 65

37 MANAGEMENT exploration, development and production and well drilling; CNOOC also holds Young Scientific Talent Training Session to train technological management talents in fields of deepwater, unconventional and reservoir geophysics, seismic data processing, production technologies, high-temperature and high-pressure gas fields and intactness of equipment and facilities, and improves their core professional technological capabilities and scientific research innovation capabilities; CORPORATE CULTURE Corporate culture is the soul for a company and the power source for the corporate development. In 2015, facing the severe challenges brought by international oil price slide, CNOOC fully played the leading role of corporate culture, enhanced confidence and gathered strength, with the vision of Energy for All in mind, on basis of the carrier of Quality and Benefit Year, CNOOC effectively advanced corporate culture building and fully guaranteed its survival and development. for high-level skill talents, CNOOC holds Comprehensive Capabilities Improvement Session of Mid-aged and Young Technicians to improve on-site management skills, innovation capabilities and capabilities of apprentice follow master. The written test of the skill competition CNOOC Spirit CNOOC advocates its spirit, sets advanced models, inspires the passion of the whole staff for devotion and practical innovation and shapes great image of the Company. CNOOC strengthens culture carrier construction, plays the effect of Offshore Oil Industrial Exhibition Hall as National Ocean Awareness Educational Base, and constantly conducts Opening Day activities. In addition, CNOOC continues to promote Ocean and People campus science Average Traing Hours Per Capita (Unit: hour/person) employees and specifically implements it in the individual performance evaluation system and training system, so as CNOOC dedicatedly compiled CNOOC 2016 Party Building Annual Report which comprehensively displayed the popularization image exhibition and fully completes the project of touring exhibitions in five middle high schools and 2016 年 86 to ensure that professional level and overall capabilities are increasing steadily. corporate party building achievements. CNOOC founded the CNOOC E-Party WeChat enterprise ID covering over primary schools 年 年 88 In 2016, the Company carried out 46,522 training courses, with 822,900 person-time, 8,215,376 hours of training and on average 86 hours per person, in which the international talent training was carried out for 14,556 hours per person. Supported by a training course system with various classifications, grades and systems, for its employees, CNOOC formulates Individual Development Plan (IDP), analyzes comprehensive and professional training needs of Emergency Drill Experience CNOOC implements knowledge management project to accelerate the knowledge sedimentation and inheritance. The Company built and improved training equipment and facilities and the knowledge management system and training resources management system including internal and external teachers and courses system to realize knowledge accumulation, experience inheritance and resources sharing. It initiated featured courses development and internal tutor training project, collected courses and outstanding tutors in multiple ways based on CNOOC Great Courses and CNOOC Great Teachers competitions which rated 40 wide, influential and CNOOC featured courses and trained a professional and experienced internal teachers; CNOOC also explored the way for professional talent training, built professional course systems and successively promoted the professional training system construction in 2,300 frontline party branches in the whole system, pushed out many special activities including A Letter to Party Branch Secretary, Yang Hua and built the direct train between the Party and the frontline Party branches. CNOOC also conducted Frontline Party Branch Work surveys and researches and attained rich and detailed first-hand materials. The subsidiaries of CNOOC achieved fruitful results in cultural construction. The deepwater drilling and completion team of Wesrern South China Sea Oil Management Bureau was awarded the 2015 National Ocean Figure and the Front Engineer with impressive stories in central enterprises. The team deeds were written into the second series of Front Heroes. And with the opportunity of Hai Yang Shi You 981 winning China Quality, The Company vigorously promotes the Spirit of Craftsmanship of Culture Promotion Centered on the development of the enterprise, CNOOC pushed out a series of external campaigns step by step. The quantity and quality of reports attained new breakthroughs. In 2016, CNOOC focused on the themes of Innovation and Development, pushed out 30 key news reports, promoted to form multiple climaxes. There were altogether over 3,800 plane and internet media reports and 150 TV reports, among which 63 were CCTV broadcasting news and 7 were CCTV news. CNOOC completed the key news of Typical State- Owned Enterprises Reform of the Propaganda Department of the Central Committee of the CPC. Multiple mainstream central media broadcasted CNOOC in prime time and key pages which caused intense responses. The internal news is lively and vivid. Centered on the leadership, purchasing and drilling and completion which excellence pursuing. Meanwhile, the deeds of general two major themes of strict party governance and cost has achieved great training result. research institute and China Asphalt were selected in decreasing and efficiency increasing, China Offshore Oil CNOOC broadens the channels of informatization training for employees and introduces various models, including Internet+. The Company actively promotes the construction of online+offline mobile+pc mixed training models and Constructed E-learning platform. It completed the type selection of the online study platform and conducted trial run in pilot units. Spiritual Civilization Heroes in Central Enterprises; CNOOC frogmen participated in the Open Your Door for Good Luck show of CCTV and showed great images of CNOOC staff, which made great advertisement. COSL built Boatman culture, CNOOC EnerTech held the fourth Annual Character assessment, CNOOC Enterprises Co., Ltd held Ten Stars achievements tour forum, which set examples for the staff. Press conducted key reports and organized and planned a series of deep reports including Typical Characters for Cost Decreasing, Creativity Survey on Youth Science Research Personnel and Double Innovations. CNOOC pushed out video news, completed media channels and realized subpublic communication and 3D publicity

38 MANAGEMENT CNOOC strengthens the application of new media, the official WeChat of CNOOC successively won 2016 Most Influential New Media of Central Enterprise, Innovation Award of New Media of China Newspaper and Top 100 WeChat of Energy Enterprises. The official WeChat also ranked No.12 for the WeChat influence ranking among 70 companies in China Newspapers and ranked No.1 among oil industry. The official WeChat of CNOOC first entered Tou Tiao in 2016 and has sent 18 terms by now. Cultural & Sports Activities CNOOC advocates Happy Work and Happy Life. CNOOC enriches employees cultural life through various activities. The Company has carried out the Health Embraces CNOOC health promotion event, actively promoting the idea of health and exercise and enhancing the management of physical and mental health of employees; CNOOC has promoted the secondary units to establish Basketball and Badminton Association, and conducted small-scale and diverse mass cultural and sports activities favoured by staff. CORPORATE CITIZENSHIP Humanitarian Engagement CNOOC actively advocates and adheres to the simultaneous fulfilment of financial, environmental and social responsibilities. CNOOC Marine Environmental and Ecological Protection Public Welfare Foundation is the unified management platform for public welfare programmes, such as charity and environmental protection carried out by CNOOC. We made efforts to fixed-point poverty alleviation, caring for students, special public welfare and other philanthropies. The development of a company requires strong support from the whole society, which, in turn, requires active contributions from companies in order to develop. As making full efforts to guarantee energy supplies, enhancing environment protection and creating economic values, CNOOC always focuses on livelihood and complies with its obligations and responsibilities of a corporate citizenship, promoting social progress with its real actions. In 2015, the Company continued to commit to humanitarian engagements and voluntary service, making joint efforts to build the community with an investment of RMB million in of China Women s Development Foundation. In 2016, the drinking-water safety in the schools, the beautiful villages and small-size water conservancy engineering construction of Mother Water Cellar project was implemented. In addition, 6 schools in the fixed-point poverty alleviation programme in the Zhuozi County were provided with 6 solar water purification equipment through dringing-water safety in schools project to solve the problem of excessive bacteria in school s water. Beijing staff football match CNOOC has made consistent investment in the past 21 years and dedicates to improving living conditions and education environment in poverty areas. CNOOC helps fixed-point poverty alleviation cities and counties in Hainan Province, Gansu Province, the Inner Mongolia Autonomous Region and the Tibet Autonomous Region to carry out accurate poverty alleviation. By the end of 2016, CNOOC has invested poverty alleviation funds of exceeding RMB 150 million and dispatched 24 talents for poverty alleviation accumulately; has invested over RMB 270 million to aid the Tibet Autonomous Region and dispatched 12 managers accumulately. CNOOC, by aiding the construction of Hope Schools, funding needy college students and others, reduced the financial pressure on students from impoverished families. CNOOC University Educational Assistance Fund jointly set by CNOOC and China Soong Ching Ling Foundation, has seen operated for 13 years. A total of RMB 40 million has been invested for funding more than 13,000 needy students in 37 universities. CNOOC continues to support Mother Water Cellar project Since 2003, CNOOC has been supporting the Cataract Patients Supporting Project of the Lifeline Express and has accumulatively donated nearly RMB 16 million. Two eye centres were constructed under the assistance of the Company in Gansu Province and the Inner Mongolian Autonomous Region. They provided services radiating to the cooperative cities and Xiahe County of Gansu Province and Zhuozi County of the Inner Mongolian Autonomous Region of CNOOC fixed-point poverty alleviation programme. The three treatment centres have provided cataract operations to 17,347 poor cataract patients with the reduced operation fee or for free. In 2016, CNOOC continued to support 1+1 Legal Volunteer Programme implemented by China Legal Aid Foundation in the no-lawyer counties in remote and border areas. Therein, the Baoting County of Hainan Province received the key legal assistance. CNOOC actively devotes itself into autistic children healing, deaf children rehabilitation, baby food aid in poor regions and other fields. On October 20, 2016, Hearing Rebuilding Audition Initiation project held its donation ceremony in China Hearing and Speech Rehabilitation Center, CNOOC Public Welfare Fund donated RMB 500,000 to China Disable 68 69

39 MANAGEMENT People Union to subsidize 50 hearing impairment children for artificial cochlea implantation surgeries. Integration into Community We constantly carry out the heart-warming projects to help communities cope with difficulties, improve the local ecological environment, lead cultural constructions in local communities and effectively improve the communities living standards, so as to build a better home. CNOOC establishes the periodic communication with community and listens to rationalization proposal of local governments and community residents. In 2016, the Company, taking advantage of its resources, was actively participating in marine rescue on the premise of ensuring the operation safety. COSL participated in 22 marine rescue missions, dispatching its ships for 24 times to rescue 17 ships and 33 people. CSPC has adopted an active public communication strategy, in addition to the CSPC Open Day activity held in the communities for different objects. It has conducted the educational support programmes of Scholarship for Tomorrow, Realizing the Gardeners Dream, English Corner in the Community and Sunshine Classroom, jointly with functional government departments, schools and other units. Besides, CSPC has proactively conducted the sharing activities of Traffic Safety Funny Day, Defensive Driving Learning Activity, Road Safety Patrol Inspection System, etc. for many times, jointly with Daya Bay government and petrochemical industrial park. Adhering to the concept of respect, mutual trust and winwin, CNOOC actively involves into local communities. Through a series of long-term and systemic community building activities, such as charitable contributions, voluntary activities and education funding, The Company benefits local people. It dedicates to leading local economic development by project investment and provides job opportunities and economic benefits for the countries or regions where its projects are located, profoundly influencing the livelihood of local people. The community relationship team of CNOOC Uganda actively shares information with the communities through daily communication, regular visits, special communication meetings, partnership activity, regular meeting of consulting committee and other means to actively respond to the opinions, complaints and suggestions from the community and practically promote the community relationship management. In accordance to the requirements in environmental and social influence report, CNOOC Uganda organized and conducted the popular environmental and social influence reduction projects such as traffic safety campaign, AIDS and infectious diseases prevention publicity, sapling planting and distribution. We set up CNOOC Performance Scholarship which has benefited over 300 students. CNOOC also sponsored CNOOC Amasaza football competitions for successive five years, which successfully promoted the local sports development and talent cultivation. CNOOC Southeast Asia built roads for the villages around the operations sites to protect fish ponds and offshore passages near the platforms to provide convenient resting places for the fishers; it also sponsored 3 village primary and middle schools to complete their remolding and decoration; conducted 3 terms of training on 90 education workers in 10 villages to improve education quality; provided skill trainings including cake bakery, marine and cultural cultivation for the local fishers and housewives to help the local residents make full use of the local resources and increase income through product additional value increasing; donated medical facilities and conducted training on related staff for the hospital around the operations to improve medical service quality and provided free medical services to the villages; built toilets and public sanitation facilities and etc. Nexen continues to provide charitable donations and voluntary services to Canadian Anti-Domestic Violence Association, YWCA Childcare Center, Calgary Hedge Center, Asylum Association and Food Relief Office. Nexen also donated USD 65,000 to the communities for community bus, and USD 250,000 to Canada Western Summer Games. Nexen has continued to donate to the Bill Woodward School near the Long Lake Project to expand school buildings and establish scholarship. Nexen donated USD 300,000 in total to the School of Business of University of British Columbia, to train local economy & management talents; Nexen donated USD 600,000 to support the project of Adopt-a-room Program, which has benefitted 450 people till now. Voluntary Services CNOOC consistently advocates and promotes voluntary services. In 2016, the Company actively engaged in various voluntary service activities through Labor Union, Youth League Committee and Women s Organization. It has utilized various forms to help social disadvantaged groups, popularize maritime knowledge and provide caring services. Aimed at promoting environmental protection and public welfare projects for scientific and development and protection of oceans, hundreds of Blue Force young volunteer service teams and thousands of young volunteers took part in the CNOOC Blue Force, which has built the communication bridge between young staff and enterprise and between the enterprise and society. With the goal of establishing harmonious family, mining area and the Company, CNOOC encourages the employees to actively participate in the voluntary services and public charity activities. It carried out activities, such as cleaning the beach, campaign of environmental protection, planting of corals, closing to Blue Force, supporting education, voluntary supporting agriculture, charity sales and community services, etc. CNOOC, together with the medium and largescale institutions and social media, has launched projects of large-scale survey on maritime consciousness of the Chinese youth along with the youth micro-public welfare action of Blue Force, Love Marine, so as to promote the conservation of marine environment. Since 2015, Blue Force volunteer service teams have been financed by CNOOC Marine Environmental and Ecological Protection Public Welfare Foundation and have carried out all kinds of micro public welfare activities more extensively. In 2016, CNOOC Blue Force continued to adhere to the strategy of serving enterprises and contributing to the society and drove the voluntary service to standardization, normalization and branding. It innovated the means of voluntary service and developed Blue Force youth voluntary service APP and built the Internet+ public welfare model. In 2016, CNOOC Blue Force was selected in the Top Ten Voluntary Service Brands of Central Enterprises. Blue Force volunteers were cleaning the beach 70 71