##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
     Form 20-F
  (Mark One)o

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR
    12(g)
    OF THE SECURITIES EXCHANGE ACT OF 1934orþ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2008.oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934oro

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934Date of event requiring this
    shell company reportFor the transition period from
    
    to   Commission File Number
    1-15006
      
 (Exact name of Registrant as
    specified in its charter)
 PetroChina Company
    Limited
 (Translation of
    Registrants name into English)
      The Peoples Republic of
    China (Jurisdiction of
    incorporation or organization)
      9 Dongzhimen North Street
    Dongcheng District, Beijing 100007
    The Peoples Republic of China,
 (Address of principal executive
    offices)
      Li Huaiqi
    Telephone number: 8610 59986223
    Facsimile number: 8610 62099557
    Email address: xwzou@petrochina.com.cn
    Address: 9 Dongzhimen North Street, Dongcheng District Beijing,
    100007 The Peoples Republic of China (Name, telephone,
    e-mail
    and/or facsimile number and address of registrants contact
    person)
      Securities registered or to be
    registered pursuant to Section 12(b) of the Act.
  Title of Each Class

Name of Each Exchange on Which RegisteredAmerican Depositary Shares, each representing 100 H Shares, par
    value RMB1.00 per share*

New York Stock Exchange, Inc.H Shares, par value RMB1.00 per share

New York Stock Exchange, Inc.**   Securities registered or to be
    registered pursuant to Section 12(g) of the Act.
  None
    (Title of Class)
  Securities for which there is a
    reporting obligation pursuant to Section 15(d) of the
    Act.
  None
    (Title of Class)
    A Shares, par value RMB1.00 per share***

161,922,077,818(1)H Shares, par value RMB1.00 per share

21,098,900,000****     (1):
    Includes 158,164,597,259 A Shares
    held by CNPC and 3,757,480,559 A Shares held by the public
    shareholders.   Yes
    þ      No
    o
  Yes
    o      No
    þ
    Yes
    þ      No
    o
 Regulation S-T
 Yes
    o      No
    o
 Rule 12b-2
 Large Accelerated Filer
    þ
    Accelerated Filer
    o
    Non-Accelerated Filer
    o   o
    U.S. GAAP
    þ
    International Financial Reporting Standards as issued by the
    International Accounting Standards Board
    o
    Other  Item 17
    o      
    Item 18
    o
 Rule 12b-2
 Yes
    o      No
    þ
    Yes
    o      No
    o
    *
    
    PetroChinas H Shares are
    listed and traded on The Stock Exchange of Hong Kong Limited.**
    
    Not for trading, but only in
    connection with the registration of American Depository Shares.***
    
    PetroChinas A Shares became
    listed on the Shanghai Stock Exchange on November 5, 2007.****
    
    Includes 1,850,628,100 H Shares
    represented by American Depositary Shares.




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Table of
    Contents
  PageCertain Terms and Conventions


4Forward-Looking Statements


7Part IItem 1





Identity of Directors, Senior Management and
    Advisors


8Item 2





Offer Statistics and Expected Timetable


8Item 3





Key Information


8Exchange Rates


8Selected Financial Data


9Risk Factors


11Item 4





Information on the Company


15Introduction


15Exploration and Production


22Refining and Marketing


32Chemicals and Marketing


38Natural Gas and Pipeline


42Competition


45Environmental Matters


46Legal Proceedings


47Properties


47Intellectual Property


48Regulatory Matters


48Item 4A





Unresolved Staff Comments


54Item 5





Operating and Financial Review and Prospects


54General


54Operating Results


59Liquidity and Capital Resources


67Off-Balance Sheet Arrangements


72Long-Term Contractual Obligations and Other
    Commercial Commitments and Payment Obligations


72Research and Development


73Trend Information


73Other Information


74Item 6





Directors, Senior Management and Employees


75Directors, Senior Management and Supervisors


75Compensation


84Board Practices


85Employees


86Share Ownership


87Item 7





Major Shareholders and Related Party
    Transactions


87Major Shareholders


87Related Party Transactions


88Interests of Experts and Counsel


90 2




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Table of
    Contents
  PageItem 8





Financial Information


91Financial Statements


91Significant Changes


92Item 9





The Offer and Listing


93Nature of the Trading Market and Market Price
    Information


93Item 10





Additional Information


94Memorandum and Articles of Association


94Material Contracts


101Foreign Exchange Controls


101Taxation


101Documents on Display


106Item 11





Quantitative and Qualitative Disclosures About
    Market Risk


107Item 12





Description of Securities Other Than Equity
    Securities


110Part IIItem 13





Defaults, Dividends Arrearages and
    Delinquencies


110Item 14





Material Modifications to the Rights to Security
    Holders and Use of Proceeds


110Item 15





Controls and Procedures


110Item 16A





Audit Committee Financial Expert


111Item 16B





Code of Ethics


111Item 16C





Principal Accountant Fees and Services


112Item 16D





Exemptions from Listing Standards for Audit
    Committees


112Item 16E





Purchases of Equity Securities by the Issuer and
    Affiliated Purchasers


112Item 16F





Change In Registrants Certifying
    Accountant


113Item 16G





Corporate Governance


113Part IIIItem 17





Financial Statements


114Item 18





Financial Statements


114Item 19





Exhibits


114EX-4.1EX-4.4EX-4.20EX-4.21EX-4.22EX-4.23EX-4.24EX-8.1EX-12.1EX-12.2EX-13.1EX-13.2   3




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CERTAIN
    TERMS AND CONVENTIONS  Conventions
    Which Apply to this Annual Report
    
    CNPC or CNPC group are to our parent,
    China National Petroleum Corporation and its affiliates and
    subsidiaries, excluding PetroChina, its subsidiaries and its
    interests in long-term investments, and where the context refers
    to any time prior to the establishment of CNPC, those entities
    and businesses which were contributed to CNPC upon its
    establishment.
    PetroChina, we, our,
    our company and us are to:  
    PetroChina Company Limited, a joint stock company incorporated
    in the Peoples Republic of China with limited liability
    and its subsidiaries and branch companies, or
    the CNPC groups domestic crude oil and natural gas
    exploration and production, refining and marketing, chemicals
    and natural gas businesses that were transferred to us in the
    restructuring of the CNPC group in 1999.  
    PRC or China is to the Peoples
    Republic of China, but does not apply to Hong Kong, Macau or
    Taiwan for purposes of this annual report.    Conversion
    Table
  1 barrel-of-oil equivalent

= 1 barrel of crude oil

= 6,000 cubic feet of natural gas1 cubic meter

= 35.315 cubic feet1 ton of crude oil

= 1 metric ton of crude oil

= 7.389 barrels of crude oil (assuming an API gravity of 34
    degrees)   Certain
    Oil and Gas Terms
    acreage
    
    The total area, expressed in acres, over which an entity has
    interests in exploration or production. Net acreage is the
    entitys interest, expressed in acres, in the relevant
    exploration or production area.API gravity
    
    An indication of the density of crude oil or other liquid
    hydrocarbons as measured by a system recommended by the American
    Petroleum Institute (API), measured in degrees. The lower the
    API gravity, the heavier the compound.condensate
    
    Light hydrocarbon substances produced with natural gas that
    condense into liquid at normal temperatures and pressures
    associated with surface production equipment.crude oil
    
    Crude oil, including condensate and natural gas liquids.development cost
    
    For a given period, costs incurred to obtain access to proved
    reserves and to provide facilities for extracting, treating,
    gathering and storing the oil and gas. 4




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finding cost
    
    For a given period, costs incurred in identifying areas that may
    warrant examination and in examining specific areas that are
    considered to have prospects of containing oil and gas reserves,
    including costs of drilling exploratory wells and
    exploratory-type test wells. Finding cost is also known as
    exploration cost.lifting cost
    
    For a given period, costs incurred to operate and maintain wells
    and related equipment and facilities, including applicable
    operating costs of support equipment and facilities and other
    costs of operating and maintaining those wells and related
    equipment and facilities. Lifting cost is also known as
    production cost.natural gas liquids
    
    Hydrocarbons that can be extracted in liquid form together with
    natural gas production. Ethane and pentanes are the predominant
    components, with other heavier hydrocarbons also present in
    limited quantities.offshore
    
    Areas under water with a depth of five meters or greater.onshore
    
    Areas of land and areas under water with a depth of less than
    five meters.primary distillation capacity
    
    At a given point in time, the maximum volume of crude oil a
    refinery is able to process in its basic distilling units.proved developed reserves
    
    Reserves that can be expected to be recovered through existing
    wells with existing equipment and operating methods. Additional
    oil and gas expected to be obtained through the application of
    fluid injection or other improved recovery techniques for
    supplementing the natural forces and mechanisms of primary
    recovery are included as proved developed reserves
    only after testing by a pilot project or after the operation of
    an installed program has confirmed through production response
    that increased recovery will be achieved.proved reserves
    
    Estimated quantities of crude oil and natural gas which
    geological and engineering data demonstrate with reasonable
    certainty to be recoverable in future years from known
    reservoirs under existing economic and operating conditions,
    i.e., prices and costs as of the date the estimate is made.
    Prices include consideration of changes in existing prices
    provided only by contractual arrangements, but not of
    escalations based upon future conditions.proved undeveloped reserves
    
    Reserves that are expected to be recovered from new wells on
    undrilled acreage, or from existing wells where a relatively
    major expenditure is required for recompletion. Reserves on
    undrilled acreage shall be limited to those drilling units
    offsetting productive units that are reasonably certain of
    production when drilled. Proved reserves for other undrilled
    units can be claimed only where it can be demonstrated with
    certainty that there is continuity of production from the
    existing productive formation. Under no circumstances should
    estimates for proved undeveloped reserves be attributable to any
    acreage for which an application of fluid injection or other
    improved recovery technique is contemplated, unless such
    techniques have been proved effective by actual tests in the
    area and in the same reservoir. 5




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reserve-to-production ratio
    
    For any given well, field or country, the ratio of proved
    reserves to annual production of crude oil or, with respect to
    natural gas, to wellhead production excluding flared gas.sales gas
    
    Marketable production of gas on an as sold basis,
    excluding flared gas, injected gas and gas consumed in
    operations.water cut
    
    For a given oil region, the percentage that water constitutes of
    all fluids extracted from all wells in that region.    
    BOE is to barrels-of-oil equivalent,
    Mcf is to thousand cubic feet, and
    Bcf is to billion cubic feet. 6




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FORWARD-LOOKING
    STATEMENTS    
    the amounts and nature of future exploration, development and
    other capital expenditures;
    future prices and demand for crude oil, natural gas, refined
    products and chemical products;
    development projects;
    exploration prospects;
    reserves potential;
    production of oil and gas and refined and chemical products;
    development and drilling potential;
    expansion and other development trends of the oil and gas
    industry;
    the planned development of our natural gas operations;
    the planned expansion of our refined product marketing network;
    the planned expansion of our natural gas infrastructure;
    the anticipated benefit from the acquisition of certain overseas
    assets from CNPC, our parent company;
    the plan to continue to pursue attractive business opportunities
    outside China;
    our future overall business development and economic performance;
    our anticipated financial and operating information regarding,
    and the future development and economic performance of our
    business;
    our anticipated market risk exposure arising from future changes
    in interest rates, foreign exchange rates and commodity
    prices; and
    other prospects of our business and operations.      
    fluctuations in crude oil and natural gas prices;
    failure to achieve continued exploration success;
    failures or delays in achieving production from development
    projects;
    continued availability of capital and financing;
    acquisitions and other business opportunities that we may pursue;
    general economic, market and business conditions, including
    volatility in interest rates, changes in foreign exchange rates
    and volatility in commodity markets; 7




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##### Table of Contents




    liability for remedial actions under environmental regulations;
    impact of the PRCs entry into the World Trade Organization;
    the actions of competitors;
    wars and acts of terrorism or sabotage;
    changes in policies, laws or regulations of the PRC, including
    changes in applicable tax rates;
    the other changes in global economic and political conditions
    affecting the production, supply and demand and pricing of crude
    oil, refined products, petrochemical products and natural
    gas; and
    the other risk factors discussed in this annual report, and
    other factors beyond our control.   PART I ITEM 1  IDENTITY
    OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS   ITEM 2  OFFER
    STATISTICS AND EXPECTED TIMETABLE   ITEM 3  KEY
    INFORMATION Exchange
    Rates    Noon Buying
    Rate(1)High

Low(RMB per US$)November 2008


6.8373



6.8220December 2008


6.8842



6,8225January 2009


6.8403



6.8225February 2009


6.8470



6.8241March 2009


6.8438



6.8240April 2009


6.8361



6.8180May 2009 (ending as of May 15)


6.8248



6.8176     (1)
    
    For periods prior to January 1, 2009, the exchange rates
    reflect the noon buying rates as reported by the Federal Reserve
    Bank of New York. For periods after January 1, 2009, the
    exchange rates reflect the exchange rates as set forth in the
    H.10 statistical release of the Federal Reserve Board. 8




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Average NoonBuying Rate(RMB per US$)2004


8.27682005


8.18262006


7.95792007


7.58062008


6.9193  Selected
    Financial Data  Historical
    Financial Information
    Year Ended December
    31,(1)2004

2005

2006

2007

2008RMB

RMB

RMB

RMB

RMB(In millions, except for per share and per ADS data)Income Statement DataRevenuesSales and other operating revenues


397,812



553,350



690,512



836,353



1,071,146Operating expensesPurchases, services and other


(113,428
)


(198,729
)


(269,301
)


(369,219
)


(562,122
)Employee compensation costs


(22,934
)


(29,770
)


(39,292
)


(50,863
)


(62,065
)Exploration expenses, including exploratory dry holes


(12,109
)


(15,569
)


(18,827
)


(20,956
)


(21,879
)Depreciation, depletion and amortization


(48,362
)


(51,803
)


(62,155
)


(67,274
)


(94,603
)Selling, general and administrative expenses


(28,357
)


(36,634
)


(43,402
)


(52,257
)


(59,457
)Employee separation costs and shutting down of manufacturing
    assets


(220
)














Taxes other than income taxes


(19,943
)


(23,997
)


(57,208
)


(73,792
)


(124,115
)Other (expenses)/incomes, net


(25
)


(3,083
)


(430
)


(1,221
)


12,395Total operating expenses


(245,378
)


(359,585
)


(490,615
)


(635,582
)


(911,846
)Income from operations


152,434



193,765



199,897



200,771



159,300Income from equity affiliates and jointly controlled entities


1,318



2,011



1,706



6,442



4,299Exchange gain (loss), net


8



85



272



(751
)


(1,081
) 9




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Year Ended December
    31,(1)2004

2005

2006

2007

2008RMB

RMB

RMB

RMB

RMB(In millions, except for per share and per ADS data)Interest income


1,373



2,036



2,148



2,099



2,274Interest expense


(3,021
)


(2,879
)


(3,273
)


(3,604
)


(2,963
)Income before taxes


152,112



195,018



200,750



204,957



161,829Income taxes


(44,004
)


(54,913
)


(50,602
)


(49,781
)


(35,178
)Income for the year


108,108



140,105



150,148



155,176



126,651Attributable to:Shareholders


104,566



134,373



143,511



146,750



114,431Minority interest


3,542



5,732



6,637



8,426



12,220108,108



140,105



150,148



155,176



126,651Basic and diluted income for the year per shareAttributable to
    shareholders(2)


0.59



0.76



0.80



0.82



0.63Basic and diluted income for the year per ADS Attributable to
    shareholders(3)


59.47



76.02



80.16



81.66



62.52   As of December
    31,(1)2004

2005

2006

2007

2008RMB

RMB

RMB

RMB

RMB(In millions, except for per share and per ADS data)Balance Sheet DataInventories


47,398



62,764



76,070



88,496



90,670Cash and cash equivalents


13,590



82,887



50,746



68,652



32,944Total current assets


124,275



178,592



165,498



235,549



224,473Total non-current assets


519,366



605,132



713,043



832,131



969,701Total current liabilities


131,459



155,992



181,125



199,222



264,337Total non-current liabilities


67,028



81,412



75,244



86,358



82,711Equity attributable to our shareholders


429,691



517,941



590,423



738,204



790,838Equity attributable to minority interests


15,463



28,379



31,749



43,896



56,288Total equity


445,154



546,320



622,172



782,100



847,126Share capital


175,824



179,021



179,021



183,021



183,021   Year ended December
    31,(1)2004

2005

2006

2007

2008RMB

RMB

RMB

RMB

RMB(In millions, except for per share and per ADS data)Other Financial DataDividend per share


0.26



0.34



0.36



0.36



0.28Dividend per ADS


26.34



33.80



35.75



36.25



28.14Capital expenditures


(99,568
)


(125,542
)


(149,245
)


(182,387
)


(232,214
)Cash Flow DataNet cash generated by operating activities


142,272



205,685



200,692



205,243



170,506Net cash used for investing activities


(102,749
)


(93,036
)


(160,774
)


(185,486
)


(213,947
)Net cash generated by/used for financing activities


(38,819
)


(42,591
)


(71,643
)


(1,630
)


7,845  10




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(1)
    
    In 2008, we acquired a 100% equity interest in Sun World
    Limited, a company wholly owned by CNPC. As we and Sun World
    Limited are under the common control of CNPC, this acquisition
    has been reflected in our consolidated financial statements as a
    combination of entities under common control in a manner similar
    to a uniting of interests. Accordingly, the acquired assets and
    related liabilities have been accounted for at carryover
    predecessor values and our consolidated financial statements for
    periods prior to the combination have been restated to include
    the financial condition and results of operation of the acquired
    company as if our company and the acquired company had always
    been operated on a combined basis in these periods.(2)
    
    The basic and diluted income per share for the year ended
    December 31, 2004 was calculated by dividing the income for
    the year attributable to our shareholders by the number of
    175,824 million shares issued and outstanding for the year
    presented. The basic and diluted income per share for the year
    ended December 31, 2005 was calculated by dividing the
    income for the year attributable to our shareholders by the
    weighted average number of 176,770 million shares issued
    and outstanding for the year presented. The basic and diluted
    income per share for the year ended December 31, 2006 was
    calculated by dividing the income for the year attributable to
    our shareholders by the number of 179,021 million shares
    issued and outstanding for the year presented. The basic and
    diluted income per share for the year ended December 31,
    2007 was calculated by dividing the income for the year
    attributable to our shareholders by the weighted average number
    of 179,700 million shares issued and outstanding for the
    year presented. The basic and diluted income per share for the
    year ended December 31, 2008 was calculated by dividing the
    income for the year attributable to our shareholders by the
    number of 183,021 million shares issued and outstanding for
    the year presented.(3)
    
    The basic and diluted income per ADS for the year ended
    December 31, 2004 was calculated by dividing the income for
    the year attributable to our shareholders by the number of
    175,824 million shares issued and outstanding for the year
    presented, each ADS representing 100 H Shares. The basic and
    diluted income per ADS for the year ended December 31, 2005
    was calculated by dividing the income for the year attributable
    to our shareholders by the weighted average number of
    176,770 million shares issued and outstanding for the year
    presented, each ADS representing 100 H Shares. The basic and
    diluted income per ADS for the year ended December 31, 2006
    was calculated by dividing the income for the year attributable
    to our shareholders by the number of 179,021 million shares
    issued and outstanding for the year presented, each ADS
    representing 100 H Shares. The basic and diluted income per ADS
    for the year ended December 31, 2007 was calculated by
    dividing the income for the year attributable to our
    shareholders by the weighted average number of
    179,700 million shares issued and outstanding for the year
    presented, each ADS representing 100 H Shares. The basic and
    diluted income per ADS for the year ended December 31, 2008
    was calculated by dividing the income for the year attributable
    to our shareholders by the number of 183,021 million shares
    issued and outstanding for the year presented, each ADS
    representing 100 H Shares. Risk
    Factors    
    The current global financial crisis and economic downturn have
    adversely affected economies and businesses around the world,
    including in China. Due to the global economical downturn and a
    decrease in consumer demand, the economic situation in China has
    been quite severe since the second half of 2008. This change in
    the macro-economic conditions has and is expected to continue to
    have an adverse impact on our business and operations. Oil and
    gas prices and margins are likely to remain lower than in recent
    times due to reduced demand. We have experienced pricing
    pressure on our refined products, which has an adverse effect on
    our profitability. These factors may also lead to intensified
    competition for market share and available margin, with
    consequential potential adverse effects on volumes. The
    financial and economic situation may have a negative impact on
    third parties with whom we do, or may do, business. Any of these
    factors may affect our results of operations, financial
    condition and liquidity. 11




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
    Our operations are affected by the volatility of prices for
    crude oil and refined products. We and China Petroleum and
    Chemical Corporation, or Sinopec, set our crude oil median
    prices monthly based on the Singapore trading prices for crude
    oil. In 2006, the PRC government, under its macroeconomic
    controls, introduced a mechanism for determining domestic prices
    of refined products. On December 18, 2008, the PRC
    government further modified this mechanism by linking the
    domestic prices of refined oil products to a number of factors,
    including international market prices, average domestic
    processing cost, tax, selling expenses and appropriate profit
    margin. Historically, international prices for crude oil and
    refined products have fluctuated widely in response to changes
    in many factors, such as global and regional economic and
    political developments, and global and regional supply and
    demand for crude oil and refined products. We do not have, and
    will not have, control over the factors affecting international
    prices for crude oil and refined products. A decline in crude
    oil prices will reduce our crude oil revenues derived from
    external customers. If crude oil prices remain at a low level
    for a prolonged period, our company has to determine and
    estimate whether our oil and gas assets may suffer impairment
    losses and, if so, the amount of the impairment losses. An
    increase in crude oil prices may, however, increase the
    production costs of refined products. In addition, a decline in
    refined products prices will reduce our revenue derived from
    refining operations. An increase in the refined products prices,
    however, will increase the production costs of chemical products
    which use refined products as raw materials.
    The crude oil and natural gas reserve data in this annual report
    are only estimates. The reliability of reserve estimates depends
    on a number of factors, assumptions and variables, such as the
    quality and quantity of our technical and economic data and the
    prevailing oil and gas prices applicable to our production, some
    of which are beyond our control and may prove to be incorrect
    over time. Results of drilling, testing and production after the
    date of the estimates may require substantial upward or downward
    revisions in our reserve data. Our actual production, revenues
    and expenditures with respect to our reserves may differ
    materially from these estimates because of these revisions.
    Our proved crude oil reserves decreased gradually and modestly
    from 2001 to 2003 because the decrease in the crude oil reserves
    in our Daqing and Liaohe oil regions could not be offset by the
    increase in the crude oil reserves in our oil regions in
    northwestern China, such as the Xinjiang oil region, the
    Changqing oil and gas region and the Tarim oil region. Our
    proved crude oil reserves increased slightly in 2004, 2005, 2006
    and 2007 compared to prior years. Our proved crude oil reserves
    slightly decreased in China in 2008 as a result of the lower oil
    price in 2008. We are actively pursuing business opportunities
    outside China to supplement our domestic resources. For
    instance, we acquired certain overseas crude oil and natural gas
    assets from CNPC. We cannot assure you, however, that we can
    successfully locate sufficient alternative sources of crude oil
    supply or at all due to the complexity of the international
    political, economic and other conditions. If we fail to obtain
    sufficient alternative sources of crude oil supply, our results
    of operations and financial condition may be materially and
    adversely affected.
    The oil, gas and petrochemicals industries are highly
    competitive. There is strong competition, both within the oil
    and gas industry and with other industries, in supplying the
    fuel needs of commerce, industry and the home. Competition puts
    pressure on product prices, affects oil products marketing and
    requires continuous management focus on reducing unit costs and
    improving efficiency. The implementation of our growth strategy
    requires continued technological advances and innovation,
    including advances in exploration, production, refining,
    petrochemicals manufacturing technology and advances in
    technology related to energy usage. Our performance could be
    impeded if competitors developed or acquired intellectual
    property rights to technology that we required or if our
    innovation lagged the industry.
    Exploring for, producing and transporting crude oil and natural
    gas and producing and transporting refined products and chemical
    products involve many hazards. These hazards may result in:  
    fires;
    explosions;
    spills;
    blow-outs; and 12




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##### Table of Contents




    other unexpected or dangerous conditions causing personal
    injuries or death, property damage, environmental damage and
    interruption of operations.        
    As of December 31, 2008, CNPC beneficially owned
    approximately 86.71% of our share capital. This ownership
    percentage enables CNPC to elect our entire board of directors
    without the concurrence of any of our other shareholders.
    Accordingly, CNPC is in a position to:  
    control our policies, management and affairs;
    subject to applicable PRC laws and regulations and provisions of
    our articles of association, affect the timing and amount of
    dividend payments and adopt amendments to certain of the
    provisions of our articles of association; and
    otherwise determine the outcome of most corporate actions and,
    subject to the requirements of the Listing Rules of the Hong
    Kong Stock Exchange, cause our company to effect corporate
    transactions without the approval of minority shareholders.    
    In addition to its relationship with us as our controlling
    shareholder, CNPC by itself or through its affiliates also
    provides us with certain services and products necessary for our
    business activities, such as construction and technical
    services, production services and supply of material services.
    The interests of CNPC and its affiliates as providers of these
    services and products to us may conflict with our interests.
    Although we have entered into a Comprehensive Products and
    Services Agreement with CNPC and our transactions with CNPC over
    the past three years have been conducted on open, fair and
    competitive commercial terms, we have only limited leverage in
    negotiating with CNPC and its affiliates over the specific terms
    of the agreements for the future provision of these services and
    products.
    The eastern and southern regions of China have a higher demand
    for refined products and chemical products than the western and
    northern regions. Most of our refineries and chemical plants are
    located in the western and northern regions of China. We incur
    relatively higher transportation costs for delivery of our
    refined products and chemical products to certain areas of the
    eastern and southern regions from our refineries and chemical
    plants in western and northern China. While we continue to
    expand the sales of these products in the eastern and southern
    regions of China, we face strong competition from Sinopec and
    China National Offshore Oil Corp, or CNOOC. As a result, we
    expect that we will continue to encounter difficulty in
    increasing our sales of refined products and chemical products
    in these regions.
    We are currently constructing new, and expanding some existing,
    refinery and petrochemical facilities and constructing several
    natural gas pipelines, which could require substantial capital
    expenditures and investments. We cannot assure you that the cash
    generated by our operations will be sufficient to fund these
    development plans or that our actual future capital expenditures
    and investments will not significantly 13




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##### Table of Contents



exceed our current planned amounts. If either of these
    conditions arise, we may have to seek external financing to
    satisfy our capital needs. Under such circumstance, our
    inability to obtain sufficient funding for our development plans
    could adversely affect our business, financial condition and
    results of operations.  
    Compliance with changes in laws, regulations and obligations
    relating to climate change or environmental protection could
    result in substantial capital expenditure, reduced profitability
    from changes in operating costs, and revenue generation and
    strategic growth opportunities being impacted.
    We are also subject to a number of risks relating to the PRC and
    the PRC oil and gas industry. These risks are described as
    follows:  
    Our operations, like those of other PRC oil and gas companies,
    are subject to extensive regulations and control by the PRC
    government. These regulations and control affect many material
    aspects of our operations, such as exploration and production
    licensing, industry-specific and product-specific taxes and fees
    and environmental and safety standards. As a result, we may face
    significant constraints on our ability to implement our business
    strategies, to develop or expand our business operations or to
    maximize our profitability. Our business may also be adversely
    affected by future changes in certain policies of the PRC
    government with respect to the oil and gas industry. For
    example, since March 26, 2006, we have been subject to a
    crude oil special gain levy imposed by the PRC government. As a
    result, we paid a special levy of RMB 28,988 million,
    RMB 44,662 million and RMB 85,291 million in
    2006, 2007 and 2008, respectively, to the PRC government in
    relation to our domestic sales of crude oil.
    Currently, the PRC government must approve the construction and
    major renovation of significant refining and petrochemical
    facilities as well as the construction of significant natural
    gas and refined product pipelines and storage facilities. We
    presently have several significant projects pending approval
    from the relevant government authorities and will need approvals
    from the relevant government authorities in connection with
    several other significant projects. We do not have control over
    the timing and outcome of the final project approvals.
    We receive most of our revenues in Renminbi. A portion of our
    Renminbi revenues must be converted into other currencies to
    meet our foreign currency obligations. The existing foreign
    exchange limitations under the PRC laws and regulations could
    affect our ability to obtain foreign exchange through debt
    financing, or to obtain foreign exchange for capital
    expenditures.  
    Prior to 2005, our company performed capping or plugging of
    wellheads and surface facilities that could be salvaged for
    alternative use. For safety reasons, our company also performed
    capping or plugging of certain wells that were considered to be
    in areas with extensive human use at the time of the
    abandonment. Our company, however, did not perform capping or
    plugging of wells that were neither considered to be in areas
    with extensive human use nor could be salvaged for alternative
    use. Consequently, such wellheads and surface facilities were
    left at their original sites after the wells were retired.  The Environmental Protection Regulation for Oil and Gas
    Exploration and Production Activities in Heilongjiang Province The Environmental Protection Regulation for Oil and
    Gas Exploration and Production Activities in Gansu Province
   14




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
    Because PRC laws, regulations and legal requirements dealing
    with economic matters are relatively new and continue to evolve,
    and because of the limited volume of published judicial
    interpretations and the non-binding nature of prior court
    decisions, the interpretation and enforcement of these laws,
    regulations and legal requirements involve some uncertainty. We
    have included the Mandatory Provisions and certain additional
    requirements that are imposed by the Hong Kong Stock Exchange
    Listing Rules in our Articles of Association for the purpose of
    reducing the scope of difference between the Hong Kong Company
    Law and the PRC Company Law. However, because the PRC Company
    Law is different in certain important aspects from company laws
    in the United States, Hong Kong and other common law
    jurisdictions, and because the PRC securities laws and
    regulations are still at an early stage of development, you may
    not enjoy shareholders protections that you may be
    entitled to in other jurisdictions.
    In addition to the adverse effect on our revenues, margins and
    profitability from any future fall in oil and natural gas
    prices, a prolonged period of low prices or other indicators
    would lead to a review for impairment of our oil and natural gas
    properties. This review would reflect managements view of
    long-term oil and natural gas prices. Such a review could result
    in a charge for impairment which could have a significant effect
    on our results of operations in the period in which it occurs.
    The United States Securities and Exchange Commission, or the
    SEC, as required by Section 404 of the Sarbanes-Oxley Act
    of 2002, adopted rules requiring every public company in the
    United States to include a management report on such
    companys internal control over financial reporting in its
    annual report, which contains managements assessment of
    the effectiveness of the companys internal control over
    financial reporting. Although our management concluded that our
    internal control over our financial reporting for the fiscal
    year ended December 31, 2008 was effective, we may discover
    other deficiencies in the course of our future evaluation of our
    internal control over our financial reporting and may be unable
    to remediate such deficiencies in a timely manner. If we fail to
    maintain the adequacy of our internal control over financial
    reporting, we may not be able to conclude that we have effective
    internal control over financial reporting on an ongoing basis,
    in accordance with the Sarbanes-Oxley Act. Moreover, effective
    internal control is necessary for us to produce reliable
    financial reports and is important to prevent fraud. As a
    result, our failure to achieve and maintain effective internal
    control over financial reporting could result in the loss of
    investor confidence in the reliability of our financial
    statements, which in turn could harm our business and negatively
    impact the trading prices of our ADSs, H Shares or A Shares.   ITEM 4 
    INFORMATION ON THE COMPANY Introduction  History
    and Development of the Company
  Overview
    of Our Operations
    
    the exploration, development, production and sale of crude oil
    and natural gas;
    the refining, transportation, storage and marketing of crude oil
    and petroleum products; 15




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##### Table of Contents




    the production and marketing of basic petrochemical products,
    derivative chemical products and other chemical
    products; and
    the transmission and storage of crude oil, refined products and
    natural gas as well as the sale of natural gas.             16




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Acquisitions
            Our
    Corporate Organization and Shareholding Structure
   17




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##### Table of Contents



(1)
    
    Indicates approximate shareholding.(2)
    
    Indicates approximate shareholding, including the 526,404,000 H
    shares indirectly held by CNPC through Fairy King Investments
    Limited, an overseas wholly-owned subsidiary of CNPC, as of
    May 12, 2009.(3)
    
    Includes subsidiary companies and those branches without legal
    person status.(4)
    
    Represents enterprises directly administered and operated by
    such segment.(5)
    
    Includes PetroChina Planning & Engineering Institute,
    PetroChina Exploration & Development Research
    Institute, CNPC E&D, PetroChina Foreign Cooperation
    Administration Department, IT Service Center, PetroChina
    International Co., Ltd., and Petrochemical Research Institute. 18




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##### Table of Contents





(1)
    
    Includes subsidiary companies and those branches without legal
    person status.(2)
    
    Represents enterprises directly administered and operated by
    such segment.  19




---



##### Table of Contents



General
    Information
  (86-10) 5998-6223.
   20




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21




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##### Table of Contents



Exploration
    and Production        Reserves
   22




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##### Table of Contents



Crude Oil

Natural
    Gas(1)

Combined(1)(Millions of barrels)

(Bcf)

(BOE, in millions)Proved developed and undeveloped reservesReserves as of December 31, 2006


11,618.0



53,469.2



20,529.4Revisions of previous estimates


83.7



(1,063.0
)


(93.4
)Extensions and discoveries


763.9



6,331.4



1,819.1Improved recovery


78.8



0



78.8Production for the year


(838.8
)


(1,627.0
)


(1,110.0
)Reserves as of December 31, 2007


11,705.6



57,110.6



21,223.9Revisions of previous estimates


(574.0
)


(636.3
)


(680.0
)Extensions and discoveries


885.4



6,579.0



1,982.0Improved recovery


75.0



0



75.0Production for the year


(870.7
)


(1,864.1
)


(1,181.4
)Reserves as of December 31, 2008


11,221.3



61,189.2



21,419.5Proved developed reservesAs of December 31, 2006


9,185.2



22,563.9



12,945.8As of December 31, 2007


9,047.1



26,047.1



13,388.3As of December 31, 2008


8,324.1



26,666.8



12,768.6     (1)
    
    Represents natural gas remaining after field separation for
    condensate removal and reduction for flared gas. 23




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##### Table of Contents



As of December 31,2006

2007

2008Proved



Proved



ProvedDeveloped



Developed



Developedand

Proved

and

Proved

and

ProvedUndeveloped

Developed

Undeveloped

Developed

Undeveloped

Developed(Millions of barrels)Crude oil reservesDaqing


4,200.3



3,516.0



3,856.1



3,324.3



3,548.0



2,912.0Liaohe


1,067.5



845.8



1,121.0



888.1



895.9



675.2Xinjiang


1,306.6



1,077.0



1,354.9



1,198.9



1,302.6



1,106.6Changqing


1,450.6



1,182.9



1,488.9



1,194.8



1,624.5



1,256.7Jilin


775.5



501.8



784.2



463.4



819.8



441.0Dagang


482.1



400.0



523.2



346.7



520.8



352.7Tarim


523.9



370.4



590.3



379.7



594.0



371.3Huabei


500.9



388.4



448.0



307.0



431.5



281.8Qinghai


227.9



187.2



200.1



186.3



177.8



157.5Tuha


156.5



104.9



164.7



91.7



162.3



97.8Sichuan


11.7



5.4



9.5



4.4



13.1



3.6Jidong


180.4



98.3



413.1



126.0



379.2



133.5Other
    regions(1)


734.1



507.1



751.5



535.8



751.8



534.4Total


11,618.0



9,185.2



11,705.6



9,047.1



11,221.3



8,324.1   As of December 31,2006

2007

2008Proved



Proved



ProvedDeveloped



Developed



Developedand

Proved

and

Proved

and

ProvedUndeveloped

Developed

Undeveloped

Developed

Undeveloped

Developed(Bcf)Natural gas
    reserves(2)Sichuan


10,362.8



4,867.3



10,400.5



4,365.5



11,285.4



4,030.4Changqing


17,846.1



4,559.7



19,105.0



6,943.9



19,261.7



6,901.6Xinjiang


1,723.0



1,047.0



1,537.1



999.3



4,061.8



2,028.7Daqing


1,894.6



740.2



3,039.7



1,046.2



2,961.1



960.6Qinghai


4,467.0



1,584.0



4,352.8



3,003.5



4,302.1



2,948.4Tarim


14,443.6



7,818.4



15,114.3



7,918.8



15,516.4



7,722.7Liaohe


429.3



338.8



386.4



296.2



283.2



193.6Tuha


640.5



401.8



581.6



350.4



609.4



382.3Huabei


340.3



264.6



193.1



119.2



207.8



133.7Dagang


275.0



189.7



347.4



197.1



289.7



148.9Jilin


198.6



113.7



1,169.9



104.1



1,180.5



113.4Jidong


52.7



31.5



191.4



40.4



203.3



96.7Other
    regions(1)


795.7



607.2



691.4



662.5



1,026.8



1,005.8Total


53,469.2



22,563.9



57,110.6



26,047.1



61,189.2



26,666.8     (1)
    
    Represents Yumen oil regions, oil regions under our subsidiaries
    in southern China, other smaller oil regions in China and our
    overseas oil and gas fields as a result of our acquisition of
    overseas assets.(2)
    
    Represents natural gas remaining after field separation for
    condensate removal and reduction for flared gas. 24




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##### Table of Contents



Exploration
    and Development
      Year



Daqing

Xinjiang

Liaohe

Changqing

Huabei

Dagang

Sichuan

Others(1)

Total2006

Net exploratory wells
    drilled(2)


250



180



64



466



83



50



62



390



1,545Crude oil


73



88



35



203



49



21







114



583Natural gas


7



21



1



37







7



31



6



110Dry(3)


170



71



28



226



34



22



31



270



852Net development wells
    drilled(2)


4,183



1,605



713



2,023



330



179



57



2,361



11,451Crude oil


4,160



1,586



688



1,772



225



173



9



2,235



10,848Natural gas


23



8



14



216



105



6



40



123



535Dry(3)


0



11



11



35



0



0



8



3



682007

Net exploratory wells
    drilled(2)


294



183



68



447



104



70



48



415



1,629Crude oil


103



103



49



186



47



59



3



141



691Natural gas


12



15







41











30



16



114Dry(3)


179



65



19



220



57



11



15



258



824Net development wells
    drilled(2)


4,670



1,350



529



3,087



528



260



83



2,377



12,884Crude oil


4,643



1,346



515



2,652



259



252



8



2,208



11,883Natural gas


17



4



11



384



269



8



75



163



931Dry(3)


10







3



51















6



702008

Net exploratory wells
    drilled(2)


234



162



63



583



94



91



67



354



1,648Crude oil


71



72



38



207



42



69



2



136



637Natural gas


1



15



0



26



0



0



38



12



92Dry(3)


162



75



25



350



52



22



27



206



919Net development wells
    drilled(2)


4,238



1,887



356



5,079



415



238



100



2,887



15,200Crude oil


4,223



1,868



349



4,469



225



226



2



2,685



14,047Natural gas


4



18



6



528



186



8



77



179



1,006Dry(3)


11



1



1



82



4



4



21



23



147     (1)
    
    Represents the Jilin, Tarim, Tuha, Qinghai, Jidong, Yumen and
    other oil regions.(2)
    
    Net wells refer to the wells after deducting
    interests of others. No third parties own any interests in any
    of our wells.(3)
    
    Dry wells are wells with insufficient reserves to
    sustain commercial production. 25




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##### Table of Contents



Oil-and-Gas
    Properties
    Acreage(1)Productive
    Wells(1)

Developed

UndevelopedOil Region

Crude Oil

Natural Gas

Crude Oil

Natural Gas

Crude Oil

Natural Gas(Thousands of acres)Daqing


76,882



221



822.7



85.3



797.1



112.6Liaohe


21,534



606



192.1



35.8



88.5



6.5Xinjiang


25,049



140



301.2



49.0



156.8



30.2Jilin


26,040



164



298.5



30.1



321.3



20.9Changqing


26,848



2,957



539.1



2,193.0



335.8



1,887.5Huabei


7,627



105



141.2



12.3



57.7



2.9Dagang


5,133



65



106.9



24.5



64.3



21.4Tuha


2,577



100



47.0



23.6



28.9



8.3Tarim


1,251



210



107.0



72.0



61.7



202.2Sichuan


432



1,498



335.5



382.8







402.8Other
    regions(2)


6,380



397



71.2



32.5



45.7



25.1Total


199,753



6,463



2,926.4



2,940.9



1,957.8



2,720.4     (1)
    
    Includes all wells and acreage in which we have an interest. No
    third parties own any interests in any of our wells or acreage.(2)
    
    Represents the Qinghai, Jidong, Yumen, Zhejiang and other oil
    regions.    Production
    For the Year EndedDecember 31,

% of2006

2007

2008

2008 TotalCrude oil
    production(1)(thousands of barrels per day, except percentages or otherwise
    indicated)Daqing


883.1



847.3



813.2



34.2Liaohe


230.4



231.3



224.6



9.4Xinjiang


244.2



249.4



246.9



10.4Changqing


215.6



246.9



279.8



11.8Tarim


123.9



131.6



132.7



5.6Huabei


89.4



90.8



89.7



3.8Jilin


115.6



120.0



121.2



5.1 26




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##### Table of Contents



For the Year EndedDecember 31,

% of2006

2007

2008

2008 TotalDagang


93.6



91.2



92.2



3.9Tuha


44.4



44.8



46.7



1.9Other(2)


246.8



264.5



332.0



13.9Total


2,287.0



2,317.8



2,379.0



100.0Annual production (million barrels)


834.8



846.0



870.7Average sales price(RMB per barrel)


476.8



496.3



608.1(US$ per barrel)


59.81



65.27



87.55Natural gas
    production(1)(3)(millions of cubic feet per day, except percentages or otherwise
    indicated)Sichuan


1,233.9



1,329.8



1,364.6



26.8Changqing


650.4



838.4



1,024.5



20.1Daqing


138.0



123.7



136.0



2.7Qinghai


200.7



286.0



378.1



7.4Tuha


133.4



111.5



107.0



2.1Xinjiang


114.2



102.3



129.9



2.6Liaohe


52.8



43.9



40.8



0.8Huabei


41.3



39.1



38.9



0.8Tarim


1,015.7



1,383.1



1,564.1



30.7Dagang


28.7



43.0



44.2



0.9Other(4)


152.8



158.7



265.2



5.1Total


3,761.9



4,459.5



5,093.3



100.0Annual production (Bcf)


1,373.1



1,627.7



1,864.2Average sales price(RMB per Mcf)


27.6



29.0



32.3(US$ per Mcf)


3.46



3.81



4.65     (1)
    
    Production volumes for each region include our share of the
    production from all of our cooperative projects with foreign
    companies in that region.(2)
    
    Represents production from the Qinghai, Jidong, Yumen and other
    oil regions and our share of overseas production as a result of
    our acquisition of overseas assets.(3)
    
    Represents production of natural gas for sale.(4)
    
    Represents production from the Jilin, Jidong, Yumen and other
    oil regions and our share of overseas production as a result of
    our acquisition of overseas assets.   27




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##### Table of Contents



Principal
    Oil and Gas Regions
  Daqing
    Oil Region
            
    implementing ground optimization and simplification projects and
    reducing investments with low or no return so as to control cost
    from the source; and
    applying new technologies to reduce energy consumption to
    increase our ability to maximize profit.     28




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##### Table of Contents



Liaohe
    Oil Region
        Xinjiang
    Oil Region
      Sichuan
    Gas Region
       29




---



##### Table of Contents



Changqing
    Oil and Gas Region
      Tarim
    Oil and Gas Region
      30




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31




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Refining
    and Marketing        
    as of December 31, 2008, our refineries annual
    primary distillation capacity totaled 941.7 million barrels
    of crude oil per year, or 2,580.1 thousand barrels per day;
    we processed 849.8 million barrels of crude oil, or
    2.3 million barrels per day;
    we produced approximately 73.97 million tons of gasoline,
    diesel and kerosene and sold approximately 90.95 million
    tons of these products;
    as of December 31, 2008, our retail distribution network
    consisted of:  
    16,725 service stations owned and operated by us,
    731 franchise service stations owned and operated by third
    parties with which we have long-term refined product supply
    agreements, representing a significant decrease from last year,
    as a result of our termination of cooperation arrangements with
    certain franchise service stations that had demonstrated
    deficiencies in image, service or oil quality; and  
    in 2008, our service stations, which are located throughout
    China, sold approximately 61.8 million tons of gasoline and
    diesel, representing 71.7% of the total of these products sold
    through our marketing operations.  Refining
    Refined
    Products
    Year Ended December 31,Product

2006

2007

2008(In thousands of tons)Diesel


44,226.5



47,345.4



48,294.4Gasoline


22,027.2



22,018.7



23,465.2Fuel oil


3,491.4



4,162.0



4,076.5Naphtha


6,317.9



7,491.9



7,225.8Asphalt


1,605.7



1,563.4



2,093.3Kerosene


2,063.7



2,017.2



2,208.8Lubricants


1,488.4



1,760.4



1,767.9Paraffin


1,051.8



1,003.0



948.5Total


82,272.6



87,362.0



90,080.4    32




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##### Table of Contents



Our
    Refineries
  and/or
    As of December 31,2006

2007

2008Primary distillation
    capacity(1)

    (thousand barrels per day)Lanzhou Petrochemical


212.6



212.6



212.6Dalian Petrochemical


415.0



415.0



415.0Fushun Petrochemical


186.2



186.2



186.2Daqing Petrochemical


121.5



121.5



121.5Jinzhou Petrochemical


131.6



131.6



131.6Jinxi Petrochemical


131.6



131.6



131.6Jilin Petrochemical


141.7



141.7



141.7Urumqi Petrochemical


101.2



121.5



121.5Other refineries


1,122.5



1,118.4



1,118.4Total


2,563.9



2,580.1



2,580.1Refining throughput(thousand barrels per day)Lanzhou Petrochemical


191.4



213.9



202.3Dalian Petrochemical


244.7



233.5



267.2Fushun Petrochemical


196.4



196.6



193.1Daqing Petrochemical


128.5



124.3



117.1Jinzhou Petrochemical


137.8



133.6



132.5Jinxi Petrochemical


132.1



133.6



126.8Jilin Petrochemical


146.5



146.1



136.3Urumqi Petrochemical


98.0



106.1



110.3Other refineries


875.3



968.8



1,036.4Total


2,150.8



2,256.5



2,322.0 33




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##### Table of Contents



As of December 31,2006

2007

2008Conversion
    equivalent(2)

    (percent)Lanzhou Petrochemical


53.3



53.3



53.3Dalian Petrochemical


27.8



27.8



44.9Fushun Petrochemical


70.7



70.7



70.7Daqing Petrochemical


76.7



76.7



80.0Jinzhou Petrochemical


84.6



84.6



84.6Jinxi Petrochemical


66.2



66.2



66.2Jilin Petrochemical


61.4



61.4



61.4Urumqi Petrochemical


62.0



51.7



51.7Average of other refineries


51.8



51.9



54.0     (1)
    
    Represents the primary distillation capacity of crude oil and
    condensate.(2)
    
    Stated in fluid catalytic cracking, delayed coking and
    hydrocracking equivalent/ topping (percentage by weight), based
    on 100% of balanced distillation capacity.      Marketing
    
    approximately 802 regional wholesale distribution outlets
    nationwide. Substantially all of these outlets are located in
    high demand areas such as economic centers across China,
    particularly in the coastal areas, along major railways and
    along the Yangtze River; and
    16,725 service stations owned and operated by us and 731
    franchise service stations owned and operated by third parties.   34




---



##### Table of Contents



Year Ended December 31,Product

2006

2007

2008(In thousands of tons)Diesel


48,863.9



54,844.3



56,515.9Gasoline


23,993.2



27,115.7



29,631.6Fuel oil


8,711.2



9,656.2



8,414.6Naphtha


6,887.6



8,347.6



8,628.2Kerosene


2,047.4



3,782.2



4,797.9Lubricants


2,044.4



2,348.5



1,977.1Asphalt


3,321.2



4,387.1



3,315.2Paraffin


1,104.3



1,021.8



908.3Total


96,973.2



111,503.4



114,188.8   Wholesale
    Marketing
    Retail
    Marketing
      
       35




---



##### Table of Contents



Owned and operated by
    us(1)


16,725Franchised


731Total


17,456     (1)
    
    Includes 469 service stations owned and operated by
    BP PetroChina Petroleum Company Limited.  pre-paid
 36




---



##### Table of Contents



37




---



##### Table of Contents



Chemicals
    and Marketing      Our
    Chemical Products
    Year Ended December 31,2006

2007

2008(In thousand tons)Basic petrochemicalsPropylene


2,671.2



3,083.2



3,152.4Ethylene


2,067.9



2,581.5



2,675.6Benzene


749.6



827.8



943.5Derivative petrochemicalsSynthetic resinPolyethylene


1,531.3



2,101.2



2,153.7Polypropylene


1,291.0



1,630.2



1,730.0ABS


223.0



215.0



198.9Other synthetic resin products


15.8



16.1



16.9Synthetic fiberPolyacrylic fiber


81.0



79.3



61.6Terylene fiber


53.3



48.1



35.7Other synthetic fiber products


6.4



9.3



9.0Synthetic rubberStyrene butadiene rubber


212.9



210.6



249.6Other synthetic rubber products


99.1



100.0



94.4IntermediatesAlkylbenzene


207.9



197.5



205.4Other chemicalsUrea


3,576.3



3,634.5



3,823.7    38




---



##### Table of Contents



Sales and
    Marketing
   39




---



##### Table of Contents



Year Ended December 31,Product

2006

2007

2008(In thousands of tons)Derivative petrochemicalsSynthetic resinPolyethylene


1,594.8



2,102.4



2,194.9Polypropylene


1,069.6



1,434.8



1,549.1ABS


233.4



216.7



327.1Synthetic fiberTerylene fiber


59.4



56.6



41.7Polyacrylic fiber


91.2



71.6



67.5Synthetic rubberButadiene styrene rubber


203.4



219.0



233.8IntermediatesAlkylbenzene


127.9



156.6



164.6Other chemicalsUrea


3,570.6



3,662.2



4,393.2   40




---



##### Table of Contents



41




---



##### Table of Contents



Natural
    Gas and Pipeline      As of December 31 or YearEnded December 31,2006

2007

2008Length of natural gas pipelines used by our natural gas
    segment (km)


19,662



19,792



21,304Total length of natural gas pipelines (km)


20,590



22,043



24,037Volume of natural gas sold by our natural gas segment (Bcf)


1,200.5



1,502.0



1,718.5Total volume of natural gas
    sold(1) (Bcf)


1,357.0



1,647.8



1,916.6     (1)
    
    Including both the natural gas sold to third parties and the
    natural gas sold within our company for the production of other
    products.    Our
    Principal Markets for Natural Gas
         42




---



##### Table of Contents



Natural
    Gas Transmission Infrastructure
      West
    to East Natural Gas Pipelines
         43




---



##### Table of Contents



Zhong
    County to Wuhan Municipality natural gas pipeline
      The
    First and Second Shaanxi to Beijing Municipality natural gas
    pipelines
          Crude Oil
    and Refined Product Transportation and Storage
    Infrastructure
       44




---



##### Table of Contents




    11,028 kilometers of crude oil pipelines with an average daily
    throughput of approximately 3.12 million barrels; and
    crude oil storage facilities with an aggregate storage capacity
    of approximately 19.3 million cubic meters.      
    2,656 kilometers of refined product pipelines with an
    average daily throughput of approximately
    37,126 tons; and
    refined product storage facilities with a total storage capacity
    of approximately 23.0 million cubic meters.     Competition    Exploration
    and Production Operations
    Refining
    and Marketing and Chemicals and Marketing Operations
   45




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##### Table of Contents



Natural
    Gas and Pipeline Operations
   Environmental
    Matters    
    require an environmental evaluation report to be submitted and
    approved prior to the commencement of exploration, production,
    refining and chemical projects;
    restrict the type, quantities, and concentration of various
    substances that can be released into the environment in
    connection with drilling and production activities;
    limit or prohibit drilling activities within protected areas and
    certain other areas; and
    impose penalties for pollution resulting from oil, natural gas
    and petrochemical operations, including criminal and civil
    liabilities for serious pollution.     46




---



##### Table of Contents




    building environment-friendly projects;
    reducing sulphur levels in heavy fuel oil and diesel fuel;
    reducing olefin and benzene content in gasoline, and
    continuously reducing the quantity of emissions and effluents
    from our refineries and petrochemical plants; and
    developing and installing monitoring systems at our pollutant
    discharge openings and developing environmental impact
    assessments for construction projects.      
    providing each household in areas surrounding our production
    facilities with printed materials to explain and illustrate
    safety and protection knowledge and skills; and
    enhancing the implementation of various effective safety
    production measures we have adopted previously.   Legal
    Proceedings   Properties    
    CNPC would use its best endeavors to obtain formal land use
    right licenses to replace the entitlement certificates in
    relation to the 28,649 parcels of land, which were leased or
    transferred to us from CNPC, within one year from August,
    September and October 1999 when the relevant entitlement
    certificates were issued;
    CNPC would complete, within one year from November 5, 1999,
    the necessary governmental procedures for the requisition of the
    collectively owned land on which 116 service stations owned by
    us are located; and
    CNPC would obtain individual building ownership certificates in
    our name for all of the 57,482 buildings transferred to us
    by CNPC, before November 5, 2000.   47




---



##### Table of Contents



Intellectual
    Property  
   Regulatory
    Matters  Overview
    
    The Ministry of Land and Resources has the authority for
    granting, examining and approving oil and gas exploration and
    production licenses, the administration of registration and
    transfer of exploration and production licenses.
    The Ministry of Commerce:  
    sets the import and export volume quotas for crude oil and
    refined products according to the overall supply and demand for
    crude oil and refined products in China as well as the WTO
    requirements for China;
    issues import and export licenses for crude oil and refined
    products to oil and gas companies that have obtained import and
    export quotas; and
    examines and approves production sharing contracts and
    Sino-foreign equity and cooperative joint venture contracts.  
    The National Development and Reform Commission:  
    has the industry administration and policy coordination
    authority over Chinas oil and gas industry;
    determines mandatory minimum volumes and applicable prices of
    natural gas to be supplied to certain fertilizer producers;
    publishes guidance prices for natural gas and retail median
    guidance prices for certain refined products, including gasoline
    and diesel;
    approves significant petroleum, natural gas, oil refinery and
    chemical projects set forth under the Catalogues of Investment
    Projects Approved by the Central Government; and
    approves Sino-foreign equity and cooperative projects exceeding
    certain capital amounts. 48




---



##### Table of Contents



Exploration
    Licenses and Production Licenses
          Pricing
  Crude
    Oil
    Refined
    Products
   49




---



##### Table of Contents



Chemical
    Products
    Natural
    Gas
  ex-works
  ex-works ex-works ex-works
  ex-works ex-works ex-works ex-works ex-works ex-works
  ex-works
    Production
    and Marketing
  Crude
    Oil
   50




---



##### Table of Contents



Refined
    Products
    Natural
    Gas
    Foreign
    Investments
  Cooperation
    in Exploration and Production with Foreign
    Companies
        Transportation
    and Refining
   51




---



##### Table of Contents



Import
    and Export
    Capital
    Investment and Financing
                  Taxation,
    Fees and Royalty
    Tax Item

Tax Base

Tax RateEnterprise income tax

Taxable income

Since January 1, 2008, charged at the legal rate of 25%.
    However, certain of our qualified operations in west regions of
    the PRC are entitled to a rate of 15% prior to 2010.Value-added tax

Revenue

13% for liquified natural gas, natural gas, liquified petroleum
    gas, agricultural film and fertilizers and 17% for other items.Sales volume

5% for the Sino-foreign oil and gas exploration and development
    cooperative projects. However input value-added tax cannot be
    deducted.Business tax

Revenue from transportation services

3%Consumption tax

Aggregate volume sold or self-consumed

RMB0.2 per liter for unleaded gasoline 52




---



##### Table of Contents



Tax Item

Tax Base

Tax RateRMB0.1 per liter for diesel.RMB0.2 per liter for naphtha, solvent naphtha and lubricants.RMB0.1 per liter for fuel oilResource tax

Aggregate volume sold or self-consumed

Since July 1, 2005, resource tax applicable to crude oil of
    our company was adjusted upward from the original RMB8 to 30 per
    ton to RMB14 to 30 per ton, and the resource tax for natural gas
    was adjusted from the original RMB2 to 15 per thousand cubic
    meter to RMB7 to 15 per thousand cubic meter.The actual applicable rate for each oil field may differ,
    depending on the resource differences, volume of the exploration
    and production activities and costs required for the production
    at the particular oil field.Compensatory fee for mineral resources

Revenue

1% for crude oil and natural gasCrude oil special gain levy

Sales amount above specific threshold

Effective March 26, 2006, levied on the domestic crude oil
    sold at or above US$40/barrel, with a five-level progressive tax
    rates, varying from 20% to 40%   Exploration license fee

Area

RMB100 to 500 per square kilometer per yearProduction license fee

Area

RMB1,000 per square kilometer per yearRoyalty
    fee(1)

Production volume

Progressive rate of 0-12.5% for crude oil and 0-3% for natural
    gas     (1)
    
    Payable only by Sino-foreign oil and gas exploration and
    development cooperative projects. The project entity of those
    cooperative projects is not subject to any other resource tax or
    fee.  Circular on Implementing
    the Reform of Refined Oil Product Pricing and Relevant Tax and
    Charge Collection
  Environmental
    Regulations
     53




---



##### Table of Contents



ITEM 4A 
    UNRESOLVED STAFF COMMENTS   ITEM 5 
    OPERATING AND FINANCIAL REVIEW AND PROSPECTS General    Overview
    
    the exploration, development, production and sale of crude oil
    and natural gas;
    the refining, transportation, storage and marketing of crude oil
    and petroleum products;
    the production and marketing of basic petrochemical products,
    derivative chemical products and other chemical
    products; and
    the transmission and storage of crude oil, refined oil products
    and natural gas as well as the sale of natural gas.    Factors
    Affecting Results of Operations
    Crude
    Oil Prices
   54




---



##### Table of Contents



Median Prices for Principal Grades ofCrude Oil (RMB/Barrel)

Premium/(Discount)Year 2006

Year 2007

Year 2008

(RMB/Barrel)Grade of Crude Oil

Benchmark

Average

Average

Average

2006

2007

2008Daqing


Minas



513



536



701



(3.8
)


(3.8
)


(3.8
)Jidong


Minas



513



536



701



(3.8
)


(3.8
)


(3.8
)Huabei


Minas



513



536



701



(2.4
)


(3.9
)


(3.9
)Dagang


Cinta



494



512



651



(2.5
)


(4
)


(4
)Tarim


Minas



513



536



701



(34.6
)


(51
)


(51
)Tuha


Tapis



554



571



729



(29.0
)


(36
)


(36
)     Refined
    Product Prices
      90(#)

0(#)Date

Gasoline

Diesel(RMB/ton)

(RMB/ton)June 20, 2008


1,000



1,000December 19, 2008


(900
)


(1,100
)January 15, 2009


(140
)


(160
)March 25, 2009


290



180   Chemical
    Product Prices
    Natural
    Gas Prices
   55




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##### Table of Contents



Foreign
    Currency Exposure
    Interest
    Rate Exposure
    Critical
    Accounting Policies
    Accounting
    for Oil and Gas Exploration and Production
    Activities
    Oil
    and Gas Reserves
     56




---



##### Table of Contents



Property,
    Plant and Equipment
      Buildings and plant






8-40 yearsEquipment and machinery






4-30 yearsMotor vehicles






4-14 yearsOther






5-12 years  57




---



##### Table of Contents



and/or
      Provision
    for Asset Decommissioning
    Impairment
    of Accounts Receivable
    Deferred
    Tax Assets
   58




---



##### Table of Contents



Revenue
    Recognition
      Acquisitions
   Operating
    Results   59




---



##### Table of Contents



Year Ended December 31,2006

2007

2008(RMB in millions)Total revenues


690,512



836,353



1,071,146Operating expenses


(490,615
)


(635,582
)


(911,846
)Income from operations


199,897



200,771



159,300Exchange gain (loss), net


272



(751
)


(1,081
)Interest expense, net


(1,125
)


(1,505
)


(689
)Income from equity affiliates and jointly controlled entities


1,706



6,442



4,299Income before income taxes


200,750



204,957



161,829Income taxes


(50,602
)


(49,781
)


(35,178
)Income for the year attributable to minority interest


(6,637
)


(8,426
)


(12,220
)Income for the year attributable to our shareholders


143,511



146,750



114,431     2007



2008vs.



vs.2006

2007

2006

2008

2007(RMB in millions, except percentages)Sales and other operating revenuesExploration and production


425,641



417,928



10.9
%


624,909



32.4
%Refining and marketing


543,299



670,844



23.5
%


886,472



32.1
%Chemicals and marketing


82,791



102,718



24.1
%


110,850



7.9
%Natural gas and pipeline


38,917



50,066



28.6
%


63,315



26.5
%Other


1,080



1,718



59.1
%


1,418



(17.5
)%Total


1,091,728



1,297,274



18.8
%


1,686,964



30.0
%Less intersegment sales


(401,216
)


(460,921
)


14.9
%


(615,818
)


33.6
%Consolidated net sales from operations


690,512



836,353



21.1
%


1,071,146



28.1
%     2007



2008vs.



vs.2006

2007

2006

2008

2007(RMB in millions, except percentages)Income (loss) from operationsExploration and production


221,781



207,503



(6.4
)%


240,198



15.8
%Refining and marketing


(29,164
)


(20,680
)






(82,970
)


Chemicals and marketing


5,058



7,831



54.8
%


(2,877
)


Natural gas and pipeline


8,986



12,495



39.0
%


16,057



28.5
%Other


(6,764
)


(6,378
)






(11,108
)


Total


199,897



200,771



0.4
%


159,300



(20.7
)%  60




---



##### Table of Contents



Year
    Ended December 31, 2008 Compared to Year Ended
    December 31, 2007
  Consolidated
    Results of Operations
  Overview
    Total Revenues.
    Sales Volume (000 ton)

Average Realized Price (RMB/ton)Percentage of





Percentage of2008

2007

Change (%)

2008

2007

Change (%)Crude
    oil(1)


20,465



18,730



9.3



4,264



3,594



18.6Natural gas (million cubic metre, RMB/000 cubic metre)


51,054



43,570



17.2



813



693



17.3Gasoline


29,399



27,003



8.9



5,881



5,168



13.8Diesel


56,081



54,377



3.1



5,526



4,668



18.4Kerosene


4,798



3,782



26.9



6,355



4,684



35.7Heavy oil


7,061



8,772



(19.5
)


3,541



2,519



40.6Polyethylene


2,195



2,102



4.4



10,219



10,497



(2.6
)Lubricant


2,003



2,378



(15.8
)


7,515



6,420



17.1     (1)
    
    The external sales volume of crude oil listed above is the crude
    oil produced by us.  Operating Expenses.
  Purchases, Services and Other
    Expenses.
  Employee Compensation Costs.
 61




---



##### Table of Contents



Exploration Expenses.
  Depreciation, Depletion and
    Amortisation.
  Selling, General and Administrative
    Expenses.
  Taxes Other than Income Taxes.
  Other Incomes/(Expenses), net.
  Income from Operations.
  Net Exchange Loss.
  Net Interest Expenses.
  Income before Income Taxes.
  Income Taxes.
  Income for the Year Attributable to our
    Shareholders.
 62




---



##### Table of Contents



Exploration
    and Production
  Total Revenues.
    Operating Expenses.
  Income from Operations.
  Refining
    and Marketing
  Total Revenues.
    Operating Expenses.
  Loss from Operations.
  Chemicals
    and Marketing
  Total Revenues.
  Operating Expenses.
 63




---



##### Table of Contents



Loss /Income from Operations.
  Natural
    Gas and Pipeline
  Total Revenues.
  Operating Expenses.
  Income from Operations.
  Year
    Ended December 31, 2007 Compared to Year Ended
    December 31, 2006
  Consolidated
    Results of Operation
  Overview
    Total Revenues.
    Sales Volume (000 ton)

Average Realized Price (RMB/ton)Percentage of





Percentage of2007

2006

Change (%)

2007

2006

Change (%)Crude
    oil(1)


18,730



20,066



(6.7
)


3,594



3,487



3.1Natural gas (million cubic meter, RMB/000 cubic meter)


43,570



35,715



22.0



693



678



2.2Gasoline


27,003



23,899



13.0



5,168



5,035



2.6Diesel


54,377



48,516



12.1



4,668



4,411



5.8Kerosene


3,782



2,054



84.1



4,684



4,502



4.0Heavy oil


8,772



8,009



9.5



2,519



2,482



1.5Polyethylene


2,102



1,590



32.2



10,497



10,299



1.9Lubricant


2,378



2,059



15.5



6,420



6,433



(0.2
)     (1)
    
    The external sales volume of crude listed above is the crude oil
    produced by our company. 64




---



##### Table of Contents



Operating Expenses.
  Purchases, Services and Other
    Expenses.
  Employee Compensation
    Costs.
  Exploration Expenses.
  Depreciation, Depletion and
    Amortization.
  Selling, General and Administrative
    Expenses.
  Taxes other than Income Taxes.
  Income from Operations.
  Net Exchange Loss.
  Net Interest Expense.
  Income Before Income Taxes.
  Income Taxes.
 65




---



##### Table of Contents



Corporate Income
    Tax Law of the PRC
  Income for the Year Attributable to our
    Shareholders.
  Exploration
    and Production
  Total Revenues.
    Operating Expenses.
  Income from Operations.
  Refining
    and Marketing
  Total Revenues.
    Operating Expenses.
  Loss from Operations.
  Chemicals
    and Marketing
  Total Revenues.
 66




---



##### Table of Contents



Operating Expenses.
  Income from Operations.
  Natural
    Gas and Pipeline
  Total Revenues.
  Operating Expenses.
  Income from Operations.
 Liquidity
    and Capital Resources         67




---



##### Table of Contents



Year Ended December 31,2006

2007

2008(RMB in millions)Net cash generated by operating activities


200,692



205,243



170,506Net cash used for investing activities


(160,774
)


(185,486
)


(213,947
)Net cash generated by/used for financing activities


(71,643
)


(1,630
)


7,845Currency translation difference


(416
)


(221
)


(112
)Cash and cash equivalents at year end


50,746



68,652



32,944     Net Cash
    Generated by Operating Activities
      Net Cash
    Used for Investing Activities
     68




---



##### Table of Contents



Net Cash
    Generated by/Used for Financing Activities
        December 31,2006

2007

2008(RMB in millions)Short-term debt (including current portion of long-term debt)


35,919



30,934



92,761Long-term debt


35,790



39,688



32,827Total debt


71,709



70,622



125,588Less:Cash and cash equivalents


50,746



68,652



32,944Net debt


20,963



1,970



92,644        69




---



##### Table of Contents



Capital
    Expenditures and Investments
    20092006

2007

2008

Anticipated(RMB in



(RMB in



(RMB in



(RMB inmillions)

%

millions)

%

millions)

%

millions)

%Exploration and production


115,024



72.53



146,855



75.63



168,569



69.16



142,300



58.90Refining and marketing


19,206



12.11



26,546



13.67



20,274



8.32



27,500



11.38Chemicals and marketing


10,681



6.74



8,165



4.20



15,319



6.28



15,700



6.50Natural gas and pipeline


11,309



7.13



11,003



5.67



36,848



15.12



52,200



21.61Corporate and other


2,358



1.49



1,613



0.83



2,742



1.12



3,900



1.61Total


158,578



100.0



194,182



100.0



243,752



100.00



241,600



100.00       Exploration
    and Production
     70




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Refining
    and Marketing
      
    approximately RMB20,000 million for the construction and
    expansion of our refining facilities, mainly including the
    construction of large-sized refining projects in Dalian
    Petrochemical, Dushanzi Petrochemical, Guangxi Petrochemical and
    Fushun Petrochemical; and
    approximately RMB7,500 million for the construction of our
    distribution networks and storage facilities for oil products.  Chemicals
    and Marketing
      Natural
    Gas and Pipeline
      Others
     71




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Off-Balance
    Sheet Arrangements   Long-Term
    Contractual Obligations and Other Commercial
    Commitments and Payment Obligations      Payment Due by PeriodLess Than





AfterContractual Obligations

Total

1 Year

1-3 Years

3-5 Years

5 Years(RMB in millions)Long-term debt


38,371



5,544



20,720



2,129



9,978Capital lease obligations


















Operating leases


95,096



3,634



6,766



5,726



78,970Capital commitments


22,719



18,955



3,764







Unconditional purchase obligations


1,870



1,180



630



19



41Other long-term obligations


















Total contractual cash obligations


158,056



29,313



31,880



7,874



88,989   Amount of Commitment Expiration per PeriodTotalAmounts

Less Than





OverOther Commercial Commitments

Committed

1 Year

1-3 Years

3-5 Years

5 Years(RMB in millions)Lines of credit


















Standby letters of credit


















Guarantees


43







14



29



Total commercial commitments


43







14



29



     Year

Annual Payment(RMB in millions)2009


1,0002010


1,0002011


1,0002012


1,0002013


1,000   Assets
    Retirement Obligation
  The
    Environmental Protection Regulation for Oil and Gas Exploration
    and Production Activities in Heilongjiang Province The Environmental Protection Regulation for Oil and Gas
    Exploration and Production Activities in Gansu Province
 72




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Research
    and Development        Exploration
    and Production
    
    theories and technologies of crude oil and natural gas
    exploration;
    oil and gas development and surface engineering technology;
    oil and gas production and pipeline transportation; and
    security, energy conservation and environment protection.  Refining
    and Chemicals
    
    technology for clean refined oil products;
    core technology for heavy oil processing;
    technology for developing high quality and high value synthetic
    resin products;
    high performance synthetic rubber products; and
    production technology for low cost chemical raw materials. Trend
    Information   73




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Other
    Information  Inflation
    Related
    Party Transactions
    Recent
    Developments in IFRS
           74




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##### Table of Contents



value-in-use
    re-measured acquisition-by-acquisition
    Environmental
    Expenses and Capital Expenditures
   ITEM 6 
    DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES Directors,
    Senior Management and Supervisors  his/her
  
    convening shareholders meetings and reporting its work to
    the shareholders meetings;
    implementing the resolutions of the shareholders meetings;
    determining our business plans and investment plans;
    formulating our annual budget and final accounts; 75




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
    formulating our proposals for dividend and bonus distributions
    and for the increase or reduction of capital; and
    exercising other powers, functions and duties as conferred by
    our articles of association.    his/her
  
    attending board meetings;
    examining our financial affairs;
    examining balance sheets, profit and loss accounts, business
    reports, dividend distribution proposals and other financial
    information proposed at shareholders meetings by the
    directors from time to time; and
    overseeing the actions of our board of directors and our senior
    management personnel in carrying out their duties.      Name

Age

Position

Date of
    Election(1)Jiang Jiemin


53


Chairman of the board of directors


May 15, 2008Zhou Jiping


56


Vice Chairman of the board of directors and president


May 15, 2008Wang Yilin


52


Director


May 15, 2008Zeng Yukang


58


Director


May 15, 2008Wang Fucheng


58


Director


May 15, 2008Li Xinhua


55


Director


May 15, 2008Liao Yongyuan


46


Director and vice president


May 15, 2008Wang Guoliang


56


Director


May 15, 2008Jiang Fan


45


Director


May 15, 2008Chee-Chen Tung


66


Independent non-executive director


May 15, 2008Liu Hongru


78


Independent non-executive director


May 15, 2008Franco Bernabè


60


Independent non-executive director


May 15, 2008Li Yongwu


64


Independent non-executive director


May 15, 2008Cui Junhui


62


Independent non-executive director


May 15, 2008Li Huaiqi


59


Secretary to the board of directorsSun Longde


46


Vice presidentShen Diancheng


49


Vice presidentLiu Hongbin


45


Vice presidentZhou Mingchun


41


Chief financial officer 76




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##### Table of Contents



Name

Age

Position

Date of
    Election(1)Li Hualin


46


Vice presidentZhao Zhengzhang


52


Vice presidentLin Aiguo


50


Chief engineerWang Daofu


53


Chief geologistHuang Weihe


51


Chief engineerChen Ming


58


Chairman of the supervisory boardWen Qingshan


50


SupervisorSun Xianfeng


56


SupervisorYu Yibo


45


SupervisorWang Yawei


54


SupervisorQin Gang


55


SupervisorWang Shali


54


SupervisorWu Zhipan(2)


52


Independent supervisorLi Yuan


61


Independent supervisorWang
    Daocheng(3)


69


Independent supervisor     (1)
    
    For directors only.(2)
    
    No longer an independent supervisor since May 12, 2009.(3)
    
    Mr. Wang Daocheng has been acting as an independent supervisor
    since May 12, 2009.  Directors
  Jiang Jiemin,
  Zhou Jiping,
  Wang Yilin,
 77




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##### Table of Contents



Zeng Yukang,
  Wang Fucheng,
  Li Xinhua,
  Liao Yongyuan,
  Wang Guoliang,
 78




---



##### Table of Contents



Jiang Fan,
  Independent
    Non-executive Directors
  Chee-Chen Tung,
  Liu Hongru,
  Franco Bernabè,
 79




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##### Table of Contents



Li Yongwu,
  Cui Junhui,
  Secretary
    to the Board of Directors
  Li Huaiqi,
  Other
    Senior Management Personnel
  Sun Longde,
  Shen Diancheng,
 80




---



##### Table of Contents



Liu Hongbin,
  Zhou Mingchun,
  Li Hualin,
  Zhao Zhengzhang,
  Lin Aiguo,
 81




---



##### Table of Contents



Wang Daofu,
  Huang Weihe,
  Supervisors
  Chen Ming,
  Wen Qingshan,
  Sun Xianfeng,
 82




---



##### Table of Contents



Yu Yibo,
  Wang Yawei,
  Qin Gang,
  Wang Shali,
  Wu Zhipan,
  Li Yuan,
 83




---



##### Table of Contents



Wang Daocheng,
 Compensation  Senior
    Management Compensation System
    Directors
    and Supervisors Compensation
           84




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Board
    Practices    Audit
    Committee
    
    supervising the integrity of financial reporting process to
    ensure fair, transparent and true financial disclosure;
    reviewing and evaluating the effectiveness of the internal
    control and risk management framework;
    inspecting and supervising the effectiveness of the internal
    audit functions;
    reviewing and supervising the engagement and work of external
    auditors, including evaluating the performance of external
    auditors annually and raising proposals together with the
    supervisory board to the shareholders meetings with
    respect to the engagement, re-engagement and dismissal of
    external auditors and the compensation of such external auditors;
    receiving, keeping and dealing with complaints regarding
    accounting, internal control or auditing matters; and
    receiving and dealing with anonymous submissions and complaints
    by employees regarding accounting or auditing matters, and
    keeping such submission and complaints confidential, and other
    duties from time to time provided by applicable laws and
    regulations and Listing Rules of the market where the securities
    of our company listed.  Investment
    and Development Committee
    
    studying the long-term development strategies of the Company as
    proposed by our president and making recommendations to the
    board of directors;
    studying the annual investment budget and the adjustment
    proposal regarding the investment plan as proposed by our
    president and making recommendations to the board of directors;
    reviewing preliminary feasibility studies and feasibility
    studies for material investment and financing proposals,
    material capital operation projects and material asset operation
    projects subject to the approval of the board of directors and
    making recommendations to the board of directors.
    studying any other significant matters that may affect the
    development of the Company and making recommendations to the
    board of directors. 85




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##### Table of Contents



Evaluation
    and Remuneration Committee
    
    studying the criteria for and conducting the evaluation of the
    performance of the directors and the management members and
    making recommendations to the board of directors;
    studying and reviewing the director and management compensation
    policies and proposals, including the policies and proposals
    regarding the compensation payable to directors and senior
    management for their loss of positions or retirement;
    organizing the evaluation of the performance of our president
    and reporting the evaluation result to the board of directors,
    supervising the evaluation of the performance of our senior vice
    presidents, vice presidents, chief financial officer and other
    senior management members conducted under the leadership of the
    president; and
    studying our incentive plan, compensation plan and stock
    appreciation rights plan, supervising and evaluating the
    implementation of these plans and making recommendations for
    improvements to and perfection of such plans.  Health,
    Safety and Environment Committee
    
    supervising the effective implementation of our Health, Safety
    and Environmental Protection Plan (HSE Plan);
    making recommendations to the board of directors and our
    president for major decisions or major issues with respect of
    health, safety and environmental protection that may affect the
    Company; and
    inquiring the occurrence of and responsibilities for material
    accidents with respect to the operation, property and assets,
    employees and other facilities of the Company, and supervising
    the treatment of such accidents. Employees    Employees

% of TotalExploration and production


258,821



54.17Refining and marketing


127,493



26.68Chemicals and marketing


66,557



13.93Natural gas and pipeline


20,053



4.20Other(1)


4,856



1.02Total


477,780



100.0     (1)
    
    Including the numbers of employees of the management of our
    headquarters, specialized companies, PetroChina
    Exploration & Development Research Institute,
    PetroChina Planning & Engineering Institute,
    Petrochemical Research Institute and other units.   86




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Share
    Ownership     ITEM 7 
    MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS Major
    Shareholders        Percentageof theIssued Share

PercentageCapital of the

ofSame

the TotalNumber of Shares

Class of

ShareName of Shareholders

Class of Shares

Held

Shares (%)

Capital (%)CNPC


A shares



158,164,597,259



97.68



86.42  87




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##### Table of Contents



Percentage ofSuch Sharesin That Class

Percentage ofClass of



of the Issued

Total ShareName of Shareholder

Shares

Number of Shares

Share Capital (%)

Capital (%)CNPC


H shares



526,404,000
(1)


2.49



0.29JPMorgan Chase & Co.


H shares



1,352,047,500
(2)


6.41



0.74     (1)
    
    Held by Fairy King Investments Limited, an overseas wholly-owned
    subsidiary of CNPC.(2)
    
    Includes (i) 170,829,871 shares held by JPMorgan Chase
    & Co. through various subsidiaries in short position
    in its capacity as beneficial owner and
    (ii) 1,181,217,629 shares held by JPMorgan Chase
    & Co. through various subsidiaries in long position in
    its capacity as beneficial owner, investment manager and
    custodian/approved lending agent under Hong Kong laws. Related
    Party Transactions    One-off
    Related Party Transactions
  Acquisition
    of Northeastern Inspection, Maintenance and Repair Business
    Division of CNPC
    Acquisition
    of Refined Products Assets and Business of CNPC
    Indirect
    Acquisition of Equity Interest in CNPC (HK)
   88




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Acquisition
    of Assets of the Risk Operation Service Business of
    CNPC
    Acquisition
    of City Gas Business of CNPC
    Continuing
    Related Party Transactions
  Form 20-F
    Form 20-F
  Loans
    from Related Parties
   89




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Interests
    of Experts and Counsel   90




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ITEM 8 
    FINANCIAL INFORMATION Financial
    Statements    Dividend
    Policy
      
    general business conditions;
    our financial results;
    capital requirements;
    contractual restrictions on the payment of dividends by us to
    our shareholders or by our subsidiaries to us;
    our shareholders interests;
    the effect on our debt ratings; and
    other factors our board of directors may deem relevant.    
    recovery of losses, if any;
    allocations to the statutory common reserve fund; and
    allocations to a discretionary common reserve fund if approved
    by our shareholders.      
    providing our shareholders with a competitive return on
    investment; and
    assuring sufficient reinvestment of profits to enable us to
    achieve our strategic objectives. 91




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Significant
    Changes   92




---



##### Table of Contents



ITEM 9 
    THE OFFER AND LISTING Nature of
    the Trading Market and Market Price Information        Price Per H Share

Price Per ADS

Price Per A ShareHK$

US$

RMBHigh

Low

High

Low

High

LowAnnual Data2004


4.85



3.20



63.70



41.63







2005


7.35



4.025



94.50



51.65







2006


11.12



6.35



142.12



83.50







2007


19.90



8.57



263.70



109.55



43.96



29.242008


14.24



4.25



182.12



57.25



31.31



9.95Quarterly Data2007First quarter


11.08



8.57



137.90



109.55







Second quarter


11.90



8.89



152.05



112.14







Third quarter


14.74



9.83



185.58



125.92







Fourth quarter


19.90



13.46



263.70



172.43



43.96



29.242008First quarter


14.24



9.17



182.12



120.63



31.31



16.99Second quarter


12.12



9.77



156.97



125.92



18.35



14.94Third quarter


10.66



7.45



136.92



92.79



15.63



10.17Fourth quarter


8.14



4.25



104.30



57.25



12.19



9.952009First quarter


7.82



5.10



101.25



64.09



12.16



10.02Monthly Data2008November


6.39



5.41



83.55



64.30



11.91



10.29December


7.26



6.13



93.45



77.42



11.85



10.14 93




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##### Table of Contents



Price Per H Share

Price Per ADS

Price Per A ShareHK$

US$

RMBHigh

Low

High

Low

High

Low2009January


7.82



5.58



101.25



72.70



10.59



10.02February


6.60



5.53



84.65



70.87



12.16



10.35March


6.71



5.10



85.81



64.09



11.77



10.56April


6.99



6.11



89.81



80.98



11.94



11.22May (through May 15, 2009)


8.40



7.41



108.40



88.95



13.29



11.94    ITEM 10 
    ADDITIONAL INFORMATION Memorandum
    and Articles of Association  Our
    Articles of Association Currently in Effect
  Form 20-F.
  Objectives
    and Purposes
    Enforceability
    of Shareholders Rights
    
    between a holder of H Shares and us;
    between a holder of H Shares and any of our directors,
    supervisors, president, senior vice presidents, vice presidents,
    chief financial officer or other senior officers; or
    between a holder of H Shares and a holder of domestic shares,
    arising from any provision of the articles of association, any
    right or obligation conferred or imposed by the PRC Company Law
    or any other relevant law or administrative regulation which
    concerns our affairs must, with certain exceptions, be referred
    to arbitration at either the China International Economic and
    Trade Arbitration Commission in the PRC or the Hong Kong
    International Arbitration Center. Our articles of association
    provide that such arbitration will be final and conclusive.   94




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Restrictions
    on Transferability and the Share Register
      
    any relevant transfer fee is paid;
    the instrument of transfer is accompanied by the share
    certificates to which it relates, or such other evidence is
    given as may be reasonably necessary to show the right of the
    transferor to make the transfer;
    the instrument of transfer is in respect of one class of shares
    only; and
    the transfer is conducted in accordance with the laws and
    administrative regulations of or required by the securities
    exchanges on which the shares are listed.    he/she his/her
      30-day
 95




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Dividends
      
    recovery of losses, if any and the statutory common reserve fund
    is not enough to recover such losses;
    allocations to the statutory common reserve fund; and
    allocations to a discretionary common reserve fund if approved
    by the shareholders.        Voting
    Rights and Shareholders Meetings
    
    where the number of directors is less than the number stipulated
    in the PRC Company law or two-thirds of the number specified in
    our articles of association;
    where our unrecovered losses reach one-third of the total amount
    of our share capital;
    where shareholders individually or in the aggregate holding 10%
    or more of our issued and outstanding voting shares request in
    writing the convening of an extraordinary general meeting;
    where our board deems necessary or our supervisory board so
    request; or
    any other events provided by applicable laws, administrative
    regulations, rules or the articles of association of our company.   96




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##### Table of Contents




    an increase or reduction of our share capital or the issue of
    shares of any class, warrants and other similar securities;
    the issue of our debentures;
    our division, merger, dissolution and liquidation;
    amendments to our articles of association;
    any purchase or sale of significant assets or any guarantee
    provided by our company within one year exceeding 30% of our
    most recent audited aggregate assets; 97




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##### Table of Contents




    stock incentive plans; and
    any other matters required by applicable laws, administrative
    regulations or our articles of association, or considered by the
    shareholders in a general meeting and which they have resolved
    by way of an ordinary resolution to be of a nature which may
    have a material impact on us and should be adopted by special
    resolution.          Board
    of Directors
                           98




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##### Table of Contents



he/she his/her he/she he/she
    
    not to cause us to exceed the scope of business stipulated in
    our business license;
    to act honestly in our best interests;
    not to expropriate our property in any way, including, without
    limitation, usurpation of opportunities which benefit
    us; and
    not to expropriate the individual rights of shareholders,
    including, without limitation, rights to distributions and
    voting rights, save and except according to a restructuring
    which has been submitted to the shareholders for their approval
    in accordance with the articles of association.    
    a duty, in the exercise of such persons powers and
    discharge of such persons duties, to exercise the care,
    diligence and skill that a reasonably prudent person would
    exercise in comparable circumstances;
    a fiduciary obligation, in the exercise of our powers entrusted
    to him or her, not to place himself or herself in a position
    where his or her duty to us and his or her interests may
    conflict; and
    a duty not to direct a person or entity related or connected to
    a director, supervisor, president, vice president or senior
    officer in certain relationships enumerated in the articles of
    association to act in a manner which such director, supervisor,
    president, vice president or senior officer is prohibited from
    doing.    Supervisory
    Board
    
    to review the periodic reports prepared by the board of
    directors and issue written opinions in connection with such
    review; 99




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##### Table of Contents




    to verify financial reports and other financial information
    which have been prepared by the board and which are proposed to
    be presented at shareholders meetings;
    to oversee our directors, president, vice presidents and other
    senior officers in order to prevent such persons from abusing
    their authority or infringing upon our interest; and
    to contact with the directors on behalf of our company, or bring
    lawsuits against the directors, president, senior vice
    president, vice president, chief financial officer or any other
    executive officers pursuant to Article 152 of the PRC
    Company Law.        Restrictions
    on Large or Controlling Shareholders
    
    to relieve a director or supervisor from his or her duty to act
    honestly in our best interests;
    to approve the expropriation by a director or supervisor of our
    assets in any way, including, without limitation, opportunities
    which may benefit us; or
    to approve the expropriation by a director or supervisor of the
    individual rights of other shareholders, including, without
    limitation, rights to distributions and voting rights, except
    according to a restructuring of our company which has been
    submitted for approval by the shareholders in a general meeting
    in accordance with our articles of association.      
    is in a position to elect more than one-half of the board of
    directors;
    has the power to exercise, or to control the exercise of, 30% or
    more of our voting rights;
    holds 30% or more of our issued and outstanding shares; or
    has de facto control of us in any other way.   100




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Material
    Contracts  Form 20-F.
 Foreign
    Exchange Controls    
    debt service on foreign currency-denominated debt;
    purchases of imported equipment and materials; and
    payment of any dividends declared in respect of the H Shares.         Taxation    PRC
    Taxation
  Dividends
    and Individual Investors
     101




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##### Table of Contents



Dividends
    and Foreign Enterprises
  Enterprise Income Tax Law of the PRC Circular on Issues
    Concerning the Withholding of Corporate Income Tax by PRC
    Resident Enterprises from Dividends Payable to H Share
    Non-resident Corporate Shareholders
    Tax
    Treaties
    
    the United States;
    Australia;
    Canada;
    France;
    Germany;
    Japan;
    Malaysia;
    Singapore;
    the United Kingdom; and
    the Netherlands.    Capital
    Gains
   102




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##### Table of Contents



Additional
    PRC Tax Considerations
    United
    States Federal Income Taxation
    
    tax-exempt entities;
    certain insurance companies;
    broker-dealers;
    traders in securities that elect to mark to market;
    U.S. holders liable for alternative minimum tax;
    U.S. holders that own 10% or more of our voting stock;
    U.S. holders that hold the H Shares or ADSs as part of a
    straddle or a hedging or conversion transaction; or
    U.S. holders whose functional currency is not the
    U.S. dollar.   103




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##### Table of Contents




    a citizen or resident of the United States for United States
    federal income tax purposes;
    a corporation, or other entity treated as a corporation for
    United States federal income tax purposes, created or organized
    under the laws of the United States or any political subdivision
    thereof;
    an estate the income of which is subject to United States
    federal income tax without regard to its source; or
    a trust:  
    subject to the primary supervision of a United States court and
    the control of one or more United States persons; or
    that has elected to be treated as a United States person under
    applicable United States Treasury regulations.      We urge you to consult your tax advisors regarding the United
    States federal, state, local and
    non-United
    States tax consequences of the purchase, ownership and
    disposition of the H Shares or ADSs.
    Distributions
    on the H Shares or ADSs
    
    a foreign corporation that is eligible for the benefits of a
    comprehensive income tax treaty with the United States that
    includes an exchange of information program; or
    a foreign corporation if its stock with respect to which a
    dividend is paid (or ADSs backed by such stock) is readily
    tradable on an established securities market within the United
    States,     104




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##### Table of Contents



non-United
  Sale,
    Exchange or Other Disposition
      PFIC
    Rules
    
    75% or more of its gross income consists of passive income, such
    as dividends, interest, rents and royalties; or
    50% or more of the average quarterly value of its assets
    consists of assets that produce, or are held for the production
    of, passive income.     105




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##### Table of Contents



Backup
    Withholding and Information Reporting
    
    are a corporation or fall within various other exempt
    categories, and, when required, demonstrate this fact; or
    provide a correct taxpayer identification number on a properly
    completed IRS
    Form W-9
    or a substitute form, certify that you are exempt from backup
    withholding and otherwise comply with applicable requirements of
    the backup withholding rules.   Documents
    on Display  Form 20-F 1-800-SEC-0330
   106




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##### Table of Contents



Form 20-F.
 ITEM 11 
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
    RISK      Interest
    Rate Risk
    Foreign
    Exchange Rate Risk
      December 31,
    2008
  Percentageto TotalExpected Maturity Date

Long-Term

Fair2009

2010

2011

2012

2013

Thereafter

Total

Debt (%)

Value(RMB equivalent in millions, except percentages)Long term debtLoans in RMBFixed rate


2



2















3



7



0.02
%


5Average interest rate


0



7.47
%














0











Variable
    rate(1)


5,220



11,351



274



20







6,000



22,865



59.59
%


22,865Average interest rate


6.07
%


5.51
%


5.84
%


6.20
%






6.26
%










 107




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##### Table of Contents



Percentageto TotalExpected Maturity Date

Long-Term

Fair2009

2010

2011

2012

2013

Thereafter

Total

Debt (%)

Value(RMB equivalent in millions, except percentages)Loans in EurosFixed rate


15



17



17



16



16



126



207



0.54
%


147Average interest rate


2.11
%


2.12
%


2.12
%


2.12
%


2.12
%


2.10
%










Variable rate


































Average interest rate


































Loans in United States DollarsFixed rate


66



37



37



37



37



416



630



1.64
%


367Average interest rate


3.88
%


1.43
%


1.43
%


1.43
%


1.43
%


1.38
%










Variable rate


63



3,826



2,805



248



254



3,132



10,328



26.92
%


10,328Average interest rate


2.36
%


2.80
%


2.88
%


6.23
%


6.15
%


2.94
%










Loans in Japanese YenFixed rate


7



13



















20



0.05
%


19Average interest rate


2.42
%


2.42
%


























Variable rate


































Average interest rate


































Debentures in United States DollarsFixed rate


171



171



171











301



814



2.12
%


758Average interest rate


9.50
%


9.50
%


9.50
%










3.00
%










Debentures in RMBFixed rate










2,000







1,500







3,500



9.12
%


3,262Average interest rate










3.76
%






4.11
%














Total


5,544



15,417



5,304



321



1,807



9,978



38,371



100.00
%


37,751   December 31,
    2007
  Percentageto TotalExpected Maturity Date

Long-Term

Fair2008

2009

2010

2011

2012

Thereafter

Total

Debt (%)

Value(RMB equivalent in millions, except percentages)Long term debtLoans in RMBFixed rate


272







2







1







275



0.53
%


254Average interest rate


3.83
%






0







0















Variable
    rate(1)


7,280



5,220



11,182



10



20



8,700



32,412



62.45
%


32,412Average interest rate


5.49
%


5.07
%


5.46
%


6.89
%


6.89
%


5.84
%










Loans in EurosFixed rate


16



16



16



16



16



167



247



0.48
%


163Average interest rate


2.12
%


2.12
%


2.12
%


2.12
%


2.12
%


2.10
%










Variable rate


































Average interest rate


































Loans in United States DollarsFixed rate


137



79



45



39



39



468



807



1.56
%


539Average interest rate


5.25
%


3.62
%


1.44
%


1.43
%


1.43
%


1.38
%










Variable rate


4,234



249



2,629



77



3,431



2,867



13,487



25.99
%


13,487Average interest rate


4.92
%


5.33
%


5.07
%


5.50
%


7.40
%


5.12
%










 108




---



##### Table of Contents



Percentageto TotalExpected Maturity Date

Long-Term

Fair2008

2009

2010

2011

2012

Thereafter

Total

Debt (%)

Value(RMB equivalent in millions, except percentages)Loans in Japanese YenFixed rate


20



9



8















37



0.07
%


36Average interest rate


3.40
%


2.42
%


2.42
%






















Variable rate


































Average interest rate


































Debentures in United States DollarsFixed rate


241



181



184



183







334



1,123



2.17
%


1,123Average interest rate


10.83
%


9.50
%


9.50
%


9.50
%






3.30
%










Debentures in RMBFixed rate














2,000







1,500



3,500



6.75
%


2,981Average interest rate














3.76
%






4.11
%










Total


12,200



5,754



14,066



2,325



3,507



14,036



51,888



100.00
%


50,995   December 31,
    2006
  Percentageto TotalExpected Maturity Date

Long-Term

Fair2007

2008

2009

2010

2011

Thereafter

Total

Debt (%)

Value(RMB equivalent in millions, except percentages)Long term debtLoans in RMBFixed rate


62



272











1







335



0.59
%


320Average interest rate


4.45
%


3.83
%


























Variable
    rate(1)


13,740



7,280



5,220



1,142







7,590



34,972



61.84
%


34,972Average interest rate


5.21
%


5.35
%


4.64
%


5.01
%






5.07
%










Loans in EurosFixed rate


17



16



16



16



16



176



257



0.45
%


214Average interest rate


2.12
%


2.12
%


2.12
%


2.12
%


2.12
%


2.11
%










Variable rate


































Average interest rate


































Loans in United States DollarsFixed rate


568



146



73



41



41



562



1,431



2.53
%


1,200Average interest rate


7.69
%


5.12
%


3.96
%


1.43
%


1.43
%


1.39
%










Variable rate


4,697



4,198



706



297



82



3,217



13,197



23.34
%


13,197Average interest rate


5.67
%


6.76
%


5.95
%


5.79
%


4.72
%


5.77
%










Loans in British PoundsFixed rate


49























49



0.09
%


47Average interest rate


2.85
%






























Loans in Japanese YenFixed rate


37



21



9



8











75



0.13
%


78Average interest rate


4.25
%


3.40
%


2.42
%


2.42
%


















Variable rate


































Average interest rate


































 109




---



##### Table of Contents



Percentageto TotalExpected Maturity Date

Long-Term

Fair2007

2008

2009

2010

2011

Thereafter

Total

Debt (%)

Value(RMB equivalent in millions, except percentages)Debentures in United States DollarFixed Rate


205



20











781



343



1,349



2.39
%


1,403Average interest rate


13.48
%


15.00
%










9.50
%


3.00
%










Debentures in RMBFixed rate


1,388















2,000



1,500



4,888



8.64
%


4,449Average interest rate


4.49
%














3.76
%


4.11
%










Total


20,763



11,953



6,024



1,504



2,921



13,388



56,553



100.00
%


55,880     (1)
    
    Due to the declining interest rates in recent years in China,
    the PRC government has implemented a program to adjust interest
    rates on certain fixed RMB loans periodically to reflect the
    market rates in effect published by the Peoples Bank of
    China, or the PBOC, from time to time. As a result, these
    previously fixed RMB loans are categorized as variable rate
    loans as of December 31, 2006, 2007 and 2008. The newly
    adjusted rates usually become effective one year after the
    announcement by the PBOC. The average interest rates on these
    loans are calculated based on the then effective rates as of
    December 31, 2006, 2007 and 2008, respectively.  Commodity
    Price Risk
   ITEM 12 
    DESCRIPTION OF SECURITIES OTHER THAN EQUITY
    SECURITIES   PART II ITEM 13 
    DEFAULTS, DIVIDENDS ARREARAGES AND
    DELINQUENCIES   ITEM 14 
    MATERIAL MODIFICATIONS TO THE RIGHTS TO SECURITY HOLDERS AND
    USE OF PROCEEDS   ITEM 15 
    CONTROLS AND PROCEDURES  Evaluation
    of the Management on Disclosure Controls and
    Procedures
  Rules 13a-15(e)
 110




---



##### Table of Contents



Managements
    Report on Internal Control over Financial Reporting
  Rules 13a-15(f). Internal Control  Integrated Framework
      Changes
    in Internal Control over Financial Reporting
   ITEM 16A 
    AUDIT COMMITTEE FINANCIAL EXPERT  Form 20-F.
 ITEM 16B 
    CODE OF ETHICS    www.petrochina.com.cn,
       111




---



##### Table of Contents



ITEM 16C 
    PRINCIPAL ACCOUNTANT FEES AND SERVICES  Form 20-F.
      December 31,2007

2008RMB

RMB(In millions)Audit fees


119



95Audit-related fees






Tax fees






All other fees






Total


119



95       Audit
    Committee Pre-approved Policies and Procedures
    de minimis Rule 2-01 Regulation S-X.
 ITEM 16D 
    EXEMPTIONS FROM LISTING STANDARDS FOR AUDIT
    COMMITTEES  Rule 10A-3 Rule 10A-3.
 ITEM 16E 
    PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
    PURCHASERS   112




---



##### Table of Contents



ITEM 16F 
    CHANGE IN REGISTRANTS CERTIFYING
    ACCOUNTANT   ITEM 16G 
    CORPORATE GOVERNANCE      Director
    Independence
      Nominating/Corporate
    Governance Committee
    Compensation
    Committee
      Corporate
    Governance Guidelines
   113




---



##### Table of Contents




    director qualification standards and responsibilities;
    key board committee responsibilities;
    director compensation; and
    director orientation and continuing education    Code of
    Business Conduct and Ethics
  Form 20-F
  Certification
    Requirements
   PART III ITEM 17 
    FINANCIAL STATEMENTS   ITEM 18 
    FINANCIAL STATEMENTS  page F-1
 ITEM 19 
    EXHIBITS      114




---



##### Table of Contents



ExhibitNumber

Description of Exhibits1
.1

Articles of Association (as amended) (English
    translation)(5)1
.2

Articles of Association (as amended on May 15, 2008)
    (English
    translation)(5)4
.1

2009 Management Performance Contract (English Translation)4
.2

Risk Operation Service Business Assets Transfer Agreement, dated
    August 23, 2007, between CNPC and PetroChina (English
    Translation)(5)4
.3

Capital Injection Agreement Concerning CNPC Exploration and
    Development Company Limited, dated December 27, 2007, among
    CNODC, CNPC E&D and PetroChina (English
    Translation)(5)4
.4

Annual Crude Oil Mutual Supply Framework Agreement, dated
    December 19, 2008, between China Petroleum and Chemical
    Corporation and PetroChina (English translation)4
.5

Second Supplemental Agreement to Comprehensive products and
    Services Agreement, dated September 1, 2005, between CNPC
    and PetroChina (English
    translation)(2)4
.6

Supplementary Agreement to Comprehensive Products and Services
    Agreement, dated June 9, 2005, between CNPC and PetroChina
    (English
    Translation)(3)4
.7

Form of Non-competition Agreement between CNPC and PetroChina
    (together with English
    translation)(4)4
.8

Form of Comprehensive Products and Services Agreement between
    CNPC and PetroChina (together with English
    translation)(4)4
.9

Form of Land Use Rights Leasing Contract between CNPC and
    PetroChina (together with English
    translation)(4)4
.10

Form of Buildings Leasing Contract between CNPC and PetroChina
    (together with English
    translation)(4)4
.11

Form of Trademark Licensing Contract between CNPC and PetroChina
    (together with English
    translation)(4)4
.12

Form of Patent and Know-how Licensing Contract between CNPC and
    PetroChina (together with English
    translation)(4)4
.13

Form of Computer Software Licensing Contract between CNPC and
    PetroChina (together with English
    translation)(4)4
.14

Form of Contract for Transfer of Rights under Production Sharing
    Contracts between CNPC and PetroChina (together with English
    translation)(4)4
.15

Form of Guarantee of Debts Contract between CNPC and PetroChina
    (together with English
    translation)(4)4
.16

Form of Contract for the Supervision of Certain Sales
    Enterprises between CNPC and PetroChina (together with English
    translation)(4)4
.17

Form of Agreement for Transfer of Rights and Interests under the
    Crude Oil Premium and Discount Calculation Agreement between
    China Petrochemical Corporation, CNPC and PetroChina (together
    with English
    translation)(4)4
.18

Form of Agreement for the Transfer of Rights and Interests under
    the Retainer Contracts relating to Oil Exploration and
    Exploitation in Lengjiapu Area, Liaohe Oil Region and
    No. 9.1-9.5
    Areas, Karamay Oil Field (together with English
    translation)(4)4
.19

Share Purchase Agreement in respect of the shares of
    PetroKazakhstan, dated August 23, 2006, between Pervinage
    Holding B.V. (a wholly owned subsidiary of CNPC E&D) and
    819 Luxembourg S. a r. l. (an indirect wholly owned subsidiary
    of
    CNPC)(1)4
.20

Inspection and Maintenance Business Equity and Assets Transfer
    Agreement, dated April 28, 2008, between CNPC and
    Petrochina (English translation)4
.21

Assets Transfer Agreement, date June 10, 2008, between
    Petrochina and CNPC (English translation)4
.22

Agreement for the Sale and Purchase of Shares in Sun World
    Limited, dated August 27, 2008, among Petrochina, CNPC and
    China Petroleum Hong Kong (Holding) Limited (English translation)4
.23

Form of Risk Operation Service Business Assets Transfer
    Agreements, dated August November 19, 2008, among six
    branch companies of Petrochina and six subordinate enterprises
    of CNPC (English translation) 115




---



##### Table of Contents



ExhibitNumber

Description of Exhibits4
.24

Equity Interests Transfer Agreement, dated May 15, 2009,
    between PetroChina Kunlun Gas Limited and China Petroleum
    Pipeline Bureau; Form of Equity Interests Transfer Agreements,
    dated May 15, 2009, between PetroChina Kunlun Gas Limited
    and China Huayou Group Corporation; Assets Transfer Agreement,
    dated May 15, 2009, between PetroChina Kunlun Gas Limited
    and China Huayou Group Corporation (English translation)8
.1

List of major subsidiaries12
.1

Certification of Chief Executive Officer required by
    Section 302 of the Sarbanes-Oxley Act of 200212
.2

Certification of Chief Financial Officer required by
    Section 302 of the Sarbanes-Oxley Act of 200213
.1

Certification of Chief Executive Officer required by
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 200213
.2

Certification of Chief Financial Officer required by
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 200216
.1

Code of Ethics for Senior
    Management(3)16
.2

Code of Ethics for
    Employees(3)     (1)
    
    Incorporated by reference to our annual report on
    Form 20-F
    for the fiscal year ended December 31, 2006
    (File No. 1-15006)
    filed with the Commission.(2)
    
    Incorporated by reference to our annual report on
    Form 20-F
    for the fiscal year ended December 31, 2005
    (File No. 1-15006)
    filed with the Commission.(3)
    
    Incorporated by reference to our annual report on
    Form 20-F
    for the fiscal year ended December 31, 2004
    (File No. 1-15006)
    filed with the Commission.(4)
    
    Incorporated by reference to our Registration Statement on
    Form F-1
    (File No. 333-11566)
    filed with the Commission, as declared effective on
    March 29, 2000.(5)
    
    Incorporated by reference to our annual report on
    Form 20-F
    for the fiscal year ended December 31, 2007
    (File No. 1-15006)
    filed with the Commission. 116




---



##### Table of Contents



SIGNATURE
  Form 20-F
    
  Name:
    Li HuaiqiTitle:
    Secretary to Board of Directors   117




---



##### Table of Contents



INDEX OF
    CONSOLIDATED FINANCIAL STATEMENTS
 PagePetroChina Company Limited and its SubsidiariesConsolidated Financial StatementsManagements Report on Internal Control Over
    Financial Reporting


F-2Report of Independent Registered Public
    Accounting Firm


F-3Consolidated Statements of Income for each of the
    three years in the period ended December 31, 2008


F-4Consolidated Balance Sheets as of
    December 31, 2007 and 2008


F-5Consolidated Statements of Cash Flows for each of
    the three years in the period ended December 31, 2008


F-6Consolidated Statements of Changes in Equity for
    each of the three years in the period ended December 31,
    2008


F-8Notes to the Consolidated Financial Statements


F-9Supplementary information on Oil and Gas
    Exploration and Production Activities (unaudited)


F-58  F-1




---



##### Table of Contents



Managements
    Report on Internal Control over Financial Reporting  Rules 13a-15(f). Internal Control  Integrated Framework
     F-2




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM    Internal Control  Integrated
    Framework
          F-3




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITEDCONSOLIDATED STATEMENTS OF INCOMEFor the Years Ended December 31, 2006, 2007 and 2008
    (Amounts in millions)
  Year Ended December 31,2006

2007Notes

(Note 35)

(Note 35)

2008RMB

RMB

RMBREVENUESSales and other operating revenues




690,512



836,353



1,071,146OPERATING EXPENSESPurchases, services and other




(269,301
)


(369,219
)


(562,122
)Employee compensation costs

6


(39,292
)


(50,863
)


(62,065
)Exploration expenses, including exploratory dry holes




(18,827
)


(20,956
)


(21,879
)Depreciation, depletion and amortization




(62,155
)


(67,274
)


(94,603
)Selling, general and administrative expenses




(43,402
)


(52,257
)


(59,457
)Taxes other than income taxes

7


(57,208
)


(73,792
)


(124,115
)Other (expenses)/incomes, net




(430
)


(1,221
)


12,395TOTAL OPERATING EXPENSES




(490,615
)


(635,582
)


(911,846
)INCOME FROM OPERATIONS




199,897



200,771



159,300FINANCE COSTSExchange gain




2,028



1,808



1,774Exchange loss




(1,756
)


(2,559
)


(2,855
)Interest income




2,148



2,099



2,274Interest expense

8


(3,273
)


(3,604
)


(2,963
)TOTAL NET FINANCE COSTS




(853
)


(2,256
)


(1,770
)INCOME FROM EQUITY AFFILIATES AND JOINTLY CONTROLLED
    ENTITIES

18


1,706



6,442



4,299INCOME BEFORE INCOME TAXES




200,750



204,957



161,829INCOME TAXES

9


(50,602
)


(49,781
)


(35,178
)INCOME FOR THE YEAR




150,148



155,176



126,651ATTRIBUTABLE TO:EQUITY HOLDERS OF THE COMPANY




143,511



146,750



114,431MINORITY INTEREST




6,637



8,426



12,220150,148



155,176



126,651BASIC AND DILUTED NET INCOME PER SHARE FOR INCOME
    ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY DURING THE YEAR
    (RMB)

10


0.80



0.82



0.63NUMBER OF SHARES

10


179,021



179,700



183,021DIVIDENDSInterim dividends declared during the year

11


36,307



36,823



24,127Final dividends proposed after the balance sheet date

11


27,694



28,708



27,36764,001



65,531



51,494    F-4




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITEDCONSOLIDATED BALANCE SHEETSAs of December 31, 2007 and 2008
    (Amounts in millions)
  At December 31,2007Notes

(Note 35)

2008RMB

RMBASSETSCURRENT ASSETSCash and cash equivalents


12



68,652



32,944Time deposits with maturities over three months but within one
    year






18,885



10,425Notes receivable


13



4,735



4,314Accounts receivable


14



18,565



16,756Inventories


15



88,496



90,670Prepaid expenses and other current assets


16



36,216



69,364TOTAL CURRENT ASSETS






235,549



224,473NON-CURRENT ASSETSProperty, plant and equipment, less accumulated depreciation,
    depletion and amortization


17



765,933



898,909Investments in equity affiliates and jointly controlled entities


18



26,219



28,886Available-for-sale financial assets


19



2,699



2,022Advance operating lease payments


20



23,434



26,201Intangible and other assets


21



8,488



10,677Deferred tax assets


25



305



496Time deposits with maturities over one year






5,053



2,510TOTAL NON-CURRENT ASSETS






832,131



969,701TOTAL ASSETS






1,067,680



1,194,174LIABILITIES AND EQUITYCURRENT LIABILITIESShort-term debts


23



30,934



92,761Accounts payable and accrued liabilities


22



145,393



156,390Income taxes payable






11,762



1,262Other taxes payable






11,133



13,924TOTAL CURRENT LIABILITIES






199,222



264,337NON-CURRENT LIABILITIESLong-term debts


23



39,688



32,827Other long-term obligations






1,035



1,162Asset retirement obligations


24



24,761



36,262Deferred tax liabilities


25



20,874



12,460TOTAL NON-CURRENT LIABILITIES






86,358



82,711TOTAL LIABILITIES






285,580



347,048EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANYA shares


26



161,922



161,922H shares


26



21,099



21,099Share capital, issued and outstanding, RMB1.00 Par value


26



183,021



183,021Retained earnings






333,779



378,600Capital reserve


27



53,362



53,362Revaluation reserve


27



79,946



79,946Statutory Common Reserve Fund


27



102,696



115,466Special Reserve  Safety Fund Reserve


27



3,536



6,750Currency translation differences


27



(1,545
)


(2,717
)Other reserves


27



(16,591
)


(23,590
)MINORITY INTEREST






43,896



56,288TOTAL EQUITY






782,100



847,126TOTAL LIABILITIES AND EQUITY






1,067,680



1,194,174    F-5




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITEDCONSOLIDATED STATEMENTS OF CASH FLOWSFor the Years Ended December 31, 2006, 2007 and 2008
    (Amounts in millions)
  Year Ended December 31,2006

2007Notes

(Note 35)

(Note 35)

2008RMB

RMB

RMBCASH FLOWS FROM OPERATING ACTIVITIESIncome for the year




150,148



155,176



126,651Adjustments for:Income taxes

9


50,602



49,781



35,178Depreciation, depletion and amortization




62,155



67,274



94,603Capitalized exploratory costs charged to expense

17


9,494



9,161



10,341Income from equity affiliates and jointly controlled entities




(1,706
)


(6,442
)


(4,299
)Allowance for doubtful receivables, net

14, 16


(316
)


(2,321
)


1Write down in inventories, net




140



55



8,593Impairment of available-for-sale financial assets, net




32







30Impairment of investments in equity affiliates and jointly
    controlled entities








5



29Loss on disposal of property, plant and equipment




1,753



1,808



2,596Loss/(Gain) on disposal of intangible and other assets




192



(2
)


19(Gain)/Loss on disposal of equity affiliates and jointly
    controlled entities

18


(10
)


(320
)


3Gain on disposal of available-for-sale financial assets

19


(3
)


(142
)


(5
)Gain on disposal of a subsidiary












(259
)Dividend income




(210
)


(126
)


(251
)Interest income




(2,148
)


(2,099
)


(2,274
)Interest expense

8


3,273



3,604



2,963Advance payments on long-term operating leases




(5,694
)


(4,803
)


(4,675
)Changes in working capital: accounts receivable and prepaid expenses and other
    current assets




(1,797
)


(16,051
)


(26,767
) inventories




(13,448
)


(12,041
)


(10,771
) accounts payable and accrued liabilities




4,667



19,844



(5,685
)CASH FLOWS GENERATED FROM OPERATIONS




257,124



262,361



226,021Interest received




2,076



2,072



2,362Interest paid




(3,753
)


(4,163
)


(3,984
)Income taxes paid




(54,755
)


(55,027
)


(53,893
)NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES




200,692



205,243



170,506    F-6




---



##### Table of Contents



PETROCHINA COMPANY LIMITED
  CONSOLIDATED STATEMENTS OF CASH FLOWS 
    (Continued)
    For the Years Ended December 31, 2006, 2007 and 2008
    (Amounts in millions)
  Year Ended December 31,2006

2007Notes

(Note 35)

(Note 35)

2008RMB

RMB

RMBCASH FLOWS FROM INVESTING ACTIVITIESCapital expenditures






(131,186
)


(173,268
)


(215,416
)Acquisition of equity affiliates and a jointly controlled entity






(1,173
)


(1,903
)


(3,619
)Acquisition of available-for-sale financial assets






(62
)


(328
)


(23
)(Acquisition)/Consolidation of PetroKazakhstan Inc.






(21,376
)


1,542



Net proceeds of investments in collateralized loans with
    maturities not greater than three months






235







Acquisition of intangible assets and other non-current assets






(3,064
)


(3,378
)


(3,909
)Purchase of minority interest






(4,735
)


(178
)


(177
)Acquisition of Sun World Limited


35











(6,693
)Repayment of capital by equity affiliates and jointly controlled
    entities






99



6,618



Proceeds from disposal of property, plant and equipment






378



1,014



435Proceeds from disposal of equity affiliates and jointly
    controlled entities






69



1,033



67Proceeds from disposal of subsidiaries














535Proceeds from disposal of available-for-sale financial assets






4



276



52Proceeds from disposal of intangible and other non-current assets






2







37Dividends received






1,325



1,111



4,095(Increase)/Decrease in time deposits with maturities over three
    months






(1,290
)


(18,025
)


10,669NET CASH FLOWS USED FOR INVESTING ACTIVITIES






(160,774
)


(185,486
)


(213,947
)CASH FLOWS FROM FINANCING ACTIVITIESRepayments of short-term debts






(29,343
)


(33,183
)


(83,841
)Repayments of long-term debts






(18,552
)


(24,218
)


(14,196
)Dividends paid to minority interest






(1,660
)


(4,829
)


(2,738
)Dividends paid to equity holders of the Company


11



(68,589
)


(64,517
)


(52,835
)Dividends paid to Sun World Limited equity holder from Sun World
    Limited pre-acquisition














(791
)Issuance of A shares


26







66,243



Increase in short-term debts






30,183



36,842



152,768Increase in long-term debts






14,877



20,650



4,472Capital contribution from minority interest






1,492



1,349



8,768Capital reduction of subsidiaries














(3,754
)(Decrease)/Increase in other long-term obligations






(51
)


33



(8
)NET CASH FLOWS USED FROM /(FOR) FINANCING ACTIVITIES






(71,643
)


(1,630
)


7,845TRANSLATION OF FOREIGN CURRENCY






(416
)


(221
)


(112
)(Decrease)/Increase in cash and cash equivalents






(32,141
)


17,906



(35,708
)Cash and cash equivalents at beginning of the year


12



82,887



50,746



68,652Cash and cash equivalents at end of the year


12



50,746



68,652



32,944    F-7




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITEDCONSOLIDATED STATEMENTS OF CHANGES IN
    EQUITY
    For the Years Ended December 31, 2006, 2007 and 2008
    (Amounts in millions)
  Minority

TotalAttributable to Equity Holders of the Company

Interest

EquityShare

RetainedCapital

Earnings

Reserves

SubtotalRMB

RMB

RMB

RMB

RMB

RMBBalance at December 31, 2005


179,021



203,812



132,556



515,389



28,278



543,667Acquisition of Sun World Limited (Note 35)






2,471



81



2,552



101



2,653Balance at January 1, 2006


179,021



206,283



132,637



517,941



28,379



546,320Fair value loss from available-for-sale financial assets










(1
)


(1
)


(1
)


(2
)Currency translation differences










(283
)


(283
)


(294
)


(577
)Net loss recognized directly in equity










(284
)


(284
)


(295
)


(579
)Income for the year ended December 31, 2006






143,511







143,511



6,637



150,148Total recognized income/(loss) for 2006






143,511



(284
)


143,227



6,342



149,569Transfer to reserves






(13,355
)


13,355











Final dividends for 2005






(32,282
)






(32,282
)






(32,282
)Interim dividends for 2006 (Note 11)






(36,307
)






(36,307
)






(36,307
)Dividends to minority interest


















(1,654
)


(1,654
)Purchase from minority interest of listed subsidiaries
    (Note 35)










(2,156
)


(2,156
)


(2,579
)


(4,735
)Capital contribution from minority interest


















1,492



1,492Other


















(231
)


(231
)Balance at December 31, 2006


179,021



267,850



143,552



590,423



31,749



622,172Fair value gain from available-for-sale financial assets










286



286



22



308Currency translation differences










(938
)


(938
)


(914
)


(1,852
)Net loss recognized directly in equity










(652
)


(652
)


(892
)


(1,544
)Income for the year ended December 31, 2007






146,750







146,750



8,426



155,176Total recognized income/(loss) for 2007






146,750



(652
)


146,098



7,534



153,632Transfer to reserves (Note 27)






(12,768
)


12,768











Special Reserve  Safety Fund Reserve
    (Note 27)






(3,536
)


3,536











Final dividend for 2006 (Note 11)






(27,694
)






(27,694
)






(27,694
)Interim dividend for 2007 (Note 11)






(36,823
)






(36,823
)






(36,823
)Dividends to minority interest


















(4,823
)


(4,823
)Purchase from minority interest of subsidiaries (Note 35)










(113
)


(113
)


(65
)


(178
)Issuance of A shares


4,000







62,243



66,243







66,243Consolidation of PetroKazakhstan Inc.


















8,101



8,101Capital contribution from minority interest


















1,349



1,349Other










70



70



51



121Balance at December 31, 2007


183,021



333,779



221,404



738,204



43,896



782,100Fair value loss from available-for-sale financial assets










(237
)


(237
)


(36
)


(273
)Currency translation differences










(1,172
)


(1,172
)


(1,504
)


(2,676
)Net loss recognized directly in equity










(1,409
)


(1,409
)


(1,540
)


(2,949
)Income for the year ended December 31, 2008






114,431







114,431



12,220



126,651Total recognized income/(loss) for 2008






114,431



(1,409
)


113,022



10,680



123,702Transfer to reserves (Note 27)






(12,770
)


12,770











Special Reserve  Safety fund reserve (Note 27)






(3,214
)


3,214











Final dividends for 2007 (Note 11)






(28,708
)






(28,708
)






(28,708
)Interim dividends for 2008 (Note 11)






(24,127
)






(24,127
)






(24,127
)Dividends to Sun World Limited equity holder from Sun World
    Limited pre-acquisition






(791
)






(791
)






(791
)Dividends to minority interest


















(2,776
)


(2,776
)Capital reduction of subsidiaries










(61
)


(61
)


(3,693
)


(3,754
)Acquisition of Sun World Limited (Note 35)










(6,693
)


(6,693
)






(6,693
)Purchase of minority interest in subsidiaries










(17
)


(17
)


(160
)


(177
)Capital contribution from minority interest


















8,768



8,768Disposal of subsidiaries


















(429
)


(429
)Other










9



9



2



11Balance at December 31, 2008


183,021



378,600



229,217



790,838



56,288



847,126    F-8




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts in millions unless otherwise stated)
  1  ORGANIZATION
    AND PRINCIPAL ACTIVITIES
      2  BASIS
    OF PREPARATION
      3  SUMMARY
    OF PRINCIPAL ACCOUNTING POLICIES
  (a)  Basis
    of consolidation
       F-9




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
      (b)  Investments
    in equity affiliates
      (c)  Investments
    in jointly controlled entities
      (d)  Transactions
    with minority interest
    (e)  Foreign
    currencies
     F-10




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
      (f)  Property,
    plant and equipment
              Buildings


8-40 yearsEquipment and Machinery


4-30 yearsMotor vehicles


4-14 yearsOther


5-12 years          F-11




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
    (g)  Oil
    and gas properties
        (h)  Intangible
    assets
    (i)  Financial
    assets
   F-12




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
    (i)  Loans
    and receivables
    (ii)  Available-for-sale
    financial assets
      (j)  Leases
      (k)  Related
    parties
     F-13




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
  (l)  Inventories
    (m)  Accounts
    receivable
    (n)  Cash
    and cash equivalents
    (o)  Accounts
    payable
    (p)  Debts
        (q)  Taxation
     F-14




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
      (r)  Revenue
    recognition
      (s)  Provisions
      (t)  Research
    and development
    (u)  Retirement
    benefit plans
   F-15




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
    (v)  Share-based
    compensation  Share appreciation rights
    (w)  New
    accounting developments
          value-in-use
    acquisition-by-acquisition
 F-16




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
      4  FINANCIAL
    RISK AND CAPITAL MANAGEMENT
  4.1  Financial
    risk factors
    (a)  Market
    risk
  (i)  Foreign
    exchange risk
    (ii)  Interest
    rate risk
      (iii)  Price
    risk
    (b)  Credit
    risk
     F-17




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
        (c)  Liquidity
    risk
        4.2  Capital
    management
        4.3  Fair
    value estimation
      5  CRITICAL
    ACCOUNTING ESTIMATES AND JUDGEMENTS
     F-18




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
  (a)  Estimation
    of oil and natural gas reserves
    (b)  Estimation
    of impairment of property, plant and equipment
    (c)  Estimation
    of asset retirement obligations
    6  EMPLOYEE
    COMPENSATION COSTS
  Year Ended December 31,2006

2007

2008RMB

RMB

RMBWages, salaries and allowances


26,752



32,798



38,933Social security costs


12,540



18,065



23,13239,292



50,863



62,065     7  TAXES
    OTHER THAN INCOME TAXES
   F-19




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
  8  INTEREST
    EXPENSE
  Year Ended December 31,2006

2007

2008RMB

RMB

RMBInterest on loans


3,792



4,136



3,966Accretion expense (Note 24)


796



1,202



1,746Less: amounts capitalized


(1,315
)


(1,734
)


(2,749
)3,273



3,604



2,963     9  INCOME
    TAXES
  Year Ended December 31,2006

2007

2008RMB

RMB

RMBCurrent taxes


51,839



48,975



43,393Deferred taxes (Note 25)


(1,237
)


806



(8,215
)50,602



49,781



35,178    F-20




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
    Year Ended December 31,2006

2007

2008RMB

RMB

RMBIncome before income taxes


200,750



204,957



161,829Tax calculated at tax rates of 33% (2006 and 2007) and 25%
    (2008)


66,247



67,636



40,457Prior year tax return adjustment


243



451



25Effect of income taxes from international operations in excess
    of taxes at the PRC statutory tax rate


1,503



633



6,876Effect of preferential tax rate


(14,280
)


(17,008
)


(10,895
)Effect of changes in statutory tax rates on deferred taxes






(3,788
)


(3,134
)Tax effect of income not subject to tax


(1,193
)


(2,838
)


(1,358
)Tax effect of taxable items deductible not expensed






(2,365
)


Tax effect of expenses not deductible for tax purposes


2,483



4,142



3,207Tax effect of unused tax losses which had expired






2,918



Tax effect of temporary differences in relation to certain crude
    oil sales which no longer existed at year end


(4,401
)






Income taxes


50,602



49,781



35,178   10  BASIC
    AND DILUTED NET INCOME PER SHARE
         F-21




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
  11  DIVIDENDS
  Year Ended December 31,2006

2007

2008RMB

RMB

RMBInterim dividends attributable to equity holders of the Company
    for 2006 (Note (i))


36,307







Final dividends attributable to equity holders of the Company
    for 2006 (Note (ii))


27,694







Interim dividends attributable to equity holders of the Company
    for 2007 (Note (iii))






36,823



Final dividends attributable to equity holders of the Company
    for 2007 (Note (iv))






28,708



Interim dividends attributable to equity holders of the Company
    for 2008 (Note (v))










24,127Final dividends attributable to equity holders of the Company
    for 2008 (Note (vi))










27,36764,001



65,531



51,494     (i)
    
    Interim dividends attributable to equity holders of the Company
    in respect of 2006 of RMB0.202806 yuan per share amounting to a
    total of RMB36,307 were accounted for in equity as an
    appropriation of retained earnings in the year ended
    December 31, 2006, and were paid on September 26, 2006.(ii)
    
    Final dividends attributable to equity holders of the Company in
    respect of 2006 of RMB0.154699 yuan per share amounting to a
    total of RMB27,694 were approved by the shareholders in the
    Annual General Meeting on May 16, 2007 and accounted for in
    equity as an appropriation of retained earnings in the year
    ended December 31, 2007, and were paid on June 1, 2007.(iii)
    
    Interim dividends attributable to equity holders of the Company
    in respect of 2007 of RMB0.205690 yuan per share amounting to a
    total of RMB36,823 were accounted for in equity as an
    appropriation of retained earnings in the year ended
    December 31, 2007, and were paid on September 28, 2007.(iv)
    
    Final dividends attributable to equity holders of the Company in
    respect of 2007 of RMB0.156859 yuan per share amounting to a
    total of RMB28,708 were approved by the shareholders in the
    Annual General Meeting on May 15, 2008 and accounted for in
    equity as an appropriation of retained earnings in the year
    ended December 31, 2008, and were paid on June 13,
    2008.(v)
    
    Interim dividends attributable to equity holders of the Company
    in respect of 2008 of RMB0.13183 yuan per share amounting to a
    total of RMB24,127 were accounted for in equity as an
    appropriation of retained earnings in the year ended
    December 31, 2008, and were paid on October 16, 2008.(vi)
    
    At the meeting on March 25, 2009, the Board of Directors
    proposed final dividends attributable to equity holders of the
    Company in respect of 2008 of RMB0.14953 yuan per share
    amounting to a total of RMB27,367. These consolidated financial
    statements do not reflect this dividend payable as the final
    dividends were proposed after the balance sheet date and will be
    accounted for in equity as an appropriation of retained earnings
    in the year ending December 31, 2009 when approved by the
    Companys shareholders.  12  CASH
    AND CASH EQUIVALENTS
   F-22




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
  13  NOTES RECEIVABLE
    14  ACCOUNTS
    RECEIVABLE
  At December 31,2007

2008RMB

RMBAccounts receivable due from third parties


15,442



12,784Accounts receivable due from related parties


6,002



6,394Less: Provision for impairment of accounts receivable


(2,879
)


(2,422
)18,565



16,756       At December 31,2007

2008RMB

RMBWithin 1 year


18,406



16,509Between 1 to 2 years


39



155Between 2 to 3 years


32



25Over 3 years


2,967



2,48921,444



19,178       Year Ended December 31,2006

2007

2008RMB

RMB

RMBAt beginning of the year


3,998



3,257



2,879Reversal of provision for impairment of accounts receivable, net


(126
)


(90
)


(69
)Amount written off against allowance


(615
)


(288
)


(388
)At end of the year


3,257



2,879



2,422  F-23




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
  15  INVENTORIES
  At December 31,2007

2008RMB

RMBCrude oil and other raw materials


30,324



31,305Work in progress


6,083



3,472Finished goods


52,804



65,072Spare parts and consumables


32



3189,243



99,880Less: Write down in inventories


(747
)


(9,210
)88,496



90,670       16  PREPAID
    EXPENSES AND OTHER CURRENT ASSETS
  At December 31,2007

2008RMB

RMBOther receivables


9,472



7,808Amounts due from related parties


19,586



17,743Advances to suppliers


10,745



21,58239,803



47,133Less: Allowance for doubtful receivables


(4,079
)


(3,938
)35,724



43,195Value-added tax recoverable






25,677Prepaid expenses


304



275Other current assets


188



21736,216



69,364      F-24




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
    Year Ended December 31,2006

2007

2008RMB

RMB

RMBBalance at beginning of the year


6,814



6,506



4,079(Write back)/Provision, net


(190
)


(2,231
)


70Amount written off against allowance


(118
)


(196
)


(211
)Balance at end of the year


6,506



4,079



3,938   17  PROPERTY,
    PLANT AND EQUIPMENT
  EquipmentOil and Gas

and

Motor



ConstructionYear Ended December 31, 2007

Buildings

Property

Machinery

Vehicles

Other

in Progress

TotalRMB

RMB

RMB

RMB

RMB

RMB

RMBCost or valuationAt beginning of the year


80,309



582,433



307,845



12,120



7,976



73,950



1,064,633Additions


2,983



7,883



2,299



3,237



293



170,405



187,100Transfers


8,778



87,528



25,916







885



(123,107
)


Consolidation of PetroKazakhstan Inc.


184



8,119



247



170



136



1,310



10,166Disposals or write offs


(1,585
)


(8,539
)


(2,443
)


(423
)


(265
)


(9,161
)


(22,416
)Currency translation differences


(77
)


(1,635
)


(133
)


(11
)


(19
)


(237
)


(2,112
)At end of the year


90,592



675,789



333,731



15,093



9,006



113,160



1,237,371Accumulated depreciation and impairmentAt beginning of the year


(19,280
)


(237,822
)


(147,787
)


(6,533
)


(4,381
)


(297
)


(416,100
)Charge for the year


(5,034
)


(37,022
)


(19,940
)


(1,215
)


(775
)


(5
)


(63,991
)Disposals or write offs or transfers


1,459



4,687



1,073



344



102



17



7,682Currency translation differences


10



915



26



6



14







971At end of the year


(22,845
)


(269,242
)


(166,628
)


(7,398
)


(5,040
)


(285
)


(471,438
)Net book valueAt end of the year


67,747



406,547



167,103



7,695



3,966



112,875



765,933   F-25




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
  EquipmentOil and Gas

and

Motor



ConstructionYear Ended December 31, 2008

Buildings

Properties

Machinery

Vehicles

Other

in Progress

TotalRMB

RMB

RMB

RMB

RMB

RMB

RMBCost or valuationAt beginning of the year


90,592



675,789



333,731



15,093



9,006



113,160



1,237,371Additions


1,005



14,382



3,694



2,793



288



220,089



242,251Transfers


10,257



106,838



32,261







920



(150,276
)


Disposals or write offs


(2,308
)


(3,945
)


(3,611
)


(492
)


(222
)


(10,341
)


(20,919
)Currency translation differences


(247
)


(3,023
)


(380
)


(67
)


(106
)


(348
)


(4,171
)At end of the year


99,299



790,041



365,695



17,327



9,886



172,284



1,454,532Accumulated depreciation and impairmentAt beginning of the year


(22,845
)


(269,242
)


(166,628
)


(7,398
)


(5,040
)


(285
)


(471,438
)Charge for the year


(5,852
)


(50,827
)


(31,828
)


(1,446
)


(942
)


(1
)


(90,896
)Disposals or write offs or transfers


1,005



1,868



2,034



339



214



20



5,480Currency translation differences


58



968



109



36



59



1



1,231At end of the year


(27,634
)


(317,233
)


(196,313
)


(8,469
)


(5,709
)


(265
)


(555,623
)Net book valueAt end of the year


71,665



472,808



169,382



8,858



4,177



172,019



898,909          F-26




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
  18  INVESTMENTS
    IN EQUITY AFFILIATES AND JOINTLY CONTROLLED ENTITIES
    Net Income/

InterestCountry of

Assets

Liabilities

Revenues

(Loss)

Held

Type ofName

Incorporation

RMB

RMB

RMB

RMB

%

ShareAs of or for the year ended December 31, 2008:Dalian West Pacific Petrochemical Co., Ltd.

PRC


10,433



13,182



41,643



(5,660
)


28.44



ordinaryChina Marine Bunker (PetroChina) Co., Ltd.

PRC


6,619



3,972



43,037



392



50.00



ordinaryAs of or for the year ended December 31, 2007:Dalian West Pacific Petrochemical Co., Ltd.

PRC


14,233



10,890



35,575



610



28.44



ordinaryChina Marine Bunker (PetroChina) Co., Ltd.

PRC


6,254



4,012



34,060



274



50.00



ordinaryPetroKazakhstan Inc.(i)

Canada










18,450



6,902



67.00



ordinary     (i)
    
    Through a supplementary agreement between the Group and the
    minority shareholder of PetroKazakhstan Inc. (first acquired by
    the Group on December 28, 2006 and accounted for using the
    equity method of accounting up to December 11, 2007), the
    Group gained control over PetroKazakhstan Inc. from
    December 12, 2007. Therefore, as of the date it acquired
    control over PetroKazakhstan Inc., the Group now accounts for
    its investment in PetroKazakhstan Inc. as a subsidiary in
    accordance with IFRS 3, Business combinations.      19  AVAILABLE-FOR-SALE
    FINANCIAL ASSETS
  At December 31,2007

2008RMB

RMBAvailable-for-sale financial assets


3,186



2,481Less: Impairment losses


(487
)


(459
)2,699



2,022      F-27




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
  20  ADVANCE
    OPERATING LEASE PAYMENTS
  At December 31,2007

2008RMB

RMBLand use rights


14,411



16,887Advance lease payments


9,023



9,31423,434



26,201     21  INTANGIBLE
    AND OTHER ASSETS
  At December 31,2007

2008Accumulated





AccumulatedCost

amortization

Net

Cost

amortization

NetRMB

RMB

RMB

RMB

RMB

RMBPatents


2,801



(1,523
)


1,278



3,071



(1,729
)


1,342Technical know-how


288



(131
)


157



372



(174
)


198Other


5,391



(1,360
)


4,031



7,093



(2,108
)


4,985Intangible assets


8,480



(3,014
)


5,466



10,536



(4,011
)


6,525Other assets










3,022











4,1528,488











10,677        F-28




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
  22  ACCOUNTS
    PAYABLE AND ACCRUED LIABILITIES
  At December 31,2007

2008RMB

RMBTrade payables


40,567



29,431Advances from customers


9,846



10,800Salaries and welfare payable


11,585



6,363Accrued expenses


5



13Dividends payable by subsidiaries to minority shareholders


67



61Interest payable


65



82Construction fee and equipment cost payables


30,784



46,310One-time employee housing remedial payment payable


221



6Other payables


11,228



15,428Amounts due to related parties


41,025



47,896145,393



156,390         At December 31,2007

2008RMB

RMBWithin 1 year


39,125



27,878Between 1 to 2 years


819



843Between 2 to 3 years


307



243Over 3 years


316



46740,567



29,431   23  DEBTS
  (a)  Short-term
    debts
  At December 31,2007

2008RMB

RMBBank loans secured


320



1,500 unsecured


18,363



24,970Loans from CNPC and a fellow CNPC subsidiary


50



60,746Other


1



118,734



87,217Current portion of long-term debts


12,200



5,54430,934



92,761  F-29




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
  (b)  Long-term
    debts
  At December 31,Interest rates and final maturities

2007

2008RMB

RMBRenminbi  denominated debts:Bank loans for the development of oil fields and construction of
    refining plants

Floating interest rate at 7.05% per annum as of December 31,
    2008, with maturities through 2010


6,720



200Bank loans for working capital

Floating interest rates ranging from 5.67%  to 6.20% per annum
    as of December 31, 2008, with maturities through 2012


6,030



6,030Loans from CNPC and a fellow CNPC subsidiary for the development
    of oil fields and construction of refining plants

Floating interest rates ranging from 5.04% to 6.26% per annum as
    of December 31, 2008, with maturities through 2032


19,862



16,181Working capital loans from fellow CNPC subsidiaries

Majority floating interest rate at 5.83% per annum as of
    December 31, 2008, with maturities through 2011


70



456Working capital loans

Fixed interest rate at 6.32% per annum as of December 31, 2008,
    with no fixed repayment terms


5



5Corporate debenture for the development of oil and gas properties

Fixed interest rates ranging from 3.76% to 4.11% per annum as of
    December 31, 2008, with maturities through 2013


3,500



3,500US Dollar  denominated debts:Bank loans for the development of oil fields and construction of
    refining plants

Fixed interest rates ranging from zero to 8.66% per annum as of
    December 31, 2008, with maturities through 2038


403



278Bank loans for the development of oil fields and construction of
    refining plants

Floating interest rates ranging from LIBOR plus 0.50% to LIBOR
    plus 3.00% per annum as of December 31, 2008, with maturities
    through 2014


4,927



3,825Bank loans for working capital

Floating interest rates ranging from LIBOR plus 0.30% to LIBOR
    plus 0.40% per annum as of December 31, 2008, with maturities
    through 2010


2,630



2,392Bank loans for acquisition of overseas oil and gas properties

Floating interest rate at LIBOR plus 0.55% per annum as of
    December 31, 2008, with maturities through 2009


821



 F-30




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
  At December 31,Interest rates and final maturities

2007

2008RMB

RMBLoans from a fellow CNPC subsidiary for the development of oil
    fields and construction of refining plants

Floating interest rate at LIBOR plus 0.40% per annum as of
    December 31, 2008, with maturities through 2020


4,171



2,691Loans from a fellow CNPC subsidiary for working capital

Floating interest rate at 8.00% per annum as of December 31,
    2008, with maturities through 2015


329



851Loans for the development of oil fields and construction of
    refining plants

Fixed interest rate at 1.55% per annum as of December 31, 2008,
    with maturities through 2022


404



352Loans for working capital

Floating interest rates ranging from 3.89% to 5.00% per annum as
    of December 31, 2008, with no fixed repayment terms


609



569Corporate debenture for the development of oil fields and
    construction of refining plants

Fixed interest rate at 3.00% per annum as of December 31, 2008,
    with maturities through 2019


335



301Corporate debenture for the development of oil and gas properties

Fixed interest rate at 9.50% per annum as of December 31, 2008,
    with maturities through 2011


730



513Corporate debenture for the development of oil and gas properties

Fixed interest rate at 15.00% per annum as of December 31, 2008,
    with maturities through 2008


58



Japanese Yen  denominated debts:Bank loans for the development of oil fields and construction of
    refining plants

Fixed interest rates at 2.42% per annum as of December 31, 2008,
    with maturities through 2010


37



20Euro  denominated debts:Bank loans for the development of oil fields and construction of
    refining plants

Fixed interest rates ranging from 2.00% to 2.30% per annum as of
    December 31, 2008, with maturities through 2023


247



207Total long-term debts


51,888



38,371Less: Current portion of long-term debts


(12,200
)


(5,544
)39,688



32,827    F-31




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
        At December 31,2007

2008RMB

RMBTotal debts: interest free


60



53 at fixed rates


11,940



84,236 at floating rates


58,622



41,29970,622



125,588Weighted average effective interest rates: bank loans


5.54
%


4.14
% loans from CNPC and a fellow CNPC subsidiary


5.17
%


4.32
% other loans


3.64
%


3.05
% corporate debentures


4.87
%


4.51
%     Carrying Amountsat December 31,2007

2008RMB

RMBBank loans


21,815



12,952Loans from CNPC and a fellow CNPC subsidiary


24,432



20,179Corporate debentures


4,623



4,314Other


1,018



92651,888



38,371   Fair Valuesat December 31,2007

2008RMB

RMBBank loans


21,580



12,754Loans from CNPC and a fellow CNPC subsidiary


24,428



20,179Corporate debentures


4,104



4,020Other


883



79850,995



37,751  F-32




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
      At December 31,2007

2008RMB

RMBFirst year


12,200



5,544Second year


5,754



15,417Third year


14,065



5,304Fourth year


2,325



321Fifth year


3,508



1,807Thereafter


14,036



9,97851,888



38,371   24  ASSET
    RETIREMENT OBLIGATIONS
  Year Ended December 31,2006

2007

2008RMB

RMB

RMBAt beginning of the year


14,187



18,481



24,761Liabilities incurred


3,589



4,818



10,033Consolidation of PetroKazakhstan Inc.






385



Liabilities settled


(105
)


(110
)


(169
)Accretion expense (Note 8)


796



1,202



1,746Currency translation differences


14



(15
)


(109
)At end of the year


18,481



24,761



36,262       25  DEFERRED
    TAX
   F-33




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
   Year Ended December 31,2006

2007

2008RMB

RMB

RMBAt beginning of the year


21,217



19,978



20,569Transfer to income statement (Note 9)


(1,237
)


806



(8,215
)Credit/(charge) directly to equity






87



(67
)Consolidation of PetroKazakhstan Inc.






(174
)


Currency translation differences


(2
)


(128
)


(364
)Others










41At end of the year


19,978



20,569



11,964    At December 31,2007

2008RMB

RMBDeferred tax assetsCurrentProvisions, primarily for receivables and inventories


5,391



9,164Tax losses of subsidiaries


95



294Non-currentShut down of manufacturing assets and impairment of long-term
    assets


3,172



4,580Other


1,702



885Total deferred tax assets


10,360



14,923Deferred tax liabilitiesCurrentNon-currentAccelerated tax depreciation


30,445



24,607Other


484



2,280Total deferred tax liabilities


30,929



26,887Net deferred tax liabilities


20,569



11,964    At December 31,2007

2008RMB

RMBDeferred tax assets:


305



496Deferred tax liabilities:


20,874



12,46020,569



11,964    F-34




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
  26  SHARE
    CAPITAL
  At December 31,2007

2008RMB

RMBRegistered, issued and fully paid:A shares


161,922



161,922H shares


21,099



21,099183,021



183,021   Year Ended December 31,Number of Shares of the Company (Millions)

2006

2007

2008RMB

RMB

RMBBeginning balance


179,021



179,021



183,021Issuance of shares






4,000



Ending balance


179,021



183,021



183,021                F-35




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
  27  RESERVES
  Year Ended December 31,2007

2008RMB

RMBRevaluation ReserveBeginning balance


79,946



79,946Ending balance


79,946



79,946Capital ReserveBeginning balance


(8,881
)


53,362Issuance of shares (Note 26)


66,243



Ending balance


53,362



53,362Statutory Common Reserve Fund(note a)Beginning balance


89,928



102,696Transfer from retained earnings


12,768



12,770Ending balance


102,696



115,466Special Reserve-Safety Fund ReserveBeginning balance






3,536Transfer from retained earnings


3,536



3,214Ending balance


3,536



6,750Currency translation differencesBeginning balance


(607
)


(1,545
)Currency translation differences


(938
)


(1,172
)Ending balance


(1,545
)


(2,717
)Other reservesBeginning balance


(16,834
)


(16,591
)Purchase from minority interest in subsidiaries


(113
)


(17
)Acquisition of Sun World Limited






(6,693
)Capital reduction of a subsidiary






(61
)Fair value gain/(loss) of available-for-sale financial assets


286



(237
)Other


70



9Ending balance


(16,591
)


(23,590
)221,404



229,217     (a)
    
    Pursuant to the PRC regulations and the Companys Articles
    of Association, the Company is required to transfer 10% of its
    net income, as determined under the PRC accounting regulations,
    to a Statutory Common Reserve Fund (Reserve Fund).
    Appropriation to the Reserve Fund may cease when the fund
    aggregates to 50% of the Companys registered capital. The
    transfer to this reserve must be made before distribution of
    dividends to shareholders.The Reserve Fund shall only be used to make good previous
    years losses, to expand the Companys production
    operations, or to increase the capital of the Company. Upon
    approval of a resolution of shareholders in a general
    meeting, the Company may convert its Reserve Fund into share
    capital and issue bonus shares to F-36




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
  existing shareholders in proportion to their original
    shareholdings or to increase the nominal value of each share
    currently held by them, provided that the balance of the Reserve
    Fund after such issuance is not less than 25% of the
    Companys registered capital.(b)
    
    According to the relevant PRC regulations, the distributable
    reserve is the lower of the retained earnings computed under PRC
    accounting regulations and IFRS. As of December 31, 2007
    and 2008, the Companys distributable reserve amounted to
    RMB257,086 and RMB316,708 which was computed under PRC
    accounting regulations, respectively.  28  PENSIONS
    29  CONTINGENT
    LIABILITIES
  (a)  Bank
    and other guarantees
    (b)  Environmental
    liabilities
    (c)  Legal
    contingencies
  
  (d)  Leasing
    of roads, land and buildings
      (e)  Group
    insurance
   F-37




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
      30  COMMITMENTS
  (a)  Operating
    lease commitments
    At December 31,2007

2008RMB

RMBNo later than 1 year


3,397



3,634Later than 1 year and no later than 5 years


11,978



12,492Later than 5 years


79,026



78,97094,401



95,096     (b)  Capital
    commitments
    (c)  Exploration
    and production licenses
      RMB2009


1,0002010


1,0002011


1,0002012


1,0002013


1,000  F-38




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
  31  MAJOR
    CUSTOMERS
    Year Ended December 31,2006

2007Percentage



Percentage

2008of total



of total



% to TotalRevenue

revenue

Revenue

revenue

Revenue

revenueRMB

%

RMB

%

RMB

%China Petroleum & Chemical Corporation


44,028



6



50,292



6



57,594



5CNPC and its subsidiaries


27,714



4



31,325



4



46,645



471,742



10



81,617



10



104,239



9   32  RELATED
    PARTY TRANSACTIONS
             F-39




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
        (a)  Bank
    deposits
  At December 31,Note

2007

2008RMB

RMBBank depositsCP Finance

(i)


8,393



8,424State-controlled banks and other financial institutions




67,741



26,52676,134



34,950   Year Ended December 31,Note

2006

2007

2008RMB

RMB

RMBInterest income from bank depositsCP Finance

(i)


81



159



114State-controlled banks and other financial institutions




1,819



1,042



1,1811,900



1,201



1,295     (i)
    
    CP Finance is a subsidiary of CNPC and a non-bank financial
    institution established with the approval from the Peoples
    Bank of China. The deposits yield interest at prevailing saving
    deposit rates. F-40




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
   (b)  Sales
    of goods and services
  Year Ended December 31,2006

2007

2008RMB

RMB

RMBSales of goodsEquity affiliates and jointly controlled entities Crude Oil


5,023



2,374



 Refined Products


19,779



18,628



14,194 Chemical Products


90



753



175CNPC and its subsidiaries Crude Oil


1,546



1,766



6,163 Refined Products


16,847



16,806



18,514 Chemical Products


5,691



7,161



10,216 Natural Gas


1,346



1,835



2,051 Other


277



339



401Other state-controlled enterprises Crude Oil


39,632



47,597



56,551 Refined Products


68,370



58,903



87,806 Chemical Products


8,979



10,849



5,564 Natural Gas


7,713



9,882



12,830175,293



176,893



214,465     Year Ended December 31,2006

2007

2008RMB

RMB

RMBSales of servicesCNPC and its subsidiaries


2,007



3,418



9,300Other state-controlled enterprises


7,761



8,497



4,1489,768



11,915



13,448    F-41




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
  (c)  Purchases
    of goods and services
  Year Ended December 31,Notes

2006

2007

2008RMB

RMB

RMBPurchases of goods

(i)Equity affiliates and jointly controlled entities




9,868



29,239



8,284Other state-controlled enterprises




50,995



58,726



52,028Purchases of servicesEquity affiliates and jointly controlled entities




126



136



128CNPC and its subsidiaries Fees paid for construction and technical services

(ii) exploration and development services

(iii)


51,441



61,110



59,451 other construction and technical services

(iv)


32,256



37,063



64,742 Fees for production services

(v)


29,963



35,958



65,471 Social services charges

(vi)


2,301



2,229



2,440 Ancillary services charges

(vii)


2,458



2,635



2,587 Commission expense and other charges

(viii)


1,241



1,178



1,350Other state-controlled enterprises

(ix)


7,703



3,546



8,896188,352



231,820



265,377     (i)
    
    Purchases of goods principally represent the purchases of raw
    materials, spare parts and low cost consumables at market prices.(ii)
    
    Under the Comprehensive Products and Services Agreement entered
    into between CNPC and the Company, certain construction and
    technical services provided by CNPC are charged at actual cost
    plus a margin of not more than 15%, including exploration and
    development services and oilfield construction services.(iii)
    
    Direct costs for exploration and development services comprise
    geophysical survey, drilling, well cementing, logging and well
    testing, etc.(iv)
    
    The fees paid for other construction and technical services
    comprise fees for construction of refineries and chemical plants
    and technical services in connection with oil and gas
    exploration and production activities such as oilfield
    construction, technology research, engineering and design, etc.(v)
    
    The fees paid for production services comprise fees for the
    repair of machinery, supply of water, electricity and gas at the
    state-prescribed prices, provision of services such as
    communications, transportation, fire fighting, asset leasing,
    environmental protection and sanitation, maintenance of roads,
    manufacture of replacement parts and machinery etc. are at cost
    or market prices.(vi)
    
    These represent expenditures for social welfare and support
    services which are charged at cost.(vii)
    
    Ancillary service charges represent mainly fees for property
    management, the provision of training centers, guesthouses,
    canteens, public shower rooms, etc., at market prices.(viii)
    
    CNPC purchases materials on behalf of the Company and charges
    commission thereon. The commission is calculated at rates
    ranging from 1% to 5% of the goods purchased.(ix)
    
    Purchases of services from other state-controlled enterprises
    principally represent the purchases of construction and
    technical services at market prices. F-42




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
   (d)  Purchases
    of assets
  Year Ended December 31,2006

2007

2008RMB

RMB

RMBPurchases of assetsEquity affiliates and jointly controlled entities


2







CNPC and its subsidiaries


1,795



2,395



3,576Other state-controlled enterprises


6,617



5,840



2,5138,414



8,235



6,089     (e)  Year-end
    balances arising from sales/purchases of
    goods/services/assets
  At December 31,2007

2008RMB

RMBAccounts receivable from related parties at the end of the yearEquity affiliates and jointly controlled entities


296



12Fellow subsidiaries (CNPC Group)


3,796



4,870Other state-controlled enterprises


1,910



1,5126,002



6,394Less: Allowance for doubtful accounts receivableFellow subsidiaries (CNPC Group)


(189
)


(145
)Other state-controlled enterprises


(708
)


(692
)(897
)


(837
)5,105



5,557Prepayments and other receivables from related parties at the
    end of the yearEquity affiliates and jointly controlled entities


2,412



1,077Fellow subsidiaries (CNPC Group)


10,365



14,877Other state-controlled enterprises


6,809



1,78919,586



17,743Less: Allowance for doubtful receivablesEquity affiliates and jointly controlled entities


(39
)


(129
)Fellow subsidiaries (CNPC Group)


(22
)


(9
)Other state-controlled enterprises


(79
)


(106
)(140
)


(244
)19,446



17,499 F-43




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
  At December 31,2007

2008RMB

RMBAccounts payable and accrued liabilities to related parties at
    the end of the yearEquity affiliates and jointly controlled entities


117



245Parent (CNPC)


922



963Fellow subsidiaries (CNPC Group)


32,845



40,913Other state-controlled enterprises


7,141



5,77541,025



47,896   Year Ended December 31,2006

2007

2008RMB

RMB

RMBNet changes in allowance for doubtful accounts receivable from
    related parties charged/(credited) to the consolidated
    statements of incomeEquity affiliates and jointly controlled entities


5



(5
)


Fellow subsidiaries (CNPC Group)


(11
)


(32
)


(11
)Other state-controlled enterprises


(52
)






(2
)(58
)


(37
)


(13
)Net changes in allowance for doubtful receivables from related
    parties charged/(credited) to the consolidated statements of
    incomeEquity affiliates and jointly controlled entities


(20
)


(173
)


96Fellow subsidiaries (CNPC Group)


(32
)


18



Other state-controlled enterprises


12



(218
)


27(40
)


(373
)


123  F-44




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
  (f)  Leases
  Year Ended December 31,Notes

2006

2007

2008RMB

RMB

RMBAdvance operating lease payments paid to related parties

(i)Other state-controlled enterprises




49



88



2449



88



24Other operating lease payments paid to related partiesParent (CNPC)

(ii)


2,276



2,292



2,376Other state-controlled enterprises




16



21



2,292



2,313



2,376     (i)
    
    Advance operating lease payments principally represent the
    advance payments for the long-term operating lease of land and
    gas stations at prices prescribed by local governments or market
    prices.(ii)
    
    Other operating lease payments to CNPC principally represent the
    rental paid for the operating lease of land and buildings at the
    prices prescribed in the Land Use Rights Leasing Contract, the
    Buildings Leasing Contract and Supplemental Buildings Leasing
    Agreement with CNPC.  At December 31,2007

2008RMB

RMBOperating lease payable to related partiesParent (CNPC)


16



1016



10   (g)  Loans
  Year Ended December 31,Loans to Related Parties

2007

2008RMB

RMBLoans to equity affiliates:Beginning of the year


1,800



1,853Loans advanced during year


366



158Loans repaid


(322
)


(1,759
)Interest charged


129



8Interest received


(120
)


(6
)End of the year


1,853



254       F-45




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
  Year Ended December 31,Loans from related parties

Notes

2007

2008RMB

RMBLoans from CNPC and a fellow CNPC subsidiary:

(i)Beginning of the year




27,184



24,493Loans received during year




7,238



85,766Loans repaid




(9,575
)


(28,904
)Interest charged




1,377



1,640Interest paid




(1,388
)


(1,623
)Currency translation differences




(343
)


(419
)End of the year




24,493



80,953Loans from state-controlled banks and other financial
    institutions:

(ii)Beginning of the year




32,810



34,263Loans received during year




38,320



47,204Loans repaid




(36,335
)


(51,042
)Interest charged




1,869



1,543Interest paid




(1,875
)


(1,549
)Currency translation differences




(526
)


(729
)End of the year




34,263



29,690Loans from other related parties:

(iii)Beginning of the year




5



5Loans received during year








Loans repaid








Interest charged








Interest paid








Currency translation differences








End of the year




5



5     (i)
    
    The loans from CNPC and fellow CNPC subsidiaries are mainly with
    interest rates ranging from 4.46% to 7.47% and 1.94% to 8.00%
    per annum as of December 31, 2007 and 2008, respectively
    with maturities through 2032.(ii)
    
    The loans from state-controlled banks and other financial
    institutions are mainly with interest rates ranging from zero to
    8.66% and zero to 8.66% per annum as of December 31, 2007
    and 2008, respectively with maturities through 2038.(iii)
    
    The loans from other related parties are mainly with interest
    rate at 6.32% and 6.32% per annum as of December 31, 2007
    and 2008 respectively, and with no fixed repayment terms.     F-46




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
  (h)  Key
    management compensation
  Year Ended December 31,2006

2007

2008RMB000

RMB000

RMB000Emoluments and other benefits


7,857



10,273



10,581Contribution to retirement benefit scheme


298



345



4448,155



10,618



11,025   (i)  Contingent
    liabilities
    (j)  Collateral
    for debts
        33  EMOLUMENTS
    OF DIRECTORS AND SUPERVISORS
    2008

2007

2008Fee for

Salaries,Directors

Allowances

Contributionand

and Other

to RetirementName

Supervisors

Benefits

Benefit Scheme

Total

Total

TotalRMB000

RMB000

RMB000

RMB000

RMB000

RMB000Chairman:Mr. Chen Geng(ii)


















598



797Mr. Jiang Jiemin


















916



722















1,514



1,519Vice Chairman:Mr. Zhou Jiping






495



20



515







Executive directors:Mr. Su Shulin(i)






















684Mr. Duan Wende(iv)






353



13



366



824



684Mr. Liao Yongyuan






836



33



869











1,189



46



1,235



824



1,368 F-47




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
  2008

2007

2008Fee for

Salaries,Directors

Allowances

Contributionand

and Other

to RetirementName

Supervisors

Benefits

Benefit Scheme

Total

Total

TotalRMB000

RMB000

RMB000

RMB000

RMB000

RMB000Non-executive directors:Mr. Wang Yilin






















Mr. Zeng Yukang






















Mr. Wang Fucheng






















Mr. Wang Guoliang






















Mr. Li Xinhua






















Mr. Jiang Fan






548



21



569



499



461Mr. Chee-chen Tung


249











249



264



275Mr. Liu Hongru


343











343



349



279Mr. Li Yongwu (iii)


197











197







Mr. Cui Junhui


331











331







Mr. Franco Bernabè


243











243



257



2591,363



548



21



1,932



1,369



1,274Supervisors:Mr. Chen Ming






















Mr. Wen Qingshan






















Mr. Sun Xianfeng






















Mr. Yu Yibo






















Mr. Xu Fengli(ii)


















264



459Mr. Wang Yawei






















Mr. Qin Gang






490



31



521



469



295Ms. Wang Shali






















Mr. Li Yongwu(iii)


110











110



315



330Mr. Zhang Jinzhu(iv)






193



13



206



333



Mr. Wu Zhipan


234











234



319



330Mr. Li Yuan


124











124







468



683



44



1,195



1,700



1,4141,831



2,915



131



4,877



5,407



5,575     (i)
    
    No longer a director since November 24, 2006.(ii)
    
    No longer a director or supervisor since May 16, 2007.(iii)
    
    Elected as an independent non-executive director in May 16,
    2008 and no longer a supervisor since then.(iv)
    
    No longer an executive director or a supervisor since
    May 16, 2008. F-48




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
     2008

2007

2006Number

Number

NumberRMB Nil-RMB 1 million


25



20



20               34  SEGMENT
    INFORMATION
               F-49




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
      Primary
    reporting format  business segments
  Exploration

Refining

Chemicals

Naturaland

and

and

Gas andYear Ended December 31, 2006

Production

Marketing

Marketing

Pipeline

Other

TotalRMB

RMB

RMB

RMB

RMB

RMBSales and other operating revenues


425,641



543,299



82,791



38,917



1,080



1,091,728Less: Intersegment sales


(342,386
)


(44,806
)


(7,983
)


(5,617
)


(424
)


(401,216
)Total sales and other operating revenues from external customers


83,255



498,493



74,808



33,300



656



690,512Depreciation, depletion and amortization


(37,692
)


(12,235
)


(6,417
)


(5,263
)


(548
)


(62,155
)Segment result


234,470



(5,361
)


8,208



9,470



(3,058
)


243,729Other costs


(12,689
)


(23,803
)


(3,150
)


(484
)


(3,706
)


(43,832
)Income/(loss) from operations


221,781



(29,164
)


5,058



8,986



(6,764
)


199,897Finance costs






















(853
)Income from equity affiliates and jointly controlled entities


1,318



333



38



1



16



1,706Income before income taxes






















200,750Income taxes






















(50,602
)Income for the year






















150,148Interest income


4,935



1,471



634



157



7,171



14,368Less: Intersegment interest income






















(12,220
)Interest income from external entities






















2,148Interest expense


(5,096
)


(3,790
)


(679
)


(1,614
)


(4,314
)


(15,493
)Less: Intersegment interest expense






















12,220Interest expense to external entities






















(3,273
)Segment assets


491,161



246,828



79,964



75,432



638,616



1,532,001Elimination of intersegment balances






















(686,285
)Investments in equity affiliates and jointly controlled entity


26,996



5,587



153



20



69



32,825Total assets






















878,541 F-50




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
  Exploration

Refining

Chemicals

Naturaland

and

and

Gas andYear Ended December 31, 2006

Production

Marketing

Marketing

Pipeline

Other

TotalRMB

RMB

RMB

RMB

RMB

RMBSegment capital expenditure  for property, plant and
    equipment


105,691



19,206



10,681



11,309



2,358



149,245Segment liabilities


182,938



116,002



27,092



43,616



170,152



539,800Other liabilities






















44,023Elimination of intersegment balances






















(327,454
)Total liabilities






















256,369   Exploration

Refining

Chemicals

Naturaland

and

and

Gas andYear Ended December 31, 2007

Production

Marketing

Marketing

Pipeline

Other

TotalRMB

RMB

RMB

RMB

RMB

RMBSales and other operating revenues


471,928



670,844



102,718



50,066



1,718



1,297,274Less: Intersegment sales


(378,888
)


(63,766
)


(11,009
)


(6,610
)


(648
)


(460,921
)Total sales and other operating revenues from external customers


93,040



607,078



91,709



43,456



1,070



836,353Depreciation, depletion and amortization


(43,582
)


(11,196
)


(5,923
)


(5,926
)


(647
)


(67,274
)Segment result


221,995



9,329



13,256



13,057



(3,388
)


254,249Other costs


(14,492
)


(30,009
)


(5,425
)


(562
)


(2,990
)


(53,478
)Income/(loss) from operations


207,503



(20,680
)


7,831



12,495



(6,378
)


200,771Finance costs






















(2,256
)Income from equity affiliates and jointly controlled entities


5,905



477



41



2



17



6,442Income before income taxes






















204,957Income taxes






















(49,781
)Income for the year






















155,176Interest income


7,455



2,021



804



122



8,846



19,248Less: Intersegment interest income






















(17,149
)Interest income from external entities






















2,099Interest expense


(7,501
)


(4,695
)


(901
)


(1,720
)


(5,936
)


(20,753
)Less: Intersegment interest expense






















17,149Interest expense to external entities






















(3,604
) F-51




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
  Exploration

Refining

Chemicals

Naturaland

and

and

Gas andYear Ended December 31, 2007

Production

Marketing

Marketing

Pipeline

Other

TotalRMB

RMB

RMB

RMB

RMB

RMBSegment assets


556,608



274,435



94,976



80,252



819,153



1,825,424Elimination of intersegment balances






















(784,268
)Investments in equity affiliates and jointly controlled entities


21,023



4,973



138



17



68



26,219Other assets






















305Total assets






















1,067,680Segment capital expenditure  for property, plant and
    equipment


135,060



26,546



8,165



11,003



1,613



182,387Segment liabilities


226,676



145,263



33,389



39,790



188,774



633,892Other liabilities






















43,769Elimination of intersegment balances






















(392,081
)Total liabilities






















285,580   Exploration

Refining

Chemicals

Naturaland

and

and

Gas andYear Ended December 31, 2008

Production

Marketing

Marketing

Pipeline

Other

TotalRMB

RMB

RMB

RMB

RMB

RMBSales and other operating revenues


624,909



886,472



110,850



63,315



1,418



1,686,964Less: Intersegment sales


(500,522
)


(96,490
)


(11,929
)


(6,706
)


(171
)


(615,818
)Total sales and other operating revenues from external customers


124,387



789,982



98,921



56,609



1,247



1,071,146Depreciation, depletion and amortization


(58,771
)


(20,260
)


(8,407
)


(6,310
)


(855
)


(94,603
)Segment result


257,056



(63,684
)


3,664



16,765



(7,439
)


206,362Other costs


(16,858
)


(19,286
)


(6,541
)


(708
)


(3,669
)


(47,062
)Income/(loss) from operations


240,198



(82,970
)


(2,877
)


16,057



(11,108
)


159,300Finance costs






















(1,770
)Income from equity affiliates and jointly controlled entities


4,556



(293
)


12



5



19



4,299Income before income taxes






















161,829Income taxes






















(35,178
)Income for the year






















126,651 F-52




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
  Exploration

Refining

Chemicals

Naturaland

and

and

Gas andYear Ended December 31, 2008

Production

Marketing

Marketing

Pipeline

Other

TotalRMB

RMB

RMB

RMB

RMB

RMBInterest income


9,506



3,692



985



352



7,165



21,700Less: Intersegment interest income






















(19,426
)Interest income from external entities






















2,274Interest expense


(9,307
)


(7,144
)


(1,127
)


(1,540
)


(3,271
)


(22,389
)Less: Intersegment interest expense






















19,426Interest expense to external entities






















(2,963
)Segment assets


660,358



394,158



111,023



121,368



973,128



2,260,035Elimination of intersegment balances






















(1,095,243
)Investments in equity affiliates and jointly controlled entities


23,946



4,757



114



20



49



28,886Other assets






















496Total assets






















1,194,174Segment capital expenditure  for property, plant and
    equipment


157,031



20,274



15,319



36,848



2,742



232,214Segment liabilities


262,904



185,207



34,485



53,294



334,972



870,862Other liabilities






















27,646Elimination of intersegment balances






















(551,460
)Total liabilities






















347,048     Note (a) 
    Intersegment sales are conducted principally at market prices.Note (b) 
    Segment result is income from operations before other costs.
    Other costs include selling, general and administrative expenses
    and other incomes/(expenses), net.Note (c) 
    Segment results for the years ended December 31, 2006, 2007
    and 2008 include impairments of property, plant and equipment
    (Note 17).Note (d) 
    Other assets mainly include deferred tax assets.Note (e) 
    Other liabilities mainly include income taxes payable, other
    taxes payable and deferred tax liabilities.  Note (f) 
    Elimination of intersegment balances represents elimination of
    intersegment accounts and investments. F-53




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
   Secondary
    reporting format  geographical segments
  Revenue

Total Assets

Capital ExpenditureYear Ended December 31,

2006

2007

2008

2006

2007

2008

2006

2007

2008RMB

RMB

RMB

RMB

RMB

RMB

RMB

RMB

RMBPRC


665,278



807,712



1,015,160



816,973



985,426



1,095,068



142,870



172,016



221,953Other


25,234



28,641



55,986



61,568



82,254



99,106



6,675



10,371



10,261690,512



836,353



1,071,146



878,541



1,067,680



1,194,174



149,545



182,387



232,214   35  PRINCIPAL
    SUBSIDIARIES
    AttributableCountry of

Paid-Up

Type of

EquityCompany Name

Incorporation

Capital

Legal Entity

Interest %

Principal ActivitiesDaqing Oilfield Company Limited


PRC



RMB47,500



Limited liability
    company



100.00


Exploration, production and sale of crude oil and natural gasDaqing Yu Shu Lin Oilfield Company Limited


PRC



RMB1,272



Limited liability
    company



88.16


Exploration, production and sale of crude oil and natural gasCNPC Exploration and Development Company Limited


PRC



RMB16,100



Limited liability
    company



50.00


Exploration, production and sale of crude oil and natural gas in
    and outside the PRCPetroKazakhstan Inc. (Note 18)


Canada



US Dollar 1,265



Joint stock company
    with limited liability



67.00


Exploration, production and sale of crude oil and natural gas
    outside the PRCPetroChina Hong Kong Limited(i)


Hong Kong



HK Dollar 7,592



Limited liability
    company



100.00


Investment holding and the principal activities of its
    subsidiaries, the equity affiliates and the jointly controlled
    entities are the exploration, production and sale of crude oil
    and natural gas in and outside the PRC     (i)
    
    On August 27, 2008, the Board of Directors of the Company
    approved the acquisition by the Company of a 100% interest in
    Sun World Limited (a company incorporated in the British Virgin
    Islands) through its wholly owned subsidiary PetroChina Hong
    Kong Limited and PetroChina Hong Kong (BVI) Ltd from CNPC
    through its wholly owned subsidiary China Petroleum Hongkong
    (Holding) Limited for consideration of HK$7,592 (approximately
    RMB6,693) and the acquisition was completed on December 18,
    2008 on which Sun World Limited directly held
    2,513,917,342 shares of CNPC (Hong Kong) Limited (a company
    incorporated in Bermuda and the shares of which are listed on
    The Stock Exchange of Hong Kong), representing approximately
    56.66% of the issued share capital of CNPC (Hong Kong) Limited.     F-54




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
    The Group(as previously

Sun Worldreported)

Limited

ConsolidatedRMB

RMB

RMBResults of operations of 2006:Revenue


688,978



4,301



690,512Income for the year


149,397



3,114



150,148Basic and diluted net income per share for income attributable
    to equity holders of the Company (RMB)


0.79



0.01



0.80Results of operations of 2007:Revenue


835,037



3,753



836,353Income for the year


155,229



2,824



155,176Basic and diluted net income per share for income attributable
    to equity holders of the Company (RMB)


0.81



0.01



0.82Financial position as at December 31, 2007:Total assets


1,060,131



11,642



1,067,680Total liabilities


283,784



1,711



285,580Net assets


776,347



9,931



782,100     EquityNumber of

Purchase

Number of

Total Cash

Interest HeldOutstanding

Price per

Shares

Consideration

after theEntity Name

Shares

Share

Acquired

Paid

Acquisition%Jinzhou PetroChemical Company Limited (JCPL)

150,000,000
    A shares

RMB4.25 yuan
    per A share

150,000,000
    A shares as of
    June 30, 2007

RMB638 as of
    December 31,
    2007


100.00


JCPL was delisted from the Shenzhen Stock Exchange on
    January 4, 2006.In November 2007, the Liaoning Administration for Industry and
    Commerce approved JCPLs deregistration as an incorporated
    company. F-55




---



##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
  EquityNumber of

Purchase

Number of

Total Cash

Interest HeldOutstanding

Price per

Shares

Consideration

after theEntity Name

Shares

Share

Acquired

Paid

Acquisition%Jilin Chemical Industrial Company Limited (JCIC)

200,000,000
    A shares

RMB5.25 yuan
    per A share

200,000,000
    A shares as of
    December 31,
    2007

RMB3,862 as of
    December 31,
    2007


100.00


JCIC was delisted from the Shenzhen Stock Exchange on
    February 20, 2006.964,778,000
    H shares
    (including
    American
    Depositary
    Shares)
    (ADS)

HK$2.80 per
    H share

964,778,000
    H shares
    (including
    ADS) as of
    December 31,
    2007







JCIC was delisted from the Stock Exchange of Hong Kong Limited
    and the New York Stock Exchange on January 23, 2006 and
    February 15, 2006, respectively.In December 2007, the Jilin Administration for Industry and
    Commerce approved JCICs deregistration as an incorporated
    company.Liaohe Jinma Oilfield Company Limited (LJOCL)

200,000,000
    A shares

RMB8.80 yuan
    per A share

200,000,000
    A shares as of
    June 30, 2007

RMB1,763 as of
    December 31,
    2007


100.00


LJOCL was delisted from the Shenzhen Stock Exchange on
    January 4, 2006.In May 2007, the Liaoning Administration for Industry and
    Commerce approved LJOCLs deregistration as an incorporated
    company.     36  GOVERNMENT
    GRANTS
    37  EVENTS
    AFTER THE BALANCE SHEET DATE
     F-56




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##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Amounts in millions unless otherwise stated)
    38  APPROVAL
    OF FINANCIAL STATEMENTS
   F-57




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##### Table of Contents



PETROCHINA
    COMPANY LIMITED
  SUPPLEMENTARY
    INFORMATION ON OIL AND GAS EXPLORATION AND
 PRODUCTION ACTIVITIES (UNAUDITED)
 (Amounts in millions unless otherwise stated)
    Results
    of Operations
  Year Ended December 31,2006

2007

2008RMB

RMB

RMBSales and other operating revenuesSales to third parties


83,255



93,040



124,387Intersegment sales


316,421



339,436



433,384399,676



432,476



557,771Production costs excluding taxes


(55,563
)


(63,257
)


(74,879
)Exploration expenses


(18,827
)


(20,956
)


(21,879
)Depreciation, depletion and amortization


(32,163
)


(37,022
)


(50,827
)Taxes other than income taxes


(41,896
)


(56,554
)


(105,813
)Accretion expense


(796
)


(1,202
)


(1,746
)Income before income taxes


250,431



253,485



302,627Income taxes


(66,335
)


(58,245
)


(62,322
)Results of operations from producing activities


184,096



195,240



240,305Income from producing activities of equity affiliates and
    jointly controlled entities


4,402



5,244



9,872   Capitalized
    Costs
  Year Ended December 31,2006

2007

2008RMB

RMB

RMBProperty costs










Producing assets


431,057



504,199



592,122Support facilities


150,149



171,590



197,919Construction-in-progress


25,519



43,097



59,078Total capitalized costs


606,725



718,886



849,119Accumulated depreciation, depletion and amortization


(237,407
)


(269,242
)


(317,233
)Net capitalized costs


369,318



449,644



531,886Share of net capitalized costs of equity affiliates and jointly
    controlled entities


25,043



14,191



17,237  F-58




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##### Table of Contents



PETROCHINA
    COMPANY LIMITED
    SUPPLEMENTARY INFORMATION ON OIL AND GAS EXPLORATION AND
    PRODUCTION ACTIVITIES (UNAUDITED)
    (Amounts in millions unless otherwise stated)
  Costs
    Incurred in Property Acquisitions, Exploration and Development
    Activities
  Year Ended December 31,2006

2007

2008RMB

RMB

RMBProperty acquisition costs










Exploration costs


30,975



36,420



37,668Development costs


79,902



96,449



124,855Total


110,877



132,869



162,523Share of costs of property acquisition, exploration, and
    development of equity affiliates and jointly controlled entities


4,303



2,798



4,003   Proved
    Reserve Estimates
      30-year
   F-59




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##### Table of Contents



PETROCHINA
    COMPANY LIMITED
    SUPPLEMENTARY INFORMATION ON OIL AND GAS EXPLORATION AND
    PRODUCTION ACTIVITIES (UNAUDITED)
    (Amounts in millions unless otherwise stated)
      Crude Oil andCondensate

Natural Gas(Millions of barrels)

(Billions of cubic feet)Proved developed and undevelopedReserves at January 1, 2006


11,536



48,123Changes resulting from:Revisions of previous estimates


197



686Improved recovery


81



Extensions and discoveries


635



6,248Production


(831
)


(1,588
)Reserves at December 31, 2006


11,618



53,469Changes resulting from:Revisions of previous estimates


84



(1,062
)Improved recovery


79



Extensions and discoveries


764



6,331Production


(839
)


(1,627
)Reserves at December 31, 2007


11,706



57,111Changes resulting from:Revisions of previous estimates(i)


(574
)


(637
)Improved recovery


75



Extensions and discoveries


885



6,579Production


(871
)


(1,864
)Reserves at December 31, 2008


11,221



61,189Proved developed reserves at:December 31, 2006


9,185



22,564December 31, 2007


9,047



26,047December 31, 2008


8,324



26,667Proportional interest in proved reserves of equity affiliates
    and jointly controlled entitiesDecember 31, 2006


543



105December 31, 2007


141



79December 31, 2008


372



65     (i)
    
    The revision to previous estimates during the current year is
    mainly due to a significant change in crude oil prices used in
    estimating proved reserves at December 31, 2008. F-60




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##### Table of Contents



PETROCHINA
    COMPANY LIMITED
    SUPPLEMENTARY INFORMATION ON OIL AND GAS EXPLORATION AND
    PRODUCTION ACTIVITIES (UNAUDITED)
    (Amounts in millions unless otherwise stated)
     Standardized
    Measure
      RMBAt December 31, 2006Future cash inflows from sales of oil and gas


5,611,306Future production costs


(1,620,761
)Future development costs


(296,175
)Future income tax expense


(1,202,980
)Future net cash flows


2,491,390Discount at 10% for estimated timing of cash flows


(1,336,045
)Standardized measure of discounted future net cash flows


1,155,345At December 31, 2007Future cash inflows from sales of oil and gas


8,714,483Future production costs


(3,049,226
)Future development costs


(437,946
)Future income tax expense


(1,569,898
)Future net cash flows


3,657,413Discount at 10% for estimated timing of cash flows


(1,835,343
)Standardized measure of discounted future net cash flows


1,822,070 F-61




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##### Table of Contents



PETROCHINA
    COMPANY LIMITED
    SUPPLEMENTARY INFORMATION ON OIL AND GAS EXPLORATION AND
    PRODUCTION ACTIVITIES (UNAUDITED)
    (Amounts in millions unless otherwise stated)
  RMBAt December 31, 2008Future cash inflows from sales of oil and gas


4,426,893Future production costs


(1,521,416
)Future development costs


(381,498
)Future income tax expense


(522,158
)Future net cash flows


2,001,821Discount at 10% for estimated timing of cash flows


(1,046,896
)Standardized measure of discounted future net cash flows


954,925Share of standardized measure of discounted future net cash
    flows of equity affiliates and jointly controlled entitiesAt December 31, 2006


59,825At December 31, 2007


33,543At December 31, 2008


17,912       Year Ended December 31,2006

2007

2008RMB

RMB

RMBCHANGES IN STANDARDISED MEASURE OF DISCOUNTED FUTURE NET CASH
    FLOWSBeginning of the year


1,386,194



1,155,345



1,822,070Sales and transfers of oil and gas produced, net of production
    costs


(328,001
)


(309,269
)


(375,269
)Net changes in prices and production costs and other


(317,593
)


804,330



(1,448,443
)Extensions, discoveries and improved recovery


166,249



256,476



139,058Development costs incurred


(47,551
)


(39,031
)


67,673Revisions of previous quantity estimates


32,306



(3,567
)


(46,105
)Accretion of discount


200,771



171,389



260,643Net change in income taxes


62,970



(213,603
)


535,298End of the year


1,155,345



1,822,070



954,925  F-62