PetroChina : 2020 INTERIM REPORT

September 18, 2020 at 04:45 am EDT

PETROCHINA COMPANY LIMITED

2020 INTERIM REPORT

( a joint stock limited company incorporated

in the People's Republic of China with limited liability )

2020

INTERIM REPORT

PETROCHINA COMPANY LIMITED

This interim report contains certain forward-looking statements with respect to the financial position, operational results and business of the Group. These forward-looking statements are, by their nature, subject to significant risk and uncertainties because they relate to events and depend on circumstances that may occur in the future and are beyond our control. The forward-looking statements reflect the Group's current views with respect to future events and are not a guarantee for future performance, nor do these statements constitute substantial undertakings to investors by the Group. Actual results may differ from the information contained in the forward-looking statements. Investors shall be aware of the risks relating to investments.

2020 INTERIM REPORT

CONTENTS

003 CORPORATE PROFILE

006 SUMMARY OF FINANCIAL DATA AND FINANCIAL INDICATORS

009 CHANGES IN SHARE CAPITAL AND INFORMATION ON SHAREHOLDERS

012 DIRECTORS' REPORT

032 SIGNIFICANT EVENTS

052 DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT

054 RELEVANT INFORMATION ON CORPORATE BONDS

FINANCIAL STATEMENTS

060 PREPARED IN ACCORDANCE WITH CHINA ACCOUNTING STANDARDS

143 PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS

DOCUMENTS AVAILABLE FOR INSPECTION
CONFIRMATION FROM THE DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT

002 2020 INTERIM REPORT IMPORTANT NOTICE

IMPORTANT NOTICE

The board of directors (the "Board" or "Board of Directors"), supervisory committee ("Supervisory Committee") and all directors ("Directors"), supervisors ("Supervisors") and senior management ("Senior Management") of PetroChina Company Limited (the "Company") warrant the truthfulness, accuracy and completeness of the information contained in this interim report and that there are no material omissions from, misrepresentation or misleading statements contained in the interim report, and severally and jointly accept full responsibility hereof. No substantial shareholder of the Company has obtained any funds from the Company from non-operating activities. This interim report was approved at the seventh meeting of the Board in 2020. Mr. Jiao Fangzheng, a non-executive Director and Mr. Simon Henry, an independent non-executive Director were absent from the seventh meeting of the Board of Directors in 2020 due to certain reasons, but had authorised Mr. Duan Liangwei, Director and President and Mr. Tokuchi Tatsuhito, an independent non-executive Director in writing to attend the meeting by proxy and to exercise his voting rights on his behalf. Mr. Dai Houliang, Chairman of the Board, Mr. Duan Liangwei, Director and President, and Mr. Chai Shouping, Chief Financial Officer, warrant the truthfulness, accuracy and completeness of the financial statements included in this interim report.

The financial statements of the Company and its subsidiaries (the "Group") have been prepared in accordance with China Accounting Standards ("CAS") and International Financial Reporting Standards ("IFRS"), respectively. The financial statements in this interim report are unaudited.

In overall consideration of situations such as the operating results, financial position, cash flow and expected gains from pipeline assets restructuring of the Company, to provide returns to the shareholders, the Board has resolved to declare an interim dividend of RMB0.08742 yuan per share (inclusive of applicable tax) for 2020 on the basis of a total of 183,020,977,818 shares of the Company as at June 30, 2020. The total amount of the interim dividends payable is RMB16,000 million.

CORPORATE PROFILE

003

CORPORATE PROFILE

The Company was established as a joint stock company with limited liability under the Company Law of the People's Republic of China (the "PRC" or "China") on November 5, 1999 as part of the restructuring of the China National Petroleum Corporation (the Chinese name has been changed from 中國石油天然氣集團公司 to 中國石油天然氣集團有限公司 ,the abbreviation of which is "CNPC" before and after the change of name).

The Group is the largest oil and gas producer and seller occupying a leading position in the oil and gas industry in the PRC and one of the largest companies in the PRC in terms of revenue and one of the largest oil companies in the world. The Group principally engages in, among others, the exploration, development, production and sales of crude oil and natural gas; the refining of crude oil and petroleum products; the production and sales of basic and derivative chemical products and other chemical products; the marketing and trading of refined products; and the transmission of natural gas, crude oil and refined products, and the sales of natural gas.

The American Depositary Shares (the "ADSs"), H shares and A shares of the Company were listed on the New York Stock Exchange, The Stock Exchange of Hong Kong Limited (the "HKEx" or "Hong Kong Stock Exchange") and Shanghai Stock Exchange on April 6, 2000, April 7, 2000 and November 5, 2007, respectively.

Registered Chinese Name of the Company:	中國石油天然氣股份有限公司
English Name of the Company:	PetroChina Company Limited
Legal Representative of the Company:	Dai Houliang
Secretary to the Board:	Wu Enlai
Address:	No. 9 Dongzhimen North Street
	Dongcheng District
	Beijing, PRC
Telephone:	86 (10) 5998 2622
Facsimile:	86 (10) 6209 9557
Email Address:	sunbo05@petrochina.com.cn

004 2020 INTERIM REPORT CORPORATE PROFILE

Representative on Securities Matters:	Liang Gang
Address:	No. 9 Dongzhimen North Street
	Dongcheng District
	Beijing, PRC
Telephone:	86 (10) 5998 6959
Facsimile:	86 (10) 6209 9559
Email Address:	liangg@petrochina.com.cn
Chief Representative of Hong Kong
Representative Office:	Wei Fang
Address:	Suite 3705, Tower 2, Lippo Centre
	89 Queensway, Hong Kong
Telephone:	(852) 2899 2010
Facsimile:	(852) 2899 2390
Email Address:	hko@petrochina.com.hk
Legal Address of the Company:	16 Andelu
	Dongcheng District
	Beijing, PRC
Postal Code:	100011
Office Address of the Company:	No. 9 Dongzhimen North Street
	Dongcheng District
	Beijing, PRC
Postal Code:	100007
Website:	http://www.petrochina.com.cn
Company's Email Address:	sunbo05@petrochina.com.cn

Newspapers for information disclosure:

A shares: China Securities Journal, Shanghai Securities News, Securities Times and Securities Daily Website publishing this interim report designated by the China Securities Regulatory Commission: http://www.sse.com.cn

Copies of this interim report are available at:	No. 9 Dongzhimen North Street,
	Dongcheng District, Beijing, PRC

CORPORATE PROFILE

005

Places of Listing:
A shares:	Shanghai Stock Exchange
Stock Name:	PetroChina
Stock Code:	601857
H shares:	Hong Kong Stock Exchange
Stock Name:	PETROCHINA
Stock Code:	857
ADSs:	The New York Stock Exchange
Symbol:	PTR
Other Related Information:
Auditors of the Company:
Domestic Auditors:	KPMG Huazhen LLP
Address:	8th Floor, KPMG Tower, Oriental Plaza,
	1 East Chang'an Avenue,
	Dongcheng District,
	Beijing, PRC
Overseas Auditors:	KPMG Public Interest Entity Auditor registered
	in accordance with the Financial
	Reporting Council Ordinance
Address:	8th Floor, Prince's Building,
	10 Chater Road
	Central, Hong Kong

006 2020 INTERIM REPORT SUMMARY OF FINANCIAL DATA AND FINANCIAL INDICATORS

SUMMARY OF FINANCIAL DATA AND

FINANCIAL INDICATORS

1. Key Financial Data and Financial Indicators Prepared under IFRS

			Unit: RMB million

	As at the end	As at the end	Changes from the
	end of the preceding
Items	of the reporting	of the preceding	year to the end of the
period	year	reporting period (%)
Total assets	2,677,347	2,732,910	(2.0)
Equity attributable to owners of the Company	1,188,747	1,230,156	(3.4)

	The reporting	Same period of	Changes over the
Items	the preceding	same period of the
period	year	preceding year (%)
Revenue	929,045	1,196,259	(22.3)
Net (loss)/profit attributable to owners of the
Company	(29,983)	28,423	(205.5)
Net cash flows from operating activities	79,080	134,425	(41.2)
Basic (loss)/earnings per share (RMB Yuan)	(0.164)	0.155	(205.5)
Diluted (loss)/earnings per share (RMB Yuan)	(0.164)	0.155	(205.5)
			(4.84) percentage
Return on net assets (%)	(2.52)	2.32	points

SUMMARY OF FINANCIAL DATA AND FINANCIAL INDICATORS 007

2. Key Financial Data and Financial Indicators Prepared under CAS

			Unit: RMB million

	As at the end	As at the end	Changes from the end
	of the preceding year to
Items	of the reporting	of the preceding	the end of the reporting
period	year	period (%)
Total assets	2,677,624	2,733,190	(2.0)
Equity attributable to equity holders of the	1,189,016	1,230,428	(3.4)
Company
	The reporting	Same period of	Changes over the
Items	the preceding	same period of the
period	year	preceding year (%)
Operating income	929,045	1,196,259	(22.3)
Net (loss)/profit attributable to equity
holders of the Company	(29,986)	28,420	(205.5)
Net (loss)/profit after deducting non-
recurring profit items attributable to equity
holders of the Company	(31,790)	30,386	(204.6)
Basic (loss)/earnings per share (RMB Yuan)	(0.164)	0.155	(205.5)
Diluted (loss)/earnings per share (RMB
Yuan)	(0.164)	0.155	(205.5)
Weighted average return on net assets (%)	(2.48)	2.33	(4.81) percentage points
Net cash flows from operating activities	79,080	134,425	(41.2)

008 2020 INTERIM REPORT SUMMARY OF FINANCIAL DATA AND FINANCIAL INDICATORS

3. Non-recurring Profit/Loss Items

	Unit: RMB million

Non-recurring profit/loss items	For the six months
ended June 30, 2020
Net losses on disposal of non-current assets	(1,447)
Government grants recognised in the income statement	198
Reversal of provisions for bad debts against receivables	16
Net profit or loss arising from disposal of the subsidiary	393
Other non-operating income and expenses	3,340

Sub-total	2,500

Tax impact of non-recurring profit/loss items	(685)
Impact of non-controlling interests	(11)

Total	1,804

4. Differences between CAS and IFRS

The consolidated net loss of the Group under IFRS and CAS were RMB23,324 million and RMB23,327 million, respectively, with a difference of RMB3 million. The consolidated shareholders' equity under IFRS and CAS were RMB1,400,395 million and RMB1,400,665 million, respectively, with a difference of RMB270 million. These differences under the different accounting standards were primarily due to the revaluation for assets other than fixed assets and oil and gas properties in 1999.

During the restructuring in 1999, a valuation was carried out in 1999 for assets and liabilities injected by CNPC. Valuation results on assets other than fixed assets and oil and gas properties were not recognised in the financial statements prepared under IFRS.

CHANGES IN SHARE CAPITAL AND INFORMATION ON SHAREHOLDERS 009

CHANGES IN SHARE CAPITAL AND

INFORMATION ON SHAREHOLDERS

1. Changes in Shareholdings

During the reporting period, there was no change in the total number or structure of shares of the Company arising from bonus issues or placings or otherwise.

2. Shareholdings of Substantial Shareholders

The total number of shareholders of the Company as at June 30, 2020 was 751,689, including 745,316 holders of A shares and 6,373 holders of H shares (including 151 holders of American Depositary Shares).

(1) Shareholdings of the top ten shareholders

							Unit: Shares

					Increase/	Number	Number of
				Percentage of	decrease	shares
		Nature of	Number of	during the	of shares	pledged or
Name of shareholders		shareholding	reporting	with selling	subject to
	shareholders	shares held	(%)	period (+,-)	restrictions	lock-ups
CNPC		State-owned	146,882,339,136 (1)	80.25	0	0	0
	legal person

HKSCC Nominees Limited	(2)	Overseas	20,898,081,998 (3)	11.42	1,809,709	0	0
	legal person
CNPC-CSC-17 CNPC E2
Pledge and Trust Special		State-owned			-6,791	0	3,819,980,834
Account		legal person	3,819,980,834	2.09
CNPC-CSC-17 CNPC EB
Pledge and Trust Special		State-owned	2,051,488,603	1.12	0	0	2,051,488,603
Account		legal person
China Securities Finance		State-owned	1,139,138,704	0.62	0	0	0
Corporation Limited		legal person
China Baowu Steel Group		State-owned		0.34	0	0	0
Corporation Limited		legal person	624,000,000
China Metallurgical Group		State-owned
Corporation		legal person	560,000,000	0.31	0	0	0
Hong Kong Securities Clearing	Overseas	274,697,556	0.15	65,020,517	0	0
Company Limited(4)		legal person
Ansteel Group Corporation		State-owned	220,000,000	0.12	0	0	0
	legal person


Central Huijin Asset		State-owned	206,109,200	0.11	0	0	0
Management Ltd.		legal person

010 2020 INTERIM REPORT CHANGES IN SHARE CAPITAL AND INFORMATION ON SHAREHOLDERS

Notes:

Such figure excludes the H shares indirectly held by CNPC through Fairy King Investments Limited, an overseas wholly-owned subsidiary of CNPC.
HKSCC Nominees Limited is a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited and acts as the nominee on behalf of other corporate or individual shareholders to hold the H shares of the Company.
291,518,000 H shares were indirectly held by CNPC through Fairy King Investments Limited, an overseas wholly-owned subsidiary of CNPC, representing 0.16% of the total share capital of the Company. These shares were held in the name of HKSCC Nominees Limited.
Hong Kong Securities Clearing Company Limited is a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited and acts as the nominee on behalf of investors of Hong Kong Stock Exchange to hold the A shares of the Company listed on Shanghai Stock Exchange.

Shareholdings of the top ten shareholders of shares without selling restrictions

			Unit: Shares

Ranking	Name of shareholders	Number of shares held	Type of shares
1	CNPC	146,882,339,136 (1)	A shares

2	HKSCC Nominees Limited	20,898,081,998	H shares

3	CNPC-CSC-17 CNPC E2 Pledge and Trust Special Account	3,819,980,834	A shares

4	CNPC-CSC-17 CNPC EB Pledge and Trust Special Account	2,051,488,603	A shares

5	China Securities Finance Corporation Limited	1,139,138,704	A shares

6	China Baowu Steel Group Corporation Limited	624,000,000	A shares

7	China Metallurgical Group Corporation	560,000,000	A shares

8	Hong Kong Securities Clearing Company Limited	274,697,556	A shares

9	Ansteel Group Corporation	220,000,000	A shares

10	Central Huijin Asset Management Ltd.	206,109,200	A shares

Note:

Such figure excludes the H shares indirectly held by CNPC through Fairy King Investments Limited, an overseas wholly-owned subsidiary of CNPC.

Statement on related parties or parties acting in concert among the above-mentioned shareholders: Except for the fact that HKSCC Nominees Limited and Hong Kong Securities Clearing Company Limited are subsidiaries of Hong Kong Exchanges and Clearing Limited, the Company is not aware of any connection among or between the above top ten shareholders or that they are parties acting in concert as provided for in the Measures for the Administration of Acquisitions by Listed Companies.

CHANGES IN SHARE CAPITAL AND INFORMATION ON SHAREHOLDERS 011

(3) Disclosure of substantial shareholders under the Securities and Futures Ordinance of Hong Kong

As at June 30, 2020, so far as the Directors are aware, the persons other than a Director, Supervisor or Senior Management of the Company who had interests or short positions in the shares or underlying shares of the Company which are discloseable under Divisions 2 and 3 of Part XV of the Securities and Futures Ordinance were as follows:

						Percentage of such	Percentage
	Nature of				shares in the same	of total
Name of shareholders	Number of shares	Capacity	class of the issued	share capital
shareholding	share capital (%)	(%)
	A Shares	146,882,339,136（L）	Beneficial Owner	90.71	80.25

CNPC	H Shares	291,518,000（L）(1)	Interest of Corporation	1.38	0.16
	Controlled by the
					Substantial Shareholder

BlackRock, Inc.(2)	H Shares		1,452,314,708（L）	Interest of Corporation	6.88	0.79
			Controlled by the

			6,704,000（S） Substantial Shareholder	0.03	0.004

			1,165,526,558（L） Interest of Corporation	5.52	0.64
					Controlled by
			115,848,909（S）	0.54	0.06
Citigroup Inc.(3)	H Shares	the Substantial
					Shareholder/ Approved
			1,008,925,130（LP）	4.78	0.55
			Lending Agent

(L) Long position	(S) Short position	(LP) Lending pool

Notes:

291,518,000 H shares (long position) were held by Fairy King Investments Limited, an overseas wholly-owned subsidiary of CNPC. CNPC is deemed to be interested in the H shares held by Fairy King Investments Limited.
BlackRock, Inc., through various subsidiaries, had an interest in the H shares of the Company, of which 1,452,314,708 H shares (long position) and 6,704,000 H Shares (short position) were held in the capacity as interest of corporation controlled by the substantial shareholder.
Citigroup Inc., through various subsidiaries, had an interest in the H shares of the Company, of which 156,601,428 H shares (long position) and 115,848,909 H Shares (short position) were held in its capacity as interest in corporation controlled by the substantial shareholder, and 1,008,925,130 H shares (long position) were held in its capacity as approved lending agent.

As at June 30, 2020, so far as the Directors are aware, save for disclosed above, no person (other than a Director, Supervisor or Senior Management of the Company) had an interest or short position in the shares of the Company according to the register of interests in shares and short positions kept by the Company pursuant to Section 336 of the Securities and Futures Ordinance.

3. Information on Changes of Controlling Shareholder and the De Facto Controller

There was no change in the controlling shareholder or the de facto controller of the Company during the reporting period.

012 2020 INTERIM REPORT DIRECTORS' REPORT

DIRECTORS' REPORT

The Board is pleased to present its directors' report:

1. Review of Results of Operations

In the first half of 2020, the Coronavirus Disease 2019 ("COVID-19") had a tremendous impact on the global economy, and major economies of the world experienced recessions to varying degrees; China's economy has also been hit significantly. In the first quarter, China's gross domestic product (GDP) decreased by 6.8% year-on-year. However, with effective control over COVID-19 in China, its economy is showing a trend of stable recovery. In the second quarter, GDP grew by 11.5% quarter-on-quarter and 3.2% year-on-year. In the first half of the year, GDP fell by 1.6% year-on-year. Affected by the macro economy and COVID-19, the supply and demand in the global oil market became even more eased up, and the average international crude oil prices significantly decreased as compared with the same period of last year.

Adversely affected by the sharp drop in international oil prices and a severe contraction of domestic oil and gas demand, the Group's production and operations have experienced unprecedented shocks and challenges. Facing the complex and severe situation, the Group engaged in a series of work in a centralized way, including promotion of COVID-19 prevention and control, resumption of work and production, production and operation, as well as reform and development. At the same time, we vigorously improved quality and profitability, strictly controlled costs and capital expenditures, and strived to reduce losses caused by COVID-19 and low oil prices, thereby maintaining overall smooth operation of the oil and gas industrial chain. Under the influence of both COVID-19 and oil prices, the Group's operating performance and free cash flow in the first half of the year dropped significantly,

and by means of effective measures to improve quality and profitability, the financial position was overall stable.

(1) Market Review

Crude Oil Market

In the first half of 2020, the spread of COVID-19 resulted in a historical decline in demand for petroleum in the world severe oversupply in the global petroleum market, and a sharp drop in international oil prices. During the period, the negotiation on production reduction among members of "Production Reduction Alliance" broke down, followed by a price war. Later, the largest production reduction agreement in history was reached, which has an important impact on the international oil price trend. In the first half of the year, the average spot price for North Sea Brent crude oil was US$39.95 per barrel, representing a decrease of 39.4% as compared with the same period of last year, and the average spot price for West Texas Intermediate ("WTI") crude oil was US$36.59 per barrel, representing a decrease of 36.3% as compared with the same period of last year.

According to data from the National Development and Reform Commission ("NDRC"), the domestic output of crude oil in the first half of 2020 was 96.50 million tons, representing an increase of 1.5% as compared with the same period of last year.

Refined Products Market

In the first half of 2020, domestic consumption of refined products has dropped significantly, with gasoline, diesel and kerosene all showing negative growth. During this period, domestic oil refining capacity continued to grow, and the quantity of crude oil processing grew at

DIRECTORS' REPORT 013

a basically stable rate. However, the output of refined products declined, and the net export of refined products continued to grow. According to NDRC data, in the first half of 2020, the quantity of processed crude oil amounted to 312.66 million tons, representing an increase of 2.4% as compared with the same period of last year; the output of refined products amounted to 184.24 million tons, representing a decrease of 2.5% as compared with the same period of last year; the apparent consumption of refined products amounted to 153.86 million tons, representing a decrease of 6.0% as compared with the same period of last year, among which, the consumption of gasoline decreased by 3.3% and the consumption of diesel increased by 0.1%. In the first half of 2020, the PRC government made four adjustments to the prices of domestic gasoline and diesel products, and the prices of reference gasoline and diesel products decreased, in aggregate, by RMB1,730 yuan per ton and RMB1,670 yuan per ton, respectively.

Chemical Products Market

In the first half of 2020, affected by factors such as macro economy, supply and demand, and international oil prices, the overall domestic chemical products market went downwards. Except for chemical products related to COVID-19 prevention and control, demands and prices for most chemicals dropped. Since the second quarter, with acceleration in resumption of work and production in the PRC, the chemical market demand has gradually recovered.

Natural Gas Market

In the first half of 2020, under the influence of COVID-19 and the macroeconomic downturn, global natural gas market demand declined with an even more eased up supply and demand, while the international natural gas prices dropped across the world and liquefied natural gas ("LNG") spot prices in Europe, America and

Northeast Asia hit record lows. The growth of demand for domestic natural gas slowed down and output of natural gas continued to increase relatively rapidly, while the growth of import of natural gas declined substantially. According to NDRC data, in the first half of 2020, the domestic apparent consumption of natural gas amounted to 155.6 billion cubic metres, representing an increase of 4.2% as compared with the same period of last year. The domestic natural gas output amounted to 95.0 billion cubic metres, representing an increase of 9.9% as compared with the same period of last year. The imports of natural gas amounted to 66.7 billion cubic metres, representing an increase of 3.3% as compared with the same period of last year.

(2) Business Review

Exploration and Production

Domestic Exploration and Development Operations

In the first half of 2020, the Group continued to optimize the exploration programs, and made important discoveries and progress in risk exploration and concentrated exploration. High-yield oil and gas flow was discovered from Tarim Manshen No.1 well, representing a major breakthrough in ultra-deep oil and gas exploration in the hinterland of the basin. In addition, a batch of risk exploration wells such as Sichuan Pengtan No.1, Tarim Luntan No.1, and Junggar Shatan No.2, etc. achieved new breakthroughs and opened up a new area of oil and gas exploration. We also optimized and adjusted production capacity, and organized oil and gas development and production in a scientific way. In the first half of 2020, the crude oil output amounted to 372.7 million barrels, representing an increase of 0.8% as compared with the same period of last year. The marketable natural gas output amounted to 2,024.4 billion cubic feet, representing an increase of 10.9% as compared with the same period of last year. The oil and natural gas equivalent output

014 2020 INTERIM REPORT DIRECTORS' REPORT

amounted to 710.2 million barrels, representing an increase of 5.4% as compared with the same period of last year.

Overseas Oil and Gas Operations

In the first half of 2020, the Group's overseas oil and gas business made steady progress, and the risk exploration of the Chad project and the rolling exploration of the Kazakhstan PK project made new breakthroughs and new progress. We optimized and adjusted oil and gas field development strategies with the focus on benefits and improved profitability of new wells and operations to enhance the level of oil and gas field development. In the first half of the year, the oil and

natural gas equivalent output amounted to 123.5 million barrels, representing an increase of 17.3% as compared with the same period of last year and accounting for 14.8% of the total oil and natural gas equivalent output of the Group.

In the first half of 2020, the Group recorded the crude oil output of 475.4 million barrels, representing an increase of 5.2% as compared with the same period of last year, the marketable natural gas output of 2,149.1 billion cubic feet, representing an increase of 9.4% as compared with the same period of last year, and the oil and natural gas equivalent output of 833.7 million barrels, representing an increase of 7.0% as compared with the same period of last year.

DIRECTORS' REPORT 015

Summary of Operations of the Exploration and Production Segment

	Unit	First half of 2020	First half of 2019	Changes (%)
Crude oil output	Million barrels	475.4	451.9	5.2
Of which: Domestic	Million barrels	372.7	369.8	0.8
Overseas	Million barrels	102.7	82.1	25.1
Marketable natural gas output	Billion cubic feet	2,149.1	1,964.3	9.4
Of which: Domestic	Billion cubic feet	2,024.4	1,825.1	10.9
Overseas	Billion cubic feet	124.7	139.2	(10.4)
Oil and natural gas equivalent output	Million barrels	833.7	779.4	7.0
Of which: Domestic	Million barrels	710.2	674.1	5.4
Overseas	Million barrels	123.5	105.3	17.3

Note: Figures have been converted at the rate of 1 ton of crude oil = 7.389 barrels and 1 cubic metre of natural gas = 35.315 cubic feet.

Refining and Chemicals

In the first half of 2020, we steadily promoted structural adjustment in the Group's refining and chemicals business through optimizing the allocation of crude oil resources in line with changes in market demand and profitability and adjusting processing loads in a timely manner, and made great efforts to achieve "reduction of refining and increase of chemicals". We also continued to optimize product structure, adjusted diesel-gasoline ratio in a flexible way, and strived to increase production of high value-added products. In the first half of the year, 568.2 million barrels of crude oil were processed, representing a decrease of 4.9% as compared with the same period of last year; 52.085 million tons of refined products were produced,

representing a decrease of 8.2% as compared with the same period of last year. The output of chemical products was 13.847 million tons, representing an increase of 9.5% over the same period of last year. The output of ethylene increased by 4.0% over the same period of last year. The output of synthetic resin and synthetic rubber increased by 3.7% and 4.7%, respectively, over the same period of last year.

In the first half of 2020, the integration project of refining and chemicals of Guangdong Petrochemical, Tarim and Changqing ethane to ethylene projects and other key projects progressed in an orderly manner.

016 2020 INTERIM REPORT DIRECTORS' REPORT

Summary of Operations of the Refining and Chemicals Segment

		Unit	First half of 2020	First half of 2019	Changes (%)
Processed crude oil	Million barrels	568.2	597.4	(4.9)
Gasoline, kerosene and diesel output	'000 ton	52,085	56,716	(8.2)
Of which: Gasoline	'000 ton	21,931	24,588	(10.8)
	Kerosene	'000 ton	4,264	6,038	(29.4)
	Diesel	'000 ton	25,890	26,090	(0.8)
Refining yield	%	93.43	93.26	0.17 percentage point
Ethylene		'000 ton	3,103	2,983	4.0
Synthetic resin	'000 ton	5,024	4,845	3.7
Synthetic fibre raw materials and polymers	'000 ton	656	674	(2.7)
Synthetic rubber	'000 ton	489	467	4.7
Urea		'000 ton	948	459	106.5

Note: Figures have been converted at the rate of 1 ton of crude oil = 7.389 barrels.

Marketing Domestic Operations

In the first half of 2020, the Group actively took measures to address severe situation of shrinking consumption in the refined products market and high inventories, and made every effort to strengthen the connection between production and sales, and strived to ensure smooth operation and sales channel of refineries and overall stable operation of the crude oil industry chain. In addition, we actively seized favorable opportunities of resumption of work and production and spring ploughing, improved customer service quality, and, in light of the impact of COVID-19, actively launched "in the car" refuelling and "no contact" payment. Further, we increased product marketing effort, strived to increase retail sales and optimized wholesale sales, so as to improve sales efficiency.

International Trading Operations

In the first half of 2020, the Group enhanced its effort to expand overseas share of oil sales and optimized the pace of refined products exports to promote the coordination for integration of domestic and international markets.

The Group sold a total of 76.569 million tons of gasoline, kerosene and diesel in the first half of 2020, representing a decrease of 14.8% as compared with the same period of last year, among which the domestic sales of gasoline, kerosene and diesel were 48.572 million tons, representing a decrease of 15.6% as compared with the same period of last year.

Natural Gas and Pipeline

In the first half of 2020, the Group implemented precise measures to develop the natural gas terminal

DIRECTORS' REPORT 017

market, and significantly increased terminal sales. In line with changes in market demand, we comprehensively upgraded the "labelling" management, coordinated and optimized resource allocation and sales structure. In addition, we continued to strengthen the upgrade of pipeline safety management to ensure safe and stable operation of the oil and gas pipeline network.

2. Management Discussion and Analysis
The financial data set out below is extracted from the Group's interim condensed consolidated financial statements prepared under IFRS

Consolidated Operating Results

In the first half of 2020, the Group achieved a revenue of RMB929,045 million, representing a decrease of 22.3% as compared with the same period of last year. Net loss attributable to owners of the Company was RMB29,983 million, representing a decrease of 205.5% from the RMB28,423 million of net profit attributable to owners of the Company as compared with the same period of last year. There was a basic loss per share of RMB0.164 yuan, representing a decrease of RMB0.319 yuan as compared with a basic earnings per share of RMB0.155 yuan over the same period of last year.

018 2020 INTERIM REPORT DIRECTORS' REPORT

Revenue Revenue decreased by 22.3% to RMB929,045 million for the first half of 2020 from RMB1,196,259 million for the first half of 2019. This was primarily due to the impact of the drop in the sales volume of refined products and natural gas as well as the

decrease in the prices of oil and gas products. The table below sets out the external sales volume and average realised prices of the major products sold by the Group in the first half of 2020 and 2019 and their respective percentages of change during these periods:

	Sales Volume ('000 ton)	Average Realised Price (RMB/ton)
	First half of	First half of	Percentage	First half of	First half of	Percentage
	of change	of change
	2020	2019	(%)	2020	2019	(%)
Crude oil*	85,950	65,395	31.4	1,998	3,170	(37.0)
Natural gas (100 million cubic
metres, RMB/'000 cubic metres)	1,197.67	1,252.67	(4.4)	1,175	1,391	(15.5)
Gasoline	31,569	36,496	(13.5)	5,600	6,594	(15.1)
Diesel	38,437	43,285	(11.2)	4,350	5,216	(16.6)
Kerosene	6,563	10,131	(35.2)	3,133	4,254	(26.4)
Heavy oil	10,196	9,467	7.7	2,616	3,122	(16.2)
Polyethylene	2,636	2,485	6.1	6,349	7,836	(19.0)
Lubricant	569	571	(0.4)	7,534	8,299	(9.2)

*The crude oil listed above represents all the external sales volume of crude oil of the Group. The sales volume of crude oil increased as compared with the same period of last year, primarily due to the increase in the international trading volume of crude oil.

Operating Expenses Operating expenses decreased by 16.9% to RMB935,088 million for the first half of 2020 from RMB1,125,596 million for the first half of 2019, of which:

Purchases, Services and Other Purchases, services and other decreased by 21.2% to RMB627,188 million for the first half of 2020 from RMB796,103 million for the first half of 2019. This was primarily due to the reduction in the Group's purchase costs of oil and gas products.

Employee Compensation Costs Employee compensation costs (including various types of wages, various types of insurance, housing provident fund, training costs and other relevant additional costs) for the first half of 2020 were RMB60,746 million, representing a decrease of 6.6% from RMB65,028 million for the first half of 2019. This was primarily due to the reinforcement

of linkage between the employee's remuneration and operating results.

Exploration Expenses Exploration expenses decreased by 13.8% to RMB10,569 million for the first half of 2020 from RMB12,267 million for the first half of 2019. This was primarily due to the fact that the Group controlled its exploration expenses by optimising its exploration plan based on the change in oil prices.

D epreci a t io n , D e p le t io n a n d A m o r t is a t io n Depreciation, depletion and amortisation increased by 5.3% to RMB114,388 million for the first half of 2020 from RMB108,607 million for the first half of 2019. This was primarily due to the change in the volume of oil and gas reserves caused by the drop in oil price, which resulted in increasing the depreciation and depletion of the Group's oil and gas assets.

DIRECTORS' REPORT 019

Selling, General and Administrative Expenses Selling, general and administrative expenses decreased by 8.6% to RMB29,883 million for the first half of 2020 from RMB32,695 million for the first half of 2019. This was primarily due to the vigorous advancement of the quality and profitability improvement and the continuous effort in controlling the non-productioncosts by the Group.

Taxes other than Income Taxes Taxes other than income taxes decreased by 12.5% to RMB98,931 million for the first half of 2020 from RMB113,088 million for the first half of 2019, of which the consumption tax decreased by RMB7,760 million from RMB81,137 million for the first half of 2019 to RMB73,377 million for the first half of 2020; the resource tax decreased by RMB2,695 million from RMB12,088 million for the first half of 2019 to RMB9,393 million for the first half of 2020; the crude oil special gain levy decreased by RMB621 million from RMB799 million for the first half of 2019 to RMB178 million for the first half of 2020.

Other Income, Net Other income, net of the Group for the first half of 2020 was RMB6,617 million, representing an increase of RMB4,425 million from RMB2,192 million for the first half of 2019. This was primarily due to the combined effect from the increase in the gains on asset disposal and the change in asset retirement obligation, etc.

(Loss)/Profit from Operations There was a loss from operations of RMB6,043 million for the Group in the first half of 2020, representing a decrease of 108.6% from the profit from operation of RMB70,663 million for the first half of 2019.

Net Exchange Gain/(Loss) Net exchange gain of the Group for the first half of 2020 was RMB443 million while net exchange loss for the first half of 2019 was RMB290 million. This was mainly due to the change of average exchange rate of US dollar against Renminbi.

Net Interest Expense Net interest expense increased by 1.4% to RMB13,490 million for the first half of 2020

from RMB13,304 million for the first half of 2019. This was mainly due to decrease in the balance of deposits with a higher interest rate, including those with a tenor of one year or above, as compared to the same period last year, which in turn led to a reduction of interest income.

(Loss)/Profit before Income Tax Expense Loss before income tax expense was RMB18,520 million for the Group in the first half of 2020, representing a decrease of 130.0% from the profit before income tax expense of RMB61,776 million for the first half of 2019.

Income Tax Expense Income tax expense decreased by 78.8% to RMB4,804 million for the first half of 2020 from RMB22,638 million for the first half of 2019. This was primarily due to a drastic decrease in the profit before income tax expenses of the Group.

(Loss)/Profit for the period Net loss amounted to RMB23,324 million for the Group in the first half of 2020, representing a decrease of 159.6% from net profit of RMB39,138 million for the first half of 2019.

Profit attributable to non-controlling interests Profit attributable to non-controllinginterests was RMB6,659 million for the first half of 2020, representing a decrease of 37.9% from RMB10,715 million for the first half of 2019. This was primarily due to the significant decrease in the profits of the subsidiaries of the Group over the same period last year.

(Loss)/Profit attributable to owners of the Company Loss attributable to owners of the Company amounting to RMB29,983 million for the first half of 2020, representing a decrease of 205.5% from the profit attributable to owners of the Company of RMB28,423 million for the first half of 2019.

Segment Results Exploration and Production

Revenue The revenue of the Exploration and Production segment for the first half of 2020 was

020 2020 INTERIM REPORT DIRECTORS' REPORT

RMB255,450 million, representing a decrease of 21.7% from RMB326,339 million for the first half of 2019. This was primarily due to the decrease in the sales volume, and also a reduction in the prices, of oil and gas products such as crude oil and natural gas. For the first half of 2020, the oil imported from countries such as Russia and Kazakhstan by the Group amounted to 17.98 million tons, representing a decrease of 9.4% from 19.85 million tons for the first half of 2019. The revenue from the sales of imported oil from Russia and Kazakhstan was RMB39,830 million for the first half of 2020, representing a decrease of 39.5% from RMB65,813 million for the first half of 2019. In the first half of 2020, the average realised crude oil price was US$39.02 per barrel, representing a decrease of 37.9% from US$62.85 per barrel for the first half of 2019, and the average realised crude oil price decreased by 35.6% as compared to the same period of last year after excluding the effects of exchange rates.

Operating Expenses Operating expenses of the Exploration and Production segment decreased by 10.1% to RMB245,099 million for the first half of 2020 from RMB272,711 million for the first half of 2019. This was primarily due to the decrease in the purchase costs, employee remuneration and exploration expenses. The procurement cost from importing oil from countries such as Russia and Kazakhstan was RMB43,906 million for the first half of 2020, representing a decrease of 32.0% from RMB64,523 million for the first half of 2019.

The Group continued to tighten cost controls. In the first half of 2020, the oil and gas lifting cost was US$9.64 per barrel, representing a decrease of 14.0% or US$1.57 per barrel from US$11.21 per barrel for the same period of last year.

Profit from Operations In the first half of 2020, by optimising the deployment of exploration activities, the Group's domestic exploration and production business focused on sizable and profitable exploration and enhanced its integrated administration covering matters in respect of investment, reserve and costs, which resulted in achieving an increase in profitable reserve. While the

Group insisted on attaching equal importance to both quantity and efficiency and placed special focus on sizeable and profitable production, it also strictly controlled its operating costs and used its best efforts to increase its production volume to achieve profitability. Through better coordinating the measures in connection with the prevention and control of COVID-19 and the production and operation, the Group's overseas exploration and production business was able to steadily roll out the development of new projects, rationalise asset structure on a continuous basis, adopt a range of measures to improve quality and profitability, using its best effort to control or even reduce the investment expenditure, cost and expenses, which in turn strengthened the management over the security of funds and effectively prevented operation risks. However, due to the impact of sharp drop in oil and gas prices, in the first half of 2020, the Exploration and Production segment achieved an operating profit of RMB10,351 million, representing a decrease of 80.7% in operating profit as compared with RMB53,628 million for the first half of 2019.

Refining and Chemicals

Revenue The revenue of the Refining and Chemicals segment for the first half of 2020 was RMB369,811 million, representing a decrease of 24.0% from RMB486,366 million for the first half of 2019. This was primarily due to the reduction in the sales volumes, and also a drop in the price, of refining and chemical products, especially gasoline, diesel and kerosene.

Operating Expenses Operating expenses of the Refining and Chemicals segment decreased by 20.8% to RMB380,351 million for the first half of 2020 from RMB479,996 million for the first half of 2019. This was primarily due to the decrease in the procurement costs of crude oil and raw material oil, and also a reduction in taxes, labour costs together with selling and administrative expenses.

In the first half of 2020, the cash processing cost of refineries was RMB161.43 yuan per ton, representing a

DIRECTORS' REPORT 021

decrease of 1.2% as compared with RMB163.47 yuan per ton for the same period of last year. This was primarily due to the combined effects of the decrease in power cost, ancillary material costs and labour cost together with the reduction in processing volume.

(Loss)/Profit from Operations In the first half of 2020, the Refining and Chemicals segment actively responded to unfavourable conditions arising from a drop-in market demand and a decrease in the facility loads and devoted its full efforts to optimize production operations. Based on the market-oriented approach, the Group took a firm stance in implementing measures relating to the reduction of refinery operation and the increase in chemical operation, and also closely linked production with sales to create synergies. It adjusted in a timely manner its product structure and strived to increase its production of

profitable products, while improving the direct selling rate of chemical products. Nevertheless, due to the impact of the decrease in the domestic market demand, the price drop, the decline in profit from inventories and other factors, the Refining and Chemicals segment recorded a loss from operations of RMB10,540 million for the first half of 2020, representing a decrease of RMB16,910 million as compared with the profit from operations of RMB6,370 million for the first half of 2019, among which, the refining operations recorded a loss from operations of RMB13,644 million, representing a decrease of RMB16,424 million as compared with the profit from operations of RMB2,780 million for the same period of last year; the chemical operations generated an operating profit of RMB3,104 million, representing a decrease of 13.5% as compared with RMB3,590 million for the same period of last year.

022 2020 INTERIM REPORT DIRECTORS' REPORT

Note: In 2020, in order to optimize production, operation and management, the Group shifted PetroChina Fuel Oil Company Limited and PetroChina Lubricant Company from the Marketing segment to the Refining and Chemicals segment. Accordingly, the comparative data in respect of Refining and Chemicals segment and also the Marketing segment against those of the same period of last year have been restated, which implies that the two companies mentioned above shall be deemed to have been incorporated in the Refining and Chemical segment since the earliest financial reporting period presented.

Marketing

Revenue The revenue of the Marketing segment for the first half of 2020 was RMB749,203 million, representing a decrease of 23.8% as compared with RMB982,656 million for the first half of 2019, which was primarily due to the decrease in both the sales volume and price of refined oil in China.

Operating Expenses Operating expenses of the Marketing segment decreased by 22.4% to RMB762,095 million for the first half of 2020 from RMB982,162 million for the first half of 2019. This was primarily due to a decrease in the expenditure relating to the purchase of refined products from external suppliers.

(Loss)/Profit from Operations In the first half of 2020, the Marketing segment intensified the efforts in market analysis and research and adjusted marketing tactics in a flexible manner. By capturing the favourable timing for resumption of work and production, the Group used its best endeavour to increase the sales volume and output in key areas, to increase the retail sale of refined products, strengthened refined marketing and precision marketing and improved the price realization rate. Based on the profitability projection, the Group strengthened the interaction between the domestic and international markets, coordinated the optimisation of the refined oil export plan, which led to an improvement in the overall profitability of the value chain. However, due to the impact of the decline in demand prevailing in the domestic

refined oil market, the decrease in profit from inventories and other factors, in the first half of 2020, the Marketing segment recorded a loss from operations of RMB12,892 million, representing a decrease of RMB13,386 million from the profit from operations of RMB494 million for the first half of 2019.

Natural Gas and Pipeline

Revenue The revenue of the Natural Gas and Pipeline segment decreased by 8.6% to RMB179,341 million for the first half of 2020 from RMB196,163 million for the first half of 2019, which was primarily due to the drop in the sales volume and also the decrease in sales price of natural gas domestically.

Operating Expenses Operating expenses of the Natural Gas and Pipeline segment decreased by 7.2% to RMB164,969 million for the first half of 2020 from RMB177,861 million for the first half of 2019. This was primarily due to the reduction in the expenditure for purchasing gas.

Profit from Operations In the first half of 2020, the Natural Gas and Pipeline segment continued to optimize its gas resource structure and strived to lower its procurement costs. Through proactively developing the profitable markets and further optimizing the customer structure, the Group intensively enhanced its sales capability in respect of retail sales to end users. Due to the impact brought by the decrease in both the sales volume and price of natural gas within China and other factors, in the first half of 2020, the Natural Gas and Pipeline segment achieved an operating profit of RMB14,372 million, representing a decrease of 21.5% from RMB18,302 million for the first half of 2019, of which the sales volume of imported natural gas and LNG recorded a net loss of RMB11,832 million, representing an increase in loss of RMB631 million as compared with the same period of last year.

In the first half of 2020, the Group's international operations(note) achieved a revenue of RMB368,632 million,

accounting for 39.7% of the total revenue of the Group. Profit before income tax expense of overseas operations was RMB2,380 million.

Note: The four operating segments of the Group consist of Exploration and Production, Refining and Chemicals,

DIRECTORS' REPORT 023

Marketing as well as Natural Gas and Pipeline. International operations do not constitute a separate operating segment of the Group. The financial data of international operations is included in the financial data of the respective operating segments mentioned above.

Assets, Liabilities and Equity

The following table sets out the key items in the consolidated balance sheet of the Group:

	As at June As at December 31,	Percentage of Change
	30, 2020	2019

	RMB million	RMB million	%
Total assets	2,677,347	2,732,910	(2.0)
Current assets	472,127	466,913	1.1
Non-current assets	2,205,220	2,265,997	(2.7)
Total liabilities	1,276,952	1,288,605	(0.9)
Current liabilities	664,123	661,419	0.4
Non-current liabilities	612,829	627,186	(2.3)
Equity attributable to owners of the Company	1,188,747	1,230,156	(3.4)
Share capital	183,021	183,021	-
Reserves	304,674	304,011	0.2
Retained earnings	701,052	743,124	(5.7)
Total equity	1,400,395	1,444,305	(3.0)

Total assets amounted to RMB2,677,347 million, representing a decrease of 2.0% as compared with that as at the end of 2019, of which:

Current assets amounted to RMB472,127 million, representing an increase of 1.1% from that as at the end of 2019, primarily due to the increase in monetary assets and prepayments.

Non-current assets amounted to RMB2,205,220 million, representing a decrease of 2.7% from that as at the end of 2019, primarily due to the asset structure optimization initiatives of the Group, which resulted in the disposal of low-profitability or unprofitable assets and the reduction of property, plant and equipment and also the

decrease in the right-of-use assets.

Total liabilities amounted to RMB1,276,952 million, representing a decrease of 0.9% from that as at the end of 2019, of which:

Current liabilities amounted to RMB664,123 million, representing an increase of 0.4% from that as at the end of 2019, primarily due to the increase of short-term borrowings and contract liabilities.

Non-current liabilities amounted to RMB612,829 million, representing a decrease of 2.3% from that as at the end of 2019, primarily due to the decrease in lease liabilities and asset retirement obligations.

024 2020 INTERIM REPORT DIRECTORS' REPORT

Equity attributable to owners of the Company amounted to RMB1,188,747 million, representing a decrease of 3.4% from that as at the end of 2019, primarily due to the decrease in retained earnings.

Cash Flows

As at June 30, 2020, the primary sources of funds of the Group were cash from operating activities and short-term and long-term borrowings. The funds of the

Group were mainly used for operating activities, capital expenditures, repayment of short-term and long-term borrowings and distribution of dividends to the owners of the Company.

The table below sets out the cash flows of the Group for the first half of 2020 and 2019, respectively, and the amount of cash and cash equivalents as at the end of each period:

	Six months ended June 30
	2020		2019
	RMB million	RMB million
Net cash flows from operating activities	79,080		134,425
Net cash flows used for investing activities	(110,776)		(129,973)
Net cash flows from financing activities	34,629		33
Translation of foreign currency	993		201
Cash and cash equivalents at end of the period	90,335		90,640

Net Cash Flows From Operating Activities

The net cash flows of the Group from operating activities for the first half of 2020 amounted to RMB79,080 million, representing a decrease of 41.2% from the net cash flows of RMB134,425 million for the first half of 2019. This was mainly due to a significant decrease in profit over the same period last year. As at June 30, 2020, the Group had cash and cash equivalents of RMB90,335 million, of which, approximately 55.0% were denominated in Renminbi, approximately 37.6% were denominated in US Dollars, approximately 6.2% were denominated in Hong Kong Dollars and approximately 1.2% were denominated in other currencies.

Net Cash Flows Used For Investing Activities

investing activities for the first half of 2020 amounted to RMB110,776 million, representing a decrease of 14.8% from RMB129,973 million for the first half of 2019. This was primarily due to the decrease in the capital expenditures of the Group in the first half of 2020 as compared with the same period of last year.

Net Cash Flows From Financing Activities

The net cash flows of the Group from financing activities for the first half of 2020 amounted to RMB34,629 million, representing an increase of RMB34,596 million from RMB33 million as recorded in the first half of 2019, primarily due to the increase of new long-term and short- term borrowings of the Group in the first half of 2020 as compared with the same period of last year.

The net cash flows of the Group used for

DIRECTORS' REPORT 025

The net borrowings of the Group as at June 30, 2020 and December 31, 2019, respectively, were as follows:

	As at June 30, 2020		As at December 31, 2019
	RMB million		RMB million
Short-term borrowings (including current portion
of long-term borrowings)	213,528	175,840
Long-term borrowings	314,963	290,882

Total borrowings	528,491	466,722

Less: Cash and cash equivalents	90,335	86,409

Net borrowings	438,156	380,313

The following table sets out the remaining contractual maturities of borrowings as at June 30, 2020 and December 31, 2019, respectively, which are based on contractual undiscounted cash flows including principal and interest, and the earliest contractual maturity date:

	As at June 30, 2020		As at December 31, 2019
	RMB million		RMB million
Within 1 year	226,754	188,771
Between 1 and 2 years	65,320	30,090
Between 2 and 5 years	243,012	253,918
After 5 years	33,315	31,576

	568,401	504,355

Of the total borrowings of the Group as at June 30, 2020, approximately 56.6% were fixed-rate loans and approximately 43.4% were floating-rate loans; approximately 75.0% were denominated in Renminbi, approximately 22 . 7% were denominated in US Dollars and approximately 2.3% were denominated in

other currencies.

As at June 30, 2020, the gearing ratio of the Group (gearing ratio = interest-bearingdebts/(interest-bearing debts + total equity)) was 27.4% (December 31, 2019: 24.4%).

026 2020 INTERIM REPORT DIRECTORS' REPORT

Capital Expenditures

For the first half of 2020, the Group adopted a dynamic approach in optimizing the adjustment towards its scale of investment and also its investment structure, and coordinated the promotion efforts in respect of the construction of key projects based on the change in oil price, operation results and cash flow and, as such, its capital expenditures amounted to RMB74,761 million, representing a decrease of 11.0% from RMB83,954

million for the first half of 2019, which was mainly due to an enhancement in the management and control over investments. The estimated capital expenditure for the whole year of 2020 is RMB228,500 million, representing a decrease of 23.0% from RMB 296,776 million for the year of 2019. The following table sets out the capital expenditures incurred by the Group for the first half of 2020 and for the first half of 2019 and the estimated capital expenditures for each of the business segments of the Group for the whole year of 2020.


	First half of 2020		.	First half of 2019	.		Estimates for 2020


	RMB million	(%)		RMB million	(%)			RMB million	(%)

Exploration and Production*	54,366			72.72		69,383	82.64			180,200	78.86
Refining and Chemicals	6,418			8.58		5,948	7.09			23,900	10.46
Marketing	6,491			8.68		3,266	3.89			9,400	4.11
Natural Gas and Pipeline	7,279			9.74		5,083	6.05			14,000	6.13
Head Office and Other	207			0.28		274	0.33			1,000	0.44

Total	74,761			100.00		83,954	100.00			228,500	100.00

If investments related to geological and geophysical exploration expenses were included, the capital expenditures and investments for the Exploration and Production segment for the first half of 2020 and the first half of 2019, and the estimates for the same for the year of 2020 would be RMB60,205 million, RMB75,383 million and RMB192,200 million, respectively.

Exploration and Production

Capital expenditures for the Exploration and Production segment of the Group amounted to RMB54,366 million for the first half of 2020. The expenditures were primarily used for the continuous exploration and development of key basins such as Songliao, Ordos, Tarim, Sichuan and Bohai Bay, for devoting greater efforts in the development of unconventional resources such as shale gas and for continuing to better the overseas operation of the existing projects in the Middle East, Central Asia, America, Asia Pacific and other cooperation areas so as to ensure development in a quality and profitable manner.

The Group anticipates that capital expenditures for the Exploration and Production segment throughout 2020 would amount to RMB180,200 million.

Refining and Chemicals

Capital expenditures for the Refining and Chemicals segment of the Group amounted to RMB6,418 million for the first half of 2020, primarily used for the construction of integration project of refining and chemicals of Guangdong Petrochemical, Daqing petrochemical structure adjustment, projects in relation to the ethylene production out of ethane, including those in Changqing and Tarim, and other large-scale refining and chemical projects, as well as refining and chemicals transformation

DIRECTORS' REPORT 027

and upgrading projects.

The Group anticipates that capital expenditures for the Refining and Chemicals segment throughout 2020 will amount to RMB23,900 million.

Marketing

Capital expenditures for the Marketing segment of the Group amounted to RMB6,491 million for the first half of 2020, which were used primarily for the construction and expansion of the domestic end sales networks for refined products markets, and the construction of overseas oil and gas storage, transportation and sales facilities.

The Group anticipates that capital expenditures for the Marketing segment throughout 2020 will amount to

RMB9,400 million.

Natural Gas and Pipeline

Capital expenditures for the Natural Gas and Pipeline segment of the Group amounted to RMB7,279 million for the first half of 2020, which were primarily used for the construction of key natural gas transmission pipelines such as the China-RussiaEast-route Natural Gas Pipeline Project, Shenzhen LNG and other facilities for peak shaving and storage and transportation as well as the construction of gas branches and sales terminals.

The Group anticipates that capital expenditures for the Natural Gas and Pipeline segment throughout 2020 will amount to RMB14,000 million.

028 2020 INTERIM REPORT DIRECTORS' REPORT

Head Office and Other

the IT system.

Capital expenditures for the Head Office and Other segment for the first half of 2020 amounted to RMB207 million, which were primarily used for improvements of scientific research facilities and construction of

The Group anticipates that capital expenditures for the Head Office and Other segment throughout 2020 will amount to RMB1,000 million.

The financial data set out below is extracted from the consolidated financial statements of the Group prepared under CAS

Principal operations by segment under CAS

	Income from		Cost of			Changes in
			Changes in income cost of principal	Increase/
	principal		principal		from principal	operations
	operations for		operations		operations over the	over the same	(decrease)
	the first half of		for the first	Gross same period of the	period of the	in gross
	2020		half of 2020	margin*	preceding year	preceding year	margin
	RMB million		RMB million	(%)	(%)	(%)	(Percentage
		points)
Exploration and Production	247,833	208,119	11.3	(21.9)	(9.6)	(11.1)
Refining and Chemicals	366,807	277,062	1.8	(24.0)	(23.7)	(3.8)
Marketing	737,540	722,120	2.0	(24.1)	(23.6)	(0.6)
Natural Gas and Pipeline	176,881	161,338	8.6	(8.7)	(8.0)	(0.7)
Head Office and Other	83	67	-	23.9	42.6	-
Inter-segment elimination	(623,971)	(623,573)	-	-	-	-

Total	905,173	745,133	7.1	(22.7)	(19.1)	(4.9)

Gross margin = Profit from principal operations / Income from principal operations
- Principal operations by region under CAS

				Changes over
	First half of 2020		First half of 2019	the same period of the
		preceding year
Operating income	RMB million		RMB million	(%)
Chinese Mainland	560,413	711,359	(21.2)
Other	368,632		484,900	(24.0)
Total	929,045	1,196,259	(22.3)

DIRECTORS' REPORT 029

Principal subsidiaries, associates and joint ventures of the Group

	Registered		Amount of	Amount	Amount of	Net profit /
	Shareholding	of total	net assets/
	capital	total assets	liabilities	(liabilities)	(loss)
Company name	RMB million	%	RMB million	RMB million	RMB million	RMB million
Daqing Oilfield Company
Limited	47,500	100	372,334	136,568	235,766	1,976
CNPC Exploration and
Development Company
Limited	16,100	50	207,128	41,628	165,500	2,549
PetroChina Hong Kong	HK$7,592 million	100	148,474	63,110	85,364	4,322
Limited
PetroChina International
Investment Company	31,314	100	96,443	155,198	(58,755)	(2,401)
Limited
PetroChina International Co.,	18,096	100	193,720	125,823	67,897	491
Ltd.
PetroChina Pipelines Co., Ltd.	80,000	72.26	223,969	16,289	207,680	8,870
PetroIneos Refining Limited	US$1,000	49.90	15,953	9,526	6,427	(191)
China Petroleum Finance Co.,	8,331	32	451,019	377,385	73,634	3,823
Ltd.
CNPC Captive Insurance Co.,					6,573	190
Ltd.	5,000	49	13,955	7,382
China Marine Bunker
(PetroChina) Co., Ltd.	1,000	50	9,715	6,804	2,911	81
Mangistau Investment B.V.	EUR € 18,000	50	13,240	3,974	9,266	(156)
Trans-Asia Pipeline Co., Ltd.	5,000	50	47,100	2,811	44,289	1,514

Note：For details of the nature of business and net profit of principal subsidiaries, associates and joint ventures entities of the Group, please refer to Note 6 and Note 14 of the financial statements of the Group prepared under CAS.

3. Business Prospects for the Second Half of the Year

In the second half of 2020, the situations of global prevention and control of COVID-19 are still severe, the cycles of international industrial chain and supply chain are obstructed, and the recovery of world economy is facing greater risks and challenges. The international crude oil market is expected to remain in excess of demand, and

the rebound of international oil prices is still facing great uncertainty. China's economic development is expected to remain generally stable, but with greater instability and uncertainty. The excessive domestic supply of refined oil is intensifying, the growth of demand for natural gas is falling, and the market players in the whole industrial chain of oil and gas are more diverse with the competition being more intense. Faced by such complex and severe situations, the Group will maintain the strategic strength,

030 2020 INTERIM REPORT DIRECTORS' REPORT

strengthen the bottom-line thinking, adhere to high-quality development, while sticking to law-abiding and compliant corporate governance following the governance principles of professional development, market-oriented operation, lean management and integrated planning. We will also continue to further implement the construction of the oil and gas production, supply, storage and sales system, deepen reform and innovation, pay more attention to green and low-carbon development, digital transformation, intelligent development and value creation to promote quality and profitability improvement, and spare no efforts to fulfill annual production and operation objectives and tasks.

In respect of exploration and production business, the Group will adhere to the strategy of stabilizing oil and improving gas exploration and production, promote the profitable exploration and development. We will effectively implement oil and gas exploration (in particular risk exploration), deepen comprehensive geological research and earthquake preparedness in key basins and fields, speed up the implementation of the deployed exploration of risk wells, and strive to achieve strategic discovery and breakthrough. Focusing on oil and gas exploration areas including Chang 7 shale oil, central Sichuan paleo-uplift, Ordovician and Kuqa piedmont of Tarim Basin and Mahu, we will highlight centralized large-scale and profitable exploration to consolidate the resource foundation for sustainable development of the Company. We will adhere to profitable development, stabilize the production of old oil and gas fields and speed up profitable production in new oil and gas fields. By deepening fine water injection and strengthening the management of long-time shutdown wells and profitability improvement of low-yield wells, while reinforcing the major development experiments on enhancing recovery rate at Sulige and Keshen, we effectively focus on the scale and concentrated production building of key projects.

In respect of refining and chemicals business, the Group will adhere to structure adjustment and continue to

deepen business transformation and upgrading. We will strengthen our control and management over production, allocate more resources to enterprises of sound operating results, and properly manage unplanned equipment shutdown and abnormal fluctuations so as to ensure safe, stable and long-term optimized operation and strive to increase income and enhance profitability. We will uphold the idea of molecular oil refining, optimize cost- effective oil types, select appropriate process route and realize efficient utilization of resources. We will adhere to the strategy of reducing oil and increasing chemicals production, strictly control the output of gasoline and diesel, flexibly adjust the proportion of diesel to gasoline according to the market demand and increase the products of profitability and distinctive features including high-grade gasoline, lubricating base oil and low- sulfur marine fuel oil. We will also increase the load of chemical equipment of ethylene and aromatics, develop and produce profitable and marketable new chemical products and special materials and ensure the stable supply of medical materials. We will strengthen chemical sales channels and customer management and improve the percentage of direct sales and price realization rate. We will strengthen the overall planning for the supply, production, research and marketing of oil-refining byproducts and lubricating oil, promote their integrated and coordinated development together with the distribution system of chemical products to respond to market competition as on combined business. We will promote the construction of key projects including Guangdong Petrochemical.

In respect of sales of refined products, the Group will focus on both quantity and efficiency, strive to improve the quality of refined oil in the market. We will actively respond to market changes and oil price fluctuations, strengthen regional coordination, achieve mutual facilitation between oil and non-oil products, refine marketing practices, emphasize the solution of securing room for maneuver, market expansion, increase the sales volume of retail and increase profitability to ensure integration of sales volume,

DIRECTORS' REPORT 031

market shares and profitability. It is imperative to give full play to our overall advantages, vigorously promote the development of high-quality network, solidify the markets within business zones, expand the markets outside the business zones, expand the terminal markets adopting such methods as joint venture lease, cooperative operation and combination of production and finance to and make our best endeavor to increase the sales volume of retail. We will optimize and adjust marketing tactics, establish benefit evaluation models by variety, region, time period and customer type to promote differentiated and precise marketing, and improve the price realization rate and profitability level. We will further promote the governance of stations of low sales volume and profitability and cultivation of stations of high sales volume and profitability and enhance the capability of single station to generate profits and customer service level. We will deeply tap the potential of non-oil business and solidify the situation of achieving operating profits from different channels.

In respect of natural gas and pipeline operations, the Group will adhere to the overall optimization and make every effort to increase the sales and profitability of natural gas. We will optimize the allocation of resources, make overall plans for proprietary production and import, long-term trade and spot resources, maintain the balance among production imports and sales, to ensure the smoothness of sales channel and safe operation of industrial chains. We will comprehensively enhance marketing capabilities, adhere to the principle of market orientation and the supremacy of customers, deepen "labelling" sales, plan wholesale and retail as a whole, go all out to explore the market, accurately implement policies for different regions and users, solidify market shares to achieve the increase of both quantity and profitability. We will optimize sales structure, promote the development of diversified terminal markets, steadily participate in natural gas power generation and distributed energy projects,

increase the sales of LNG and increase the proportion of direct supply and terminal retail to improve sales and profit.

In respect of international operations, the Group will stick to high quality and profitability operation and strive to improve its international operation capacity and level. We adhere to profitable exploration and focus on guaranteeing the risk exploration in the strategic alternative areas and zones where the Group plays a leading role, optimizing rolling exploration in mature areas, solidly implementing reserves evaluation and solidifying resources foundation. We will emphasize fine development, dynamically adjust project production according to oil price, project phase and contract mode, continuously make fine water injection and take measures for increasing production, improve capacity construction as planned and close blocks with no marginal contribution. We will strengthen the development of new projects and strive to find quality resources. We will strengthen risk control and effectively prevent policy risks of the exchange rate and tax rate in the country with resources. In respect of international trade, we will conscientiously cut costs and enhance profitability through reducing resource procurement costs, optimizing refined oil exports to comprehensively improve services. We will also adopt innovative trade methods, strictly control transaction risks and strive to improve bargaining power and cross-market transaction level.

By Order of the Board of Directors

PetroChina Company Limited

Dai Houliang

Chairman

Beijing, the PRC

August 27, 2020

032 2020 INTERIM REPORT SIGNIFICANT EVENTS

SIGNIFICANT EVENTS

1. Governance of the Company

During the repor ting period, the Company was capable of operating business in a regularized manner in accordance with domestic and overseas regulatory requirements. Pursuant to the relevant laws and regulations, the securities regulatory rules of the jurisdictions in which the Company is listed and the Articles of Association of PetroChina Company Limited (the "Articles of Association"), and in light of the actual conditions of the Company, the Company continuously formulated, improved, and effectively implemented the rules of procedure and the relevant work processes for the Board of Directors and all specialised committees under the Board. During the reporting period, the Company's internal management operations were further standardized and the level of the Company's corporate governance had been continually enhanced through the coordination and balances among the shareholders' general meeting, the Board and its respective specialised committees, the Supervisory Committee and the management led by the President of the Company together with the effective operations of the internal control systems.

During the reporting period, the Company convened two shareholders' general meetings, five meetings of the Board and three meetings of the Supervisory Committee, adopting 14 resolutions of the shareholders' general meeting, 25 resolutions of the Board and 11 resolutions of the Supervisory Committee. Such meetings were prepared and convened in compliance with the relevant laws and rules and the adopted resolutions were lawful and valid.

During the reporting period, the number of members of the Board was increased from nine to eleven. Adjustment was further made to the members of the specialised committees under the Board based on the

expertise background and experience of the respective Directors.

During the reporting period, the Company amended the Articles of Association and adjusted its scope of business based on its actual needs of production and operation, which ensured that the Group would continue its efforts in the prevention and control over COVID-19 and also the reform and growth of its production and operation.

During the reporting period, the Company kept increasing the compliance awareness of the controlling shareholder and the Directors, Supervisors and Senior Management of the Company. The Company's corporate governance met the requirements set out in the normative documents relating to governance of listed companies issued by the securities regulatory authorities of the places where the Company is listed, and no person with access to insider information was found dealing in the shares of the Company against the relevant regulations.

2. Compliance with the Corporate Governance

Code

For the six months ended June 30, 2020, save for the following changes during the reporting period, the Company has complied with all the code provisions of the Corporate Governance Code set out in Appendix 14 to the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (the "Listing Rules").

On December 9, 2019, Mr. Hou Qijun resigned as Director and President of the Company due to work change. On January 19, 2020, Mr. Wang Yilin resigned as Chairman, Director and chairman of the Nomination Committee of the Company due to his age. On March 9, 2020, Mr. Duan Liangwei was appointed as the President of the Company. On March 25, 2020, Mr. Dai Houliang was elected as the Chairman, and also the chairman of the Nomination Committee of the Company, and Mr. Li Fanrong was elected as the Vice Chairman of the Company. Currently, the Company has complied with all the code provisions of the Corporate Governance Code.

SIGNIFICANT EVENTS 033

3. Formulation and Implementation of the Cash Dividend Policy

As required by China Securities Regulatory Commission, the Articles of Association expressly provides that the proportion of cash dividends shall not be lower than 30% of annual net profit attributable to owners of the Company. Since its listing, the Company has been making dividend payments in an amount equal to 45% of net profit attributable to owners of the Company strictly in accordance with the provisions of the Articles of Association and the relevant regulatory requirements, adhering to the principle of repaying the shareholders.

Since 2016, the Company has endeavoured to repay the shareholders better by making special dividend payments in addition to the regular dividend payment equal to 45% of the net profit attributable to owners of the Company.

In the future, adhering to the principle of repaying the shareholders, the Company will implement flexible and practicable dividend policies and determine reasonable amounts of dividend payment based on the operating results, cash flow, material mergers or acquisitions and capital expenditures of the Company, giving full consideration to the reasonable return on investment for investors as well as the long-term interests of the Company, the interests of all shareholders as a whole and the sustainable development of the Company.

Authorised by the shareholders, the Board has reviewed and approved the 2020 interim dividend at the seventh meeting of the Board in 2020, with the consent of independent Directors.

4. Final Dividend for 2019 and Interim Dividend for 2020 and Closure of Register of Members
Final Dividend for the Year Ended December 31,
2019

The final dividend in respect of 2019 of RMB0.06601 yuan per share (inclusive of applicable tax), amounting

to a total of RMB12,081 million, was approved by the shareholders at the 2019 annual general meeting of the Company on June 11, 2020 and was paid on June 30, 2020 (for A shares) and July 31, 2020 (for H shares), respectively.

Interim Dividend for 2020 and Closure of Register of Members

The Board was authorised by the shareholders to approve the distribution of an interim dividend for 2020 at the 2019 annual general meeting of the Company on June 11, 2020. Affected by the outbreak of COIVD-19 and low oil price, the Company suffered substantial loss in the first half of 2020. Despite of difficulties, the Company still attaches great importance to shareholders' returns. In overall consideration of the situations such as the operating results, financial position, cash flow and expected gains from pipeline assets restructuring of the Company, to provide returns to the shareholders, the Board has resolved to declare an interim dividend of RMB0.08742 yuan per share (inclusive of applicable tax) for 2020 on the basis of a total of 183,020,977,818 shares of the Company as at June 30, 2020. The total amount of the interim dividends payable is RMB16,000 million.

The H share interim dividend of the Company will be paid to shareholders of H shares whose names appear on the register of members of the Company at the close of trading on October 6, 2020. The register of members of H shares will be closed from October 1, 2020 to October 6, 2020 (both days inclusive) during which period no transfer of H shares will be registered. In order to qualify for the interim dividend, holders of H shares must lodge all transfer documents together with the relevant share certificates at Hong Kong Registrars Limited on or before 4:30 p.m., September 30, 2020. Holders of A shares whose names appear on the register of members of the Company maintained at China Securities Depository and Clearing Corporation Limited ("CSDC") at the close of trading on the Shanghai Stock Exchange in the afternoon of September 21, 2020 will be eligible for the interim dividend.

034 2020 INTERIM REPORT SIGNIFICANT EVENTS

In accordance with the relevant provisions of the Articles of Association of PetroChina Company Limited and relevant laws and regulations, dividends payable to the shareholders of the Company shall be declared in Renminbi. Dividends payable to the holders of A shares shall be paid in Renminbi, and for the A shares of the Company listed on the Shanghai Stock Exchange and invested by the investors through the Hong Kong Stock Exchange, dividends shall be paid in Renminbi to the accounts of the nominal shareholders through CSDC. Save for the H shares of the Company listed on the Hong Kong Stock Exchange and invested by the investors through the Shanghai Stock Exchange and Shenzhen Stock Exchange (the "H Shares under the Southbound Trading Link"), dividends payable to the holders of H shares shall be paid in Hong Kong Dollars. The applicable exchange rate shall be the average of the medium exchange rate for Renminbi to Hong Kong Dollar as announced by the People's Bank of China for the week prior to the declaration of the dividends by the Board. Dividends payable to the holders of H Shares under the Southbound Trading Link shall be paid in Renminbi. In accordance with the Agreement on Payment of Cash Dividends on the H Shares under the Southbound Trading Link (《港股通 H 股股票現金紅利派發協議》) between the Company and CSDC, CSDC will receive the dividends payable by the Company to holders of the H Shares under the Southbound Trading Link as a nominal holder of the H Shares under the Southbound Trading Link on behalf of investors and assist the payment of dividends on the H Shares under the Southbound Trading Link to investors thereof. The average of the medium exchange rate for Renminbi to Hong Kong Dollar as announced by the People's Bank of China for the week prior to the declaration of the 2020 interim dividend by the Board is RMB0.89269 to 1.00 Hong Kong Dollar. Accordingly, the interim dividend will be 0.09793 Hong Kong Dollar per H share (inclusive of applicable tax).

The Company has appointed Bank of China (Hong Kong) Trustees Limited as the receiving agent in Hong Kong (the "Receiving Agent"), and will pay the declared interim dividend to the Receiving Agent for its onward payment to the holders of H shares. The interim dividend

will be paid by the Receiving Agent around November 13, 2020 to the holders of H shares by ordinary mail at their own risks.

According to the Law on Corporate Income Tax of the People's Republic of China (《中華人民共和國企業所得稅法》) and the relevant implementing rules which came into effect on January 1, 2008 and was amended on February 24, 2017 and December 29, 2018, the Company is required to withhold corporate income tax at the rate of 10% before distributing dividends to non-resident enterprise shareholders whose names appear on the H share register of members of the Company. Any H shares registered in the name of non-individual shareholders, including HKSCC Nominees Limited, other nominees, trustees or other groups and organisations, will be treated as being held by non-resident enterprise shareholders and therefore will be subject to the withholding of the corporate income tax. Any holders of H shares wishing to change their shareholder status should consult their agents or trust institutions on the relevant procedures. The Company will withhold and pay the corporate income tax strictly in accordance with the relevant laws or requirements of the relevant governmental departments based on the information that will have been registered on the Company's H share register of members on October 6, 2020.

According to the Notice on Issues Concerning the Collection and Management of Individual Income Tax after the Abolishment of Guo Shui Fa [1993] No.045 promulgated by the State Taxation Administration of the PRC (Guo Shui Han [2011] No.348)（《關於國稅發〔1993〕

045 號文件廢止後有關個人所得稅徵管問題的通知》（國稅函〔2011〕348 號））, the Company is required to withhold and pay the individual income tax for individual holders of H shares and individual holders of H shares are entitled to certain tax preferential treatments according to the tax agreements between those countries where the individual holders of H shares are resident and China and the provisions in respect of tax arrangements between Chinese mainland and Hong Kong (Macau). The Company will withhold and pay the individual income tax at the tax

SIGNIFICANT EVENTS 035

rate of 10% on behalf of the individual H shareholders who are Hong Kong residents, Macau residents or residents of those countries having agreements with China for individual income tax rate in respect of dividend of 10%. For individual H shareholders who are residents of those countries having agreements with China for individual income tax rates in respect of dividend of lower than 10%, the Company would make applications on their behalf to seek entitlement of the relevant agreed preferential treatments pursuant to the Circular on Issuing Administrative Measures on Preferential Treatment Entitled by Non-residentsTaxpayers under Treaties (SAT Circular [2019] No.35) (《關於發佈 < 非居民納稅人享受協定待遇管理辦法 > 的公告》( 國家稅務總局公告 2019 年第 35

號 ))issued by the State Administration of Taxation. For individual H shareholders who are residents of those countries having agreements with China for individual income tax rates in respect of dividend of higher than 10% but lower than 20%, the Company would withhold the individual income tax at the agreed-upon effective tax rate. For individual H shareholders who are residents of those countries without any taxation agreements with China or having agreements with China for individual income tax in respect of dividend of 20% or other situations, the Company would withhold the individual income tax at a tax rate of 20%.

The Company will determine the country of domicile of the individual H shareholders based on the registered address as recorded in the register of members of the Company (the "Registered Address") on October 6, 2020 and will accordingly withhold and pay the individual income tax. If the country of domicile of an individual H shareholder is not the same as the Registered Address, the individual H shareholder shall notify the share registrar of the Company's H shares and provide relevant supporting documents on or before 4:30 p.m., September 30, 2020 (address: Hong Kong Registrars Limited, Shops 1712-1716, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong). If the individual H shareholder does not provide the relevant supporting documents to the share registrar of the Company's H shares within the time period stated above, the Company will determine

the country of domicile of the individual H shareholder based on the recorded Registered Address on October 6, 2020.

The Company will not entertain any claims arising from and assumes no liability whatsoever in respect of any delay in, or inaccurate determination of, the status of the shareholders of the Company or any disputes over the withholding and payment of tax.

In accordance with the Notice of Ministry of Finance, the State Administration of Taxation, and the China Securities Regulatory Commission on Taxation Policies concerning the Pilot Program of an Interconnection Mechanism for Transactions in the Shanghai and Hong Kong Stock Markets (Cai Shui [2014] No.81) (《財政部、

國家稅務總局、證監會關於滬港股票市場交易互聯互通機

制試點有關稅收政策的通知》( 財稅 [2014]81 號 )), which became effective on November 17, 2014, and the Notice of the Ministry of Finance, the State Administration of Taxation, and the China Securities Regulatory Commission on Taxation Policies concerning the Pilot Program of an Interconnection Mechanism for Transactions in the Shenzhen and Hong Kong Stock Markets (Cai Shui [2016] No. 127) (《財政部、國家稅務總局、證監會關於深港股票市場交易互聯互通機制試點有關稅收政策的通知》( 財稅 [2016]127 號 )), which became effective on December 5, 2016, with regard to the dividends obtained by individual Chinese mainland investors from investment in the H shares of the Company listed on the Hong Kong Stock Exchange through the Shanghai-HongKong Stock Connect and Shenzhen-HongKong Stock Connect, the Company will withhold their individual income tax at the tax rate of 20% in accordance with the register of individual Chinese mainland investors provided by CSDC. As to the withholding tax having been paid abroad, an individual investor may file an application for tax credit with the competent tax authority of CSDC with an effective credit document. With respect to the dividends obtained by Chinese mainland securities investment funds from investment in the H shares of the Company listed on the Hong Kong Stock Exchange through the Shanghai-HongKong Stock Connect and Shenzhen-HongKong Stock

036 2020 INTERIM REPORT SIGNIFICANT EVENTS

Connect, the Company will levy tax with reference to the provisions concerning the collection of tax on individual investors. The Company will not withhold income tax on dividends obtained by Chinese mainland enterprise investors, and Chinese mainland enterprise investors shall file their income tax returns and pay tax themselves instead.

With regard to the dividends obtained by the investors (including enterprises and individuals) from investment in the A shares of the Company listed on Shanghai Stock Exchange through the Hong Kong Stock Exchange, the Company will withhold income tax at the tax rate of 10%, and file tax withholding returns with the competent tax authority. Where any Hong Kong investor is a tax resident of a foreign country and the rate of income

tax on dividends is less than 10%, as provided for in the tax treaty between the country and the PRC, the enterprise or individual may directly, or entrust a withholding agent to, file an application for the tax treatment under the tax treaty with the competent tax authority of the Company. Upon review, the competent tax authority will refund tax based on the difference between the amount of tax having been collected and the amount of tax payable calculated at the tax rate as set out in the tax treaty.

5. Material Litigation and Arbitration

There was no material litigation or arbitration during the reporting period.

6. Financial Assets at Fair Value

				Unit: RMB million

	Balance at the	Balance at the end	Changes in	Amount affecting
Name of Items	beginning of the	of the reporting	the reporting	the profit of the
reporting period	period	period	reporting period
Investments in other equity instruments	930	827	(103)	-

Receivables financing	7,016	4,468	(2,548)	-

The financial assets at fair value held by the Company during the reporting period include domestic and overseas listed shares and the equity investment that does not have a quoted market price in an active market, and bills of acceptance issued by banks for the sale of goods and rendering of services.

7. Material Acquisition, Disposal and Restructuring of Assets

During the reporting period, there was no material acquisitions, disposal or restructuring of assets of the Company.

8. Material Connected Transactions

(1) Connected transactions

On June 13, 2019, the third meeting of the Board

in 2019 reviewed and passed the Proposal for Capital Increased Contribution to China Petroleum Finance Company Limited ("CNPC Finance"), approving the capital increase contributions to CNPC Finance by the Company, CNPC and CNPC Capital Company Limited ("CNPC Captial") in proportion with their respective current shareholdings. As at the disclosure date of this report, the proposed capital increase is still subject to the approval by Beijing Bureau of China Banking and Insurance Regulatory Commission. In accordance with the Listing Rules of the Shanghai Stock Exchange ("SSE Listing Rules" or "Shanghai Stock Exchange Listing Rules"), the Listing Rules, CNPC, CNPC Capital and CNPC Finance are all connected persons of the Company. Therefore, the proposed capital increase constitutes a connected transaction of the Company. For specific details of this transaction, please see the announcements published on the respective websites of the Hong Kong Stock

SIGNIFICANT EVENTS 037

Exchange and the Shanghai Stock Exchange on June 13, 2019, and the connected transaction section disclosed in the 2019 annual report published on the respective websites of the Hong Kong Stock Exchange and Shanghai Stock Exchange on March 26, 2020 and March 27, 2020 respectively.

Continuing connected transactions
(a) Connected transactions with CNPC

Pursuant to the Listing Rules and the Shanghai Stock Exchange Listing Rules, since CNPC is the controlling shareholder of the Company, transactions between the Group and CNPC as well as their jointly- held entities constitute connected transactions of the Group. The Group and CNPC as well as their jointly-held entities continue to carry out certain existing continuing connected transactions. The Company had obtained independent Directors' and independent shareholders' approval at the fifth meeting of the Board held on August 23 and August 24, 2017 and the 2017 first extraordinary general meeting held on October 26, 2017, respectively, for a renewal of the existing continuing connected transactions and the new continuing connected transactions, and the proposed caps for the existing continuing connected transactions and the new continuing connected transactions for the period from January 1, 2018 to December 31, 2020.

The Group and CNPC as well as their jointly-held entities will continue to carry out the continuing connected transactions referred to in the following agreements:

Comprehensive Products and Services Agreement
Land Use Rights Leasing Contract and an agreement supplementary thereto
Buildings Leasing Contract (as amended)
Intellectual Property Licensing Contracts
Contract for the Transfer of Rights under Production Sharing Contracts

Details of the above agreements were set out in the

section headed "Connected Transactions" of the 2019 annual report published on the websites of the Hong Kong Stock Exchange and the Shanghai Stock Exchange on March 26, 2020 and March 27, 2020, respectively. Details of the Comprehensive Products and Services Agreement, the Land Use Rights Leasing Contract and its Supplementary Agreement, and the Buildings Leasing Contract (as amended) were published on the websites of the Hong Kong Stock Exchange and the Shanghai Stock Exchange on August 24, 2017 and August 25, 2017 respectively, and were also set out in the meeting materials for the 2017 first extraordinary general meeting published on the website of the Shanghai Stock Exchange on October 19, 2017.

Continuing connected transactions with Beijing Gas Group Company Limited ("Beijing Gas")

Under the Listing Rules, Beijing Gas is a substantial shareholder of PetroChina Beijing Gas Pipeline Co., Ltd., a subsidiary of the Group. Therefore, the transactions between the Group and Beijing Gas constitute connected transactions of the Group. On August 24, 2017, the Group renewed the Products and Services Agreement with Beijing Gas. Pursuant to such agreement, the Company shall provide products and services to Beijing Gas on an continuing basis, including but not limited to the provisions of natural gas and related pipeline transmission services. The term of such agreement shall commence from January 1, 2018 to December 31, 2020. Details of the transaction were published on the respective websites of Hong Kong Stock Exchange and Shanghai Stock Exchange on August 24, 2017 and August 25, 2017, respectively.

During the effective term of the Products and Services Agreement signed with Beijing Gas, the parties agree that a party to the specific agreement in respect of the provision of products and services may, for the purpose of one or more types of products or services, terminate at any time such specific agreement in respect of the provision of specific products and services by giving a written notice at least six months in advance. Further, for products or services that have already been contractually

038 2020 INTERIM REPORT SIGNIFICANT EVENTS

agreed to be provided, a party to the agreement may only terminate such agreement after the above products or services have been provided.

For PetroChina Beijing Natural Gas Pipeline Co., Ltd., since its relevant percentage ratios in respect of its total assets, profits and revenue as calculated based on the 2018 financial data are less than 5%, it has become an insignificant subsidiary of the Group. Pursuant to Rule 14A.33 of the Listing Rules, Beijing Gas has ceased to be a connected person of the Company starting from 2019, and therefore the transactions between the Group and Beijing Gas no longer constitute connected transactions under Chapter 14A of the Listing Rules. Details of the transaction were published on the respective websites of Hong Kong Stock Exchange and Shanghai Stock Exchange on March 21, 2019 and March 22, 2019, respectively.

Pursuant to the financial data of the most recent financial year, i.e. 2019, PetroChina Beijing Natural Gas Pipeline Co., Ltd. becomes a significant subsidiary of the Group. Pursuant to the Listing Rules, Beijing Gas has become a connected person of the Group starting from 2020, and therefore the transactions between the Group and Beijing Gas constitute connected transactions under Chapter 14A of the Listing Rules.

Performance of the continuing connected transactions during the reporting period

During the reporting period, in accordance with CAS, the actual total transaction amounts of the connected transactions between the Group and its connected parties were RMB157,083 million, of which the sales of goods and provision of services by the Group to its connected parties amounted to RMB47,049 million, representing 5% of the same category transactions of the Group, and purchase of goods and services by the Group from the connected parties amounted to RMB110,034 million, representing 13% of the same category transactions of the Group. The balance of the capital provided by the connected parties

to the Group amounted to RMB173,306 million.

Details of the connected transactions during the reporting period have been set out in Note 58 to the financial statements of the Group prepared under CAS and Note 19 to the financial statements of the Group prepared under IFRS.
9. Material Contracts and the Performance Thereof

There was no material transaction, or any trusteeship, sub-contracting and leasing of properties of other companies by the Company, or any trusteeship, sub- contracting and leasing of properties of the Company by other companies which was enacted during the reporting period or extended from periods prior to the reporting period.
As of the end of the reporting period, the Company and its subsidiaries had a guarantee balance of RMB199,600 million, including RMB22,537 million for credit guarantee and RMB170,107 million for performance guarantee, RMB6,956 million for financing guarantee, and the balance of guarantees as of the end of the reporting period accounted for approximately 16.79% of the Group's net asset. The guarantee balance of the Company as of the end of the reporting period did not exist for the guarantee provided to the controlling shareholder, the ultimate controller and its related parties.
The Company did not entrust any other person to carry out cash management during the reporting period nor was there any such entrustment that was extended from periods prior to the reporting period.
The Company had no material external entrusted loans during the reporting period.
Save for disclosed in this interim report, during the reporting period, the Company did not enter into any material contract which requires disclosure.

SIGNIFICANT EVENTS 039

10. Performance of Undertakings

In order to support the business development of the Company, consolidate the relevant quality assets and avoid industry competition, CNPC, the controlling shareholder of the Company, entered into the Agreement on Non-Competition and Pre-emptive Right to Transaction (the "Agreement") with the Company on March 10, 2000. As of the end of the reporting period, except for those already performed, the undertakings not performed by CNPC, the controlling shareholder of the Company, included the follows: (1) due to the fact that the laws of the jurisdiction where ADSs were listed prohibit local citizens from directly or indirectly financing or investing in the oil and gas projects in certain countries, CNPC failed to inject the overseas oil and gas projects in certain countries into the Company; (2) upon execution of the Agreement, CNPC did not strictly comply with the Agreement and obtained business opportunities that competed or were likely to compete with the principal business of the Company. Nevertheless, such industry competition primarily concentrated on oil and gas exploration and development operations at certain overseas countries and regions in which the resources owned by CNPC were insufficient or uncertain.

In connection with matters described above, CNPC issued a Letter of Undertaking to the Company on June 20, 2014 and made additional undertakings that: (1) within ten years from the date of the Letter of Undertaking, after taking into account of political, economic and other factors, the Company may request CNPC to sell offshore oil and gas assets which remain in possession by CNPC and which were in possession by CNPC as at the date of the Letter of Undertaking; (2) for business opportunities relating to investment in offshore oil and gas assets after the date of the Letter of Undertaking, the relevant prior approval procedure of the Company shall be initiated strictly in accordance with the Agreement. Subject to the applicable laws, contractual agreements and procedure requirements, CNPC will sell to the Company offshore oil and gas assets as described in items (1) and (2) above at the request of the Company.

Save for the above additional undertakings, undertakings made by CNPC in the Agreement remain unchanged.

Save for the above undertakings, during the reporting period, there were no significant undertakings made by the Company, shareholders, actual controllers, acquirers, Directors, Supervisors, Senior Management or other related parties during the reporting period or up to the reporting period.

11. Penalties on the Company and its Directors, Supervisors, Senior Management, Controlling Shareholder and De Facto Controller and Remedies Thereto

During the reporting period, none of the Company or its current Directors, Supervisors, Senior Management, controlling shareholder or ultimate controller of the Company was subject to any investigation by competent authorities, enforcement by judicial or disciplinary departments, or was handed over to judicial department or subject to criminal liabilities, subject to investigation or administrative punishment by the China Securities Regulatory Commission, or any denial of participation in the securities market or was deemed unsuitable, nor was subject to any material administrative penalty by other administrative authorities or public condemnation by a stock exchange.

12. Repurchase, Sale or Redemption of Securities

The Company and its subsidiaries did not repurchase, sell or redeem any listed securities of the Company during the six months ended June 30, 2020.

13. Compliance with the Model Code for Securities Transactions by Directors of Listed

Issuers

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers contained in Appendix 10 to the Listing Rules (the "Model

040 2020 INTERIM REPORT SIGNIFICANT EVENTS

Code") in respect of dealing in the Company's shares by its Directors. Upon specific enquiries made to each Director and Supervisor, each Director and Supervisor has confirmed to the Company that each of them had complied with the requirements set out in the Model Code during the reporting period.

14. Interests of Directors, Supervisors and Chief Executives in the Share Capital of the Company

As at June 30, 2020, except that the spouse of Mr. Liu Xianhua held 2,300 A shares of the Company, none of the Directors, Supervisors and Chief Executives had any interest or short positions in any shares, underlying shares or debentures of the Company or any associated corporation within the meaning of Part XV of the Securities and Futures Ordinance that are required to be recorded in the register mentioned under Section 352 of the Securities and Futures Ordinance or as otherwise notifiable to the Company and the Hong Kong Stock Exchange by the Directors, Supervisors and Chief Executives pursuant to the Model Code.

15. Creditworthiness of the Company and its

Controlling Shareholder and Ultimate Controller

During the reporting period, the Company and its controlling shareholder and de facto controller, CNPC,

carried out various businesses in a continuous and steady way, adhering to the philosophy of good faith and the principle of compliance with laws and regulations, and did not incurred any unperformed material court judgement that had come into force or any significant outstanding debt that had become due and payable.

16. Audit Committee

The Audit Committee of the Company comprises Mr. Cai Jinyong, Mr. Jiang, Simon X. and Mr. Liu Yuezhen. The main duties of the Audit Committee are to review and monitor the financial reporting procedures and internal control system of the Group and make recommendations to the Board.

The Audit Committee of the Company has reviewed and confirmed the interim results for the six months ended June 30, 2020.

17. Disclosure of Other Information

Save for disclosed above, there have been no material changes in the information disclosed in the annual report of the Group for the year ended December 31, 2019 in respect of matters required to be disclosed under paragraph 32 of Appendix 16 to the Listing Rules.

SIGNIFICANT EVENTS 041

18. Index of Information Disclosure

		Date of publication
		(or the time of release through
	Names of newspaper of	the website of the Hong
Matter	Kong Stock Exchange or the	Website of release
publication
	Shanghai Stock Exchange,
		if the disclosure was not
		published)
2020 Interest Payment	China Securities Journal		Website of the Hong Kong
Announcement of PetroChina on		Stock Exchange
its 2016 Corporate Bonds (First	Shanghai Securities News	January 13, 2020
Website of the Shanghai
Securities Times
Tranche) (Variety I)			Stock Exchange

2020 Interest Payment	China Securities Journal		Website of the Hong Kong
Announcement of PetroChina on		Stock Exchange
its 2016 Corporate Bonds (First	Shanghai Securities News	January 13, 2020
Website of the Shanghai
Securities Times
Tranche) (Variety II)			Stock Exchange

	China Securities Journal		Website of the Hong Kong
Announcement on Resignation of		Stock Exchange
Chairman of PetroChina	Shanghai Securities News	January 19, 2020
Website of the Shanghai
Securities Times
			Stock Exchange
Report on the Provisional Trust
Management for the Corporate		January 22, 2020	Website of the Shanghai
Bonds of PetroChina Company		Stock Exchange

Limited
Report of China Galaxy Securities
Co., Ltd. on the Provisional Trust
Management of the First Significant		February 3, 2020	Website of the Shanghai
Matters in 2020 for the Corporate		Stock Exchange

Bonds of PetroChina Company
Limited
Announcement of PetroChina on	China Securities Journal		Website of the Hong Kong
	Stock Exchange
the Resolution of the First Meeting	Shanghai Securities News	February 5, 2020
Website of the Shanghai
of the Board of Directors in 2020	Securities Times
			Stock Exchange
Notice of PetroChina on Convening	China Securities Journal		Website of the Hong Kong
	Stock Exchange
the First Extraordinary General	Shanghai Securities News	February 7, 2020
Website of the Shanghai
Meeting in 2020	Securities Times
			Stock Exchange
2020 Interest Payment	China Securities Journal		Website of the Hong Kong
Announcement of PetroChina on		Stock Exchange
its 2016 Corporate Bonds (Second	Shanghai Securities News	February 25, 2020
Website of the Shanghai
Securities Times
Tranche ) (Variety I)			Stock Exchange

2020 Interest Payment	China Securities Journal		Website of the Hong Kong
Announcement of PetroChina on		Stock Exchange
its 2016 Corporate Bonds (Second	Shanghai Securities News	February 25, 2020
Website of the Shanghai
Securities Times
Tranche) (Variety II)			Stock Exchange

			Website of the Hong Kong
H-share Announcement of		March 9, 2020	Stock Exchange
PetroChina		Website of the Shanghai

			Stock Exchange

			Website of the Hong Kong
H-share Announcement of		March 9, 2020	Stock Exchange
PetroChina		Website of the Shanghai

			Stock Exchange

042 2020 INTERIM REPORT SIGNIFICANT EVENTS

		Date of publication
		(or the time of release through
	Names of newspaper of	the website of the Hong
Matter	Kong Stock Exchange or the	Website of release
publication
	Shanghai Stock Exchange,
		if the disclosure was not
		published)
Announcement of PetroChina on the	China Securities Journal		Website of the Hong Kong
	Stock Exchange
Resolution of the Second Meeting	Shanghai Securities News	March 9, 2020
Website of the Shanghai
of the Board of Directors in 2020	Securities Times
			Stock Exchange
2020 Interest Payment	China Securities Journal		Website of the Hong Kong
Announcement of PetroChina on		Stock Exchange
its 2013 Corporate Bonds (First	Shanghai Securities News	March 9, 2020
Website of the Shanghai
Securities Times
Tranche) (Ten-year)			Stock Exchange

Announcement of PetroChina on	China Securities Journal		Website of the Hong Kong
Additional Interim Proposal to the		Stock Exchange
First Extraordinary General Meeting	Shanghai Securities News	March 10, 2020
Website of the Shanghai
Securities Times
in 2020			Stock Exchange


2020 Interest Payment	China Securities Journal		Website of the Hong Kong
Announcement of PetroChina on		Stock Exchange
its 2016 Corporate Bonds (Third	Shanghai Securities News	March 17, 2020
Website of the Shanghai
Securities Times
Tranche) (Variety I)
		Stock Exchange

2020 Interest Payment	China Securities Journal		Website of the Hong Kong
Announcement of PetroChina on		Stock Exchange
its 2016 Corporate Bonds (Third	Shanghai Securities News	March 17, 2020
Website of the Shanghai
Securities Times
Tranche) (Variety II)
		Stock Exchange

Document of the First Extraordinary			Website of the Shanghai
General Meeting of PetroChina in		March 18, 2020
	Stock Exchange
2020

Work Report of the Audit Committee			Website of the Hong Kong
		Stock Exchange
under the Board of Directors of		March 24, 2020
	Website of the Shanghai
PetroChina in 2019
			Stock Exchange
Announcement on the Resolution	China Securities Journal		Website of the Hong Kong
	Stock Exchange
of the First Extraordinary General	Shanghai Securities News	March 25, 2020
Website of the Shanghai
Meeting of PetroChina in 2020	Securities Times
			Stock Exchange
Announcement on the Resolution of	China Securities Journal		Website of the Hong Kong
	Stock Exchange
the First Meeting of the Supervisory	Shanghai Securities News	March 25, 2020
Website of the Shanghai
Committee of PetroChina in 2020	Securities Times
			Stock Exchange
Announcement of PetroChina on	China Securities Journal		Website of the Hong Kong
	Stock Exchange
the Election of Chairman and Vice	Shanghai Securities News	March 25, 2020
Website of the Shanghai
Chairman of the Board of Directors	Securities Times
			Stock Exchange
Legal Opinion on the First			Website of the Shanghai
Extraordinary General Meeting Of		March 25, 2020
	Stock Exchange
PetroChina in 2020


			Website of the Hong Kong
H-share Announcement of		March 26, 2020	Stock Exchange
PetroChina		Website of the Shanghai

			Stock Exchange

SIGNIFICANT EVENTS 043

		Date of publication
		(or the time of release through
	Names of newspaper of	the website of the Hong
Matter	Kong Stock Exchange or the	Website of release
publication
	Shanghai Stock Exchange,
		if the disclosure was not
		published)
Special Statement on the Use of			Website of the Hong Kong
Non-operating Funds and Financial		March 26, 2020	Stock Exchange
Transactions with Other Affiliates for		Website of the Shanghai

2019			Stock Exchange

			Website of the Hong Kong
Audit Report of PetroChina		March 26, 2020	Stock Exchange
	Website of the Shanghai

			Stock Exchange

			Website of the Hong Kong
Audit Report on the Internal		March 26, 2020	Stock Exchange
Controls of PetroChina in 2019		Website of the Shanghai

			Stock Exchange

Environmental, Social and			Website of the Hong Kong
		Stock Exchange
Governance Report of PetroChina		March 26, 2020
	Website of the Shanghai
in 2019
			Stock Exchange
Special Statement and Independent			Website of the Hong Kong
Opinion by Independent Directors		March 26, 2020	Stock Exchange
of PetroChina on External		Website of the Shanghai

Guarantees			Stock Exchange

			Website of the Hong Kong
Work Report of Independent		March 26, 2020	Stock Exchange
Directors of PetroChina in 2019		Website of the Shanghai

			Stock Exchange

			Website of the Hong Kong
2019 Annual Report of PetroChina		March 26, 2020	Stock Exchange
	Website of the Shanghai

			Stock Exchange

Announcement of PetroChina on	China Securities Journal		Website of the Hong Kong
	Stock Exchange
the Resolutions of the Third Meeting	Shanghai Securities News	March 26, 2020
Website of the Shanghai
of the Board of Directors in 2020	Securities Times
			Stock Exchange
2019 Annual Results Announcement	China Securities Journal		Website of the Hong Kong
	Stock Exchange
of PetroChina (Summary of the	Shanghai Securities News	March 26, 2020
Website of the Shanghai
Annual Report)	Securities Times
			Stock Exchange
Announcement of PetroChina on its	China Securities Journal		Website of the Hong Kong
	Stock Exchange
External Guarantee Arrangements	Shanghai Securities News	March 26, 2020
Website of the Shanghai
for 2020	Securities Times
			Stock Exchange
	China Securities Journal		Website of the Hong Kong
Announcement of PetroChina on		Stock Exchange
Renewal of Accounting Firm	Shanghai Securities News	March 26, 2020
Website of the Shanghai
Securities Times
			Stock Exchange
Report on the Provisional Trust			Website of the Shanghai
Management of Corporate Bonds		March 31, 2020
	Stock Exchange
of PetroChina

044 2020 INTERIM REPORT SIGNIFICANT EVENTS

		Date of publication
		(or the time of release through
	Names of newspaper of	the website of the Hong
Matter	Kong Stock Exchange or the	Website of release
publication
	Shanghai Stock Exchange,
		if the disclosure was not
		published)
PetroChina: Report of China
Galaxy Securities Co., Ltd. on the
Provisional Trust Management of		April 1, 2020	Website of the Shanghai
the Second Significant Matters in		Stock Exchange

2020 for the Corporate Bonds of
PetroChina Company Limited
	China Securities Journal		Website of the Hong Kong
Announcement of PetroChina on the		Stock Exchange
Shanghai Securities News	April 3, 2020

Resignation of the Vice President	Securities Times		Website of the Shanghai
			Stock Exchange
Report of the Trustee of the 2012			Website of the Shanghai
Corporate Bonds (First Tranche)		April 8, 2020
	Stock Exchange
(For the Year 2019)

Report of the Trustee of the 2013			Website of the Shanghai
Corporate Bonds (First Tranche)		April 8, 2020
	Stock Exchange
(For the Year 2019)

Report of the Trustee of the 2017			Website of the Shanghai
Corporate Bonds (First Tranche)		April 8, 2020
	Stock Exchange
(For the Year 2019)

PetroChina: Report of China
Galaxy Securities Co., Ltd. on the
Provisional Trust Management of		April 13, 2020	Website of the Shanghai
the Third Significant Matters in		Stock Exchange

2020 for the Corporate Bonds of
PetroChina Company Limited
			Website of the Hong Kong
Notice of PetroChina on the Meeting		April 13, 2020	Stock Exchange
of the Board of Directors		Website of the Shanghai

			Stock Exchange

	China Securities Journal		Website of the Hong Kong
Notice of PetroChina on Convening		Stock Exchange
Shanghai Securities News	April 22, 2020

the 2019 Annual General Meeting	Securities Times		Website of the Shanghai
			Stock Exchange
First Quarterly Report of PetroChina	China Securities Journal		Website of the Shanghai
Shanghai Securities News	April 29, 2020
in 2020 (Main body)	Securities Times		Stock Exchange

			Website of the Hong Kong
First Quarterly Report of PetroChina		April 29, 2020	Stock Exchange
in 2020 (Full text)		Website of the Shanghai

			Stock Exchange

Announcement of PetroChina on	China Securities Journal		Website of the Hong Kong
Adjustment to the Business Scope		Stock Exchange
and Amendments to the Articles of	Shanghai Securities News	April 29, 2020
Website of the Shanghai
Securities Times
Association			Stock Exchange

Announcement of PetroChina on the	China Securities Journal		Website of the Shanghai
Resolutions of the Fourth Meeting	Shanghai Securities News	April 29, 2020
Stock Exchange
of the Board of Directors in 2020	Securities Times

SIGNIFICANT EVENTS 045

		Date of publication
		(or the time of release through
	Names of newspaper of	the website of the Hong
Matter	Kong Stock Exchange or the	Website of release
publication
	Shanghai Stock Exchange,
		if the disclosure was not
		published)
Announcement of PetroChina on	China Securities Journal		Website of the Hong Kong
	Stock Exchange
the Additional Interim Proposal to	Shanghai Securities News	May 15, 2020
Website of the Shanghai
the 2019 Annual General Meeting	Securities Times
			Stock Exchange

Announcement of PetroChina on			Website of the Hong Kong
the Obtaining of CSRC Approval	China Securities Journal		Stock Exchange
for the Registration of the Public	Shanghai Securities News	May 27, 2020
Website of the Shanghai
Issuance of Corporate Bonds to	Securities Times
Professional Investors			Stock Exchange

Documents for the 2019 General		June 3, 2020	Website of the Shanghai
Meeting of PetroChina		Stock Exchange


			Website of the Hong Kong
Announcement of PetroChina on	China Securities Journal		Stock Exchange
the Resolutions Passed at the 2019	Shanghai Securities News	June 11, 2020

General Meeting	Securities Times		Website of the Shanghai

			Stock Exchange

Announcement of PetroChina	China Securities Journal		Website of Shanghai Stock
on the Selection of Employee	Shanghai Securities News	June 11, 2020
Exchange
Representative Supervisors	Securities Times


Announcement of PetroChina on	China Securities Journal,
the Resolution of the Third Meeting		Website of Shanghai Stock
Shanghai Securities News	June 11, 2020
of the Supervisory Committee in	Exchange
Securities Times
2020


			Website of the Hong Kong
Announcement of PetroChina on	China Securities Journal,		Stock
the Resolution of the Fifth Meeting	Shanghai Securities News	June 11, 2020

of the Board of Directors in 2020	Securities Times		Website of Shanghai Stock
			Exchange

Legal Opinion on the 2019 Annual		June 11, 2020	Website of the Shanghai
General Meeting		Stock Exchange


Announcement of PetroChina	China Securities Journal,		Website of Shanghai Stock
on Final Pay-out of Dividends on	Shanghai Securities News	June 20, 2020
Exchange
A-shares for 2019	Securities Times

046 2020 INTERIM REPORT SIGNIFICANT EVENTS

19. Performance of Social Responsibilities

The Company actively performed its social responsibilities and devoted to becoming an excellent corporate citizen of the world, adhered to the principle of "Environmental Priorities, Safety First, Quality- oriented, People-oriented", and strictly abided by the Environmental Protection Law of the PRC and other relevant laws and regulations to prevent and control pollution, enhance ecological protection and maintain social safety. Some subsidiaries of the Company are major pollutant-discharging enterprises as announced by the environmental protection authorities. Public information disclosure regarding the environment has been made by such companies as per relevant regulations of Ministry of Ecology and Environment of the People's Republic of China and the requirements of the local environmental protection authorities on the websites of the local environmental protection bureaus or other websites designated by them. Please refer to such websites for details of the disclosures.

20. Employees

As at June 30, 2020, the Group had 450,337 employees (excluding temporary and seasonal staff).

Based on characteristics of different positions, the Group built various remuneration systems to meet the demand of equity within the Group and competitiveness on the market. In subsidiaries and branches of the Company, an annual salary system is adopted for the management, a positional wage system for supervisory, professional and technical positions and a positional skill-based wage system for operators and workers. In addition, subsidies are offered to those who possess more sophisticated technical and working skills. Each employee is remunerated according to the level of their job position, individual competence and contribution, and with changes in the relevant factors, such remuneration will also be adjusted in a timely manner.

The Group has been consistently focused on employee training as an important means of achieving a robust company strategy based on talent. It serves to increase the calibre of its staff and its competitiveness and helps to build a harmonious enterprise. Employee training of the Group covers basic concepts, policies and regulations, knowledge required for a job position, safety awareness, cultural knowledge and technical skills as a fundamental basis. In practice, training revolves around four comprehensive programmes, namely, competences- building directed at the management, technical innovation at professional and technical staff, skill enhancement at operators and workers and internationalisation of talent. These training efforts are multi-dimensional and diversified in approaches, which can better cater to the Group's development requirements and its needs for building high- calibre working teams.

21. Shareholders' Meetings

On March 25, 2020, the Company held the First Extraordinary General Meeting in 2020 at Beijing Talimu Petroleum Hotel. One resolution of cumulative voting was passed and approved by way of voting at the meeting, among which, one ordinary resolution was passed and approved by more than half of the votes. The details are set out in the announcement published by the Company on the website of the Hong Kong Stock Exchange and Shanghai Stock Exchange, respectively, on March 25, 2020 named Announcement of Resolutions Passed at the First Extraordinary General Meeting of PetroChina in 2020.

On June 11, 2020, the Company convenes 2019 annual general meeting pursuant to the Articles of Association at V-Continent Wuzhou Hotel, Beijing. Ten resolutions of non-cumulative voting and three resolution of cumulative voting were passed and approved at the meeting, among which, ten ordinary resolutions were passed and approved by more than half of the votes, three special resolutions were passed and approved by more than two thirds of the votes. The details are set out

SIGNIFICANT EVENTS 047

in the announcement published by the Company on the website of the Hong Kong Stock Exchange and Shanghai Stock Exchange, respectively, on June 11, 2020 named Announcement of Resolutions Passed at the 2019 Annual General Meeting of PetroChina.

22. Risk Factors

In its course of production and operation, the Group actively took various measures to avoid and mitigate various types of risks. However, in practice, it may not be possible to prevent all risks and uncertainties completely.

(1) Industry Regulations and Tax Policies Risk

The PRC government exercises supervision over the domestic oil and natural gas industry, and its regulatory policies will affect the Group's operating activities such as obtaining the exploration and production licences, the payment of industry-specific taxes and levies, and the implementation of environmental policies and safety standards. Any future changes in the policies of the PRC government in the oil and natural gas industry may also have an impact on the Group's operations.

Taxes and levies are one of the major external factors affecting the operations of the Group. The PRC government has been actively implementing taxation reforms, which may lead to future changes in the taxes and levies relating to the operations of the Group, thereby affecting the operating results of the Group.

(2) Price Fluctuations of Oil and Gas Risk

The Group is engaged in a wide range of oil and gas products-related activities and part of its oil and gas products demands are met through external purchases in international market. The prices of crude oil, refined products and natural gas in the international market are affected by various factors such as changes in global and regional politics and economy, demand and supply of oil and gas, as well as unexpected events and

disputes with international repercussions. The prices of domestic crude oil are determined by reference to the international prices of crude oil. The prices of domestic refined products are adjusted to reflect the price changes in the international crude oil market. Domestic natural gas prices implements the guidance prices of the PRC government.

(3) Foreign Exchange Rate Risk

The Group conducts its business primarily in Renminbi in the PRC, but it keeps certain foreign currencies to pay for the imported crude oil, equipment and other raw materials as well as to repay financial liabilities denominated in foreign currencies. Currently, the PRC government has implemented a regulated floating exchange rate regime based on market supply and demand with reference to a basket of currencies. However, Renminbi is still regulated in capital projects. The exchange rates of Renminbi are affected by domestic and international economic and political changes, and demand and supply for Renminbi. Future exchange rates of Renminbi against other currencies may vary significantly from the current exchange rates, which in turn would affect the operating results and financial position of the Group.

(4) Market Competition Risk

The Group has distinctive advantages in resources, and is in a leading position in the oil and gas industry in the PRC. At present, major competitors of the Group are other large domestic oil and petrochemical producers and distributors. With the gradual opening up of the domestic oil and petrochemical market, large foreign oil and petrochemical companies have become competitors of the Group in certain regions and segments. The Group has been in a leading position in the exploration and production business and natural gas and pipeline business in China, but the Group is facing relatively intense competition in refining, chemicals and marketing of refined products businesses.

048 2020 INTERIM REPORT SIGNIFICANT EVENTS

(5) Uncertainty of the Oil and Gas Reserves Risk

According to industr y characteristics and international practices, both the crude oil and natural gas reserve data disclosed by the Group are estimates only. The Group has engaged internationally recognised valuers to evaluate the crude oil and natural gas reserves of the Group on a regular basis. However, the estimates of the reserves depends on a number of factors, assumptions and variables, such as the quality and quantity of technical and economic data, the prevailing oil and gas prices of the Group etc., many of which are beyond the control of the Group and may be adjusted over time. The results of drilling, testing and exploration after the date of the evaluation may also result in revision of the reserves data of the Group to a certain extent.

(6) Overseas Operations Risk

As the Group operates in a number of countries around the world, it is subject to the influences of different political, legal and regulatory factors prevailing in the countries of operation, including countries which are not very stable and are greatly different from developed countries in certain material aspects. The risks involved primarily include instability in political environment, taxation policies, import and export restrictions, as well as regulatory requirements.

(7) Risk Relating to Climate Change

In recent years, the oil industry has been facing ever increasing challenges posed by global climate change. A number of international, domestic and regional agreements restricting greenhouse gas emission have been signed and become effective. If China or other countries in which the Company operates take more stringent measures to reduce greenhouse gas emission, the revenue and profits earned by the Group may reduce as a result of substantial capital expenditures and taxation expenditures and increases in operating costs incurred and even the strategic investments of the Group may be subject to the unfavourable impact posed by the related laws, regulations and regulatory requirements.

(8) Hidden Hazards and Force Majeure Risk

Oil and gas exploration, development, storage and transportation and the production, storage and transportation of refined products and petrochemical products involve certain risks, which may cause unexpected or dangerous events such as personal injuries or death, property damage, environmental damage and disruption to operations, etc. The hazard risks faced by the Group correspond the expansion in the scale and area of operations. In the meantime, new regulations promulgated by the State in recent years set out higher standard for production safety. The Group has implemented a strict HSE management system and used its best endeavours to avoid the occurrence of various accidents. However, the Group cannot completely avoid potential financial losses caused by such contingent incidents. The Group has adopted strict implementation of laws and regulations of the State, and invested in a timely manner to effectively control the major safety and environmental hazards found. In addition, natural disasters such as earthquake, typhoon, tsunami and emergency public health events may cause losses to the Group's properties and personnel, and may affect the normal operations of the Group.

23. Details of Preference Shares

There was no matter concerning the preference shares requiring disclosure during the reporting period.

24. Events after the Balance Sheet Date

On July 23, 2020, the Company entered into the Framework Agreement on Transaction of Oil and Gas Pipeline Relevant Assets and 10 sub-agreements including the Equity Acquisition Agreement on PetroChina Pipeline Co., Ltd., and the Production and Operation Agreement with China Oil&Gas Pipeline Network Corporation ("PipeChina"). The Company proposes to sell its major oil & gas pipelines, certain gas storages, LNG terminals and initial oil and gas (including its equity interests) to PipeChina for 29.9% of its equity interests (equivalent to RMB149.5 billion) and corresponding cash consideration.

SIGNIFICANT EVENTS 049

Taking December 31, 2019 as the base date, the book value of the net assets disposed in this transaction attributable to owners of the Company is RMB222,880 million, and the appraised value is RMB268,705 million. The final transaction consideration is based on the appraised value, taking into account factors such as the profit and loss during the transition period, subsequent adjustment events and the timing of the delivery of initial oil and gas assets, which will be determined after audit. The transaction has been reviewed and approved by the 6th meeting of the Board of Directors of the Company of 2020 and the 4th meeting of the Supervisory Committee of the Company of 2020. Uncertainty remains since it is subject to the approval of relevant governmental authorities and the general meeting of the Company. Please refer to the announcements published by the Company on the website of Shanghai Stock Exchange numbered as Lin 2020-032 and Lin 2020-033 on July 23, 2020 and August 12, 2020, and the announcement published by the Company on the website of Hong Kong Stock Exchange for details.

Such matter does not affect the continuity of the business or the stability of management of the Group, it may have an impact on the operating results of the Group's natural gas and pipeline business in the short term, and be conducive to the sustainable and healthy development of the Group and achieving sustainable and positive operating results in the long term.

25. Other Significant Events

Impact of the Outbreak of COVID-19

January 2020 witnessed an outbreak of the COVID-19, which severely disrupted the global economy and China is set to take its toll on the Chinese economy. The Group was also significantly affected by the COVID-19, such that there has been a drastic downfall in the demand for refined oil and natural gas in the market, while the prices of crude and refined oil and natural gas have been significantly decreased, and the operation and management of oil and gas industrial chain became more complicated and difficult. The Group actively set

up an anti-COVID-19 steering team to arrange in time for various steps to be taken in response, safeguarding the health of its employees in addition to safe and well- ordered production and operation, implementing special action on improving quality and enhancing profitability, controlling the capital expenditures and costs, optimizing debt settlement structure, actively promoting sales and improving profitability, and accelerating the development of domestic natural gas business, thus trying to minimize the loss arising therefrom and ensure sustainable business development in the long run.

Such matter does not affect the continuity of the business or the stability of management of the Group but had adverse effect on the sustainable and healthy development and operating results of the Group.

(2) Significant Drop of International Crude Oil Prices

In the first half of 2020, affected by multiple factors, the prices of international crude oil experienced a sharp drop that was rare in history. The average prices of North Sea Brent crude oil and WTI crude oil were US$39.95 per barrel and US$36.59 per barrel, respectively, representing a decrease of 39.4% and 36.3% year-on-year. The Group actively takes measures to deal with the risks of crude oil price fluctuations, and strives to maintain stable and healthy development of production and operations.

Such matter does not affect the continuity of business or stability of management of the Group but had adverse effect on the operating results of the Group in the first half of the year.

(3) Phased Adjustment of Price Policies of Natural

Gas

On February 22, 2020, NDRC issued the Notice on Interim Reduction of Gas Cost for Non-residentUse to Support Resumption of Work and Production (Fa Gai Jia Ge [2020] No. 257) (《關於階段性降低非居民用氣成本支持企業復工複產的通知》( 發改價格〔2020〕257

號 )) (the "Notice"), pursuant to which, to act on the government's guideline in respect of proper coordination

050 2020 INTERIM REPORT SIGNIFICANT EVENTS

of anti-COVID-19 efforts as well as economic and social development, the cost of non-resident use of gas will be lowered in the short term. Starting from the date thereof to June 30, 2020, off-season price policies shall be implemented in advance for the city gate prices of natural gas for non-resident use, greater price discounts shall be provided to industries, such as chemical fertilizers, which are deeply affected by the COVID-19, and the end-user prices of natural gas should reduce timely.

Such matter does not affect the continuity of the business or the stability of management of the Group but had certain impact on the operating results of the Group in the first half of the year.

Continuous Implementation of Preferential Corporate Income Tax Policies for the Western Development Program

On April 23, 2020, the Ministry of Finance, the State Taxation Administration and the NDRC jointly issued the Announcement on Continuing Corporate Income Tax Policies for Enterprises of the Western Development Program (Announcement of the Ministry of Finance, State Taxation Administration and NDRC [2020] No.23) (《關於延續西部大開發企業所得稅政策的公告》( 財政部稅務總局國家發展改革委公告 2020 年第 23 號 )), clarifying that from January 1, 2021 to December 31, 2030, the corporate income tax on enterprises established in encouraged industries in the western region will be levied at a reduced rate of 15%. The previous corporate income tax preferential policies for enterprises of the western development program will be extended to the end of 2030.

Such matter does not affect the continuity of the business or the stability of management of the Group and is conducive to the sustainable and healthy development of the Group and achieving sustainable and positive operating results.

Issuance by the State of the Policy Relating to
Special Funds for Clean Energy Development

On June 12, 2020, the Ministry of Finance issued the Interim Measures for the Management of Special Funds for Clean Energy Development (Caijian [2020] No. 190) (《清潔能源發展專項資金管理暫行辦法》( 財建〔2020〕 190 號 )) , which stipulates that using special funds to reward and subsidize for the mining of unconventional natural gas such as coalbed methane (coal gas), shale gas, and tight gas in accordance with the distribution principle of "more production and more subsidy". Subsidy will be awarded multi-step according to the excess degree for the exploitation and utilization of the previous year. If the amount of exploitation and utilization has not reached the amount of the previous year, the rewards and compensation fund will be deducted according to the degree of non-compliance; the excessive part of the unconventional natural gas produced during the heating season will be rewarded and subsidized in accordance with the principle of "more production in winter and more subsidy in winter".

Such matter does not affect the continuity of the business or the stability of management of the Group and is conducive to the on the sustainable and healthy development and operating results of the Group.

Issuance by the State of the Export Tax Rebate
Policy for Fuel Oil

On January 22, 2020, the Ministry of Finance, the State Taxation Administration and the General Administration of Customs issued the Notice on the Policy on Implementing Export Tax Rebates for Bunkering Fuel Oil on International Shipping Vessels (No.4 Announcement of the Ministr y of Finance, the State Taxation Administration, the General Administration of Customs in 2020) (《關於對國際航行船舶加注燃料油實行出口退稅政策

的公告》( 財政部稅務總局海關總署公告 2020 年第 4 號 )),

SIGNIFICANT EVENTS 051

clarifying that refuelling international shipping vessels at coastal ports of China will be entitled to export tax rebate/ exemption, with the VAT export rebate rate being 13%. According to the Provisional Regulations on Consumption Tax, taxable export consumption goods are exempt from consumption tax. The announcement was implemented as from February 1, 2020.

Such matter does not affect the continuity of the business or the stability of management of the Group and is conducive to the sustainable and healthy development and operating results of the Group.

Regulating the Collection and Management of
Taxes on Refined Oil

On June 12, 2020, NDRC and the National Energy Administration issued the Guiding Opinions on Effectively Guaranteeing Energy Security in 2020 (Fa Gai Yun Xing

[2020] No.900) (《關於做好 2020 年能源安全保障工作的指導意見》( 發改運行〔2020〕900 號 )), proposing to intensify the crackdown on smuggling, tax evasion and other illegal activities concerning refined oil products to maintain market order. For local oil refineries that are qualified for importing and using crude oil but have committed serious tax evasion or other violations, their qualification will be cancelled once their evasion or violation is verified by the law enforcement departments, so as to create a market environment of fair competition.

052 2020 INTERIM REPORT DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT

DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT

1. Change of Directors, Supervisors and Senior Management of the Company

On January 19, 2020, Mr. Wang Yilin resigned as Chairman of the Board and Director of the Company due to his age.

On March 9, 2020, the Company convened the second meeting of the Board in 2020, appointing Mr. Duan Liangwei as the President of the Company.

On March 25, 2020, the Company convened the first interim extraordinary general meeting in 2020, electing Mr. Dai Houliang, Mr. Li Fanrong and Mr. Lv Bo as Directors of the Company; at the same date, the Company convened the third meeting of the Board of Directors, electing Mr. Dai Houliang as Chairman of the Board of Directors of the Company and Mr. Li Fanrong as Vice Chairman of the Board of Directors of the Company.

On April 3, 2020, Mr. Wang Zhongcai resigned as Vice President of the Company due to his age.

On June 11, 2020, the Company convened the 2019 annual general meeting, at which Mr. Liu Yuezhen and Mr. Duan Liangwei were elected as Directors of the Company, Ms. Elsie Leung Oi-sie, Mr. Tokuchi Tatsuhito, Mr. Simon Henry, Mr. Cai Jinyong and Mr. Jiang, Simon X. as independent non-executive Directors of the Company, and Mr. Xu Wenrong, Mr. Zhang Fengshan, Mr. Jiang Lifu, Mr. Lu Yaozhong and Mr. Wang Liang as Supervisors of the Company.

On June 11, 2020, in a democratic election by the employee representatives of the Company, Mr. Fu Suotang, Mr. Li Jiamin, Mr. Liu Xianhua and Mr. Li Wendong were elected as employee representative Supervisors of the Company.

2. Basic Particulars of the Current Directors, Supervisors and Other Senior Management

Directors

Name	Gender	Age	Position
Dai Houliang	Male	56	Chairman of the Board

Li Fanrong	Male	56	Vice Chairman of the Board and Non-
executive Director


Liu Yuezhen	Male	58	Non-executive Director

Lv Bo	Male	57	Non-executive Director

Jiao Fangzheng	Male	57	Non-executive Director

Duan Liangwei	Male	52	Executive Director and President

Elsie Leung Oi-sie	Female	81	Independent Non-executive Director

Tokuchi Tatsuhito	Male	67	Independent Non-executive Director

Simon Henry	Male	58	Independent Non-executive Director

Cai Jinyong	Male	61	Independent Non-executive Director

Jiang, Simon X.	Male	66	Independent Non-executive Director

DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT 053

Supervisors

Name	Gender	Age	Position
Xu Wenrong	Male	58	Chairman of the Supervisory Committee

Zhang Fengshan	Male	59	Supervisor

Jiang Lifu	Male	56	Supervisor

Lu Yaozhong	Male	55	Supervisor

Wang Liang	Male	57	Supervisor

Fu Suotang	Male	58	Supervisor appointed by employees'
representatives


Li Jiamin	Male	56	Supervisor appointed by employees'
representatives


Liu Xianhua	Male	57	Supervisor appointed by employees'
representatives


Li Wendong	Male	56	Supervisor appointed by employees'
representatives


Other Senior Management

Name	Gender	Age	Position
Sun Longde	Male	58	Vice President

Wu Enlai	Male	60	Board Secretary

Li Luguang	Male	58	Vice President

Tian Jinghui	Male	57	Vice President

Chai Shouping	Male	58	Chief Financial Officer

Ling Xiao	Male	56	Vice President

Yang Jigang	Male	57	Vice President

3. Shareholdings of the Directors, Supervisors and Senior Management

As at June 30, 2020, no current Directors, Supervisors or other Senior Management of the Company or outgoing Directors, Supervisors or other Senior Management of the Company during the reporting period held any shares of the Company.

054 2020 INTERIM REPORT RELEVANT INFORMATION ON CORPORATE BONDS

RELEVANT INFORMATION ON

CORPORATE BONDS

1. Information on Corporate Bonds Issued But Not Yet Due
All the corporate bonds of the Company which have been issued and listed on the stock exchange but have not yet been due as at the approval date of this interim report include the 2012 Corporate Bonds (First Tranche) of PetroChina Company Limited (the "2012 Corporate Bonds (First Tranche)")(ten-year term and fifteen-year term), the 2013 Corporate Bonds (First Tranche) of PetroChina Company Limited (the "2013 Corporate Bonds (First Tranche)")(ten-year term), the 2016 Corporate Bonds (First Tranche) of PetroChina Company Limited (the "2016 Corporate Bonds (First Tranche)"), the 2016 Corporate Bonds (Second Tranche) of PetroChina Company Limited (the "2016 Corporate Bonds (Second Tranche)"), the 2016 Corporate Bonds (Third Tranche) of PetroChina Company Limited (the "2016 Corporate Bonds (Third Tranche)"), and the 2017 Corporate Bonds (First Tranche) of PetroChina Company Limited (the "2017 Corporate Bonds (First Tranche)"), and the details of which are set out below:

			Date of	Maturity	Amount	Interest	Mode of	Stock
Items	Abbreviated Form	Code	(RMB 100	Exchange
Issue	Date	million)	Rate (%)	Repayment	for Listing
							Annual payment
2012 Corporate							of interest, and
						one lump sum
Bonds (First							repayment of	Shanghai
Tranche) (10-			November	November			principal at	Stock
year term)	12 PetroChina 02	122210.SH	22, 2012	22, 2022	20	4.90	maturity	Exchange

							Annual payment
							of interest, and
2012 Corporate							one lump sum
Bonds (First							repayment of	Shanghai
Tranche) (15-			November	November			principal at	Stock
year term)	12 PetroChina 03	122211.SH	22, 2012	22, 2027	20	5.04	maturity	Exchange

							Annual payment
							of interest, and
2013 Corporate							one lump sum
Bonds (First							repayment of	Shanghai
Tranche) (10-			March 15,	March 15,			principal at	Stock
year term)	13 PetroChina 02	122240.SH	2013	2023	40	4.88	maturity	Exchange

							Annual payment
							of interest, and
2016 Corporate							one lump sum
Bonds (First							repayment of	Shanghai
Tranche) (5-			January	January			principal at	Stock
year term)	16 PetroChina 01	136164.SH	19, 2016	19, 2021	88	3.03	maturity	Exchange

							Annual payment
2016 Corporate							of interest, and
						one lump sum
Bonds (First							repayment of	Shanghai
Tranche) (10-			January	January			principal at	Stock
year term)	16 PetroChina 02	136165.SH	19, 2016	19, 2026	47	3.50	maturity	Exchange

RELEVANT INFORMATION ON CORPORATE BONDS 055

			Date of	Maturity	Amount	Interest	Mode of	Stock
Items	Abbreviated Form	Code	(RMB 100	Exchange
Issue	Date	million)	Rate (%)	Repayment	for Listing
							Annual payment
							of interest, and
2016 Corporate							one lump sum
Bonds (Second							repayment of	Shanghai
Tranche) (5-year			March 3,	March 3,			principal at	Stock
term)	16 PetroChina 03	136253.SH	2016	2021	127	3.15	maturity	Exchange

							Annual payment
							of interest, and
2016 Corporate							one lump sum
Bonds (Second							repayment of	Shanghai
Tranche) (10-			March 3,	March 3,			principal at	Stock
year term)	16 PetroChina 04	136254.SH	2016	2026	23	3.70	maturity	Exchange

							Annual payment
							of interest, and
2016 Corporate							one lump sum
Bonds (Third							repayment of	Shanghai
Tranche) (5-			March 24,	March 24,			principal at	Stock
year term)	16 PetroChina 05	136318.SH	2016	2021	95	3.08	maturity	Exchange

							Annual payment
							of interest, and
2016 Corporate							one lump sum
Bonds (Third							repayment of	Shanghai
Tranche) (10-			March 24,	March 24,			principal at	Stock
year term)	16 PetroChina 06	136319.SH	2016	2026	20	3.60	maturity	Exchange

							Annual payment
							of interest, and
2017 Corporate							one lump sum
						repayment of	Shanghai
Bonds (First			August 18,	August 18,			principal at	Stock
Tranche)	17 PetroChina 01	143255.SH	2017	2020	20	4.30	maturity	Exchange

(2) Subscribers

Qualified investors who meet the requirements of the laws and regulations.

(3) Payment of Interest

During the current reporting period, with regard to all the corporate bonds of the Company, interest was paid on schedule without any delay or inability in payment of interest.

The interest of 2012 Corporate Bonds (First Tranche) formally started to accrue on November 22, 2012. Its first

payment date was November 22, 2013. No payment of interest was due during the reporting period.

The interest of the 2013 Corporate Bonds (First Tranche) formally started to accrue on March 15, 2013. Its first payment date was March 15, 2014 and its payment date within the reporting period was March 15, 2020 (which was not a trading day, resulting in the actual payment date being March 16, 2020) in an amount of RMB195.20 million.

The interest of the 2016 Corporate Bonds (First Tranche) formally started to accrue on January 19, 2016, and its first payment date was January 19, 2017. The interest payment date during the reporting period was

056 2020 INTERIM REPORT RELEVANT INFORMATION ON CORPORATE BONDS

January 19, 2020 (which was not a trading day, resulting in the actual payment date being January 20, 2020) in an amount of RMB431.14 million.

The interest of the 2016 Corporate Bonds (Second Tranche) formally started to accrue on March 3, 2016, and its first payment date was March 3, 2017. The interest payment date during the reporting period was March 3, 2020 in an amount of RMB485.15 million.

The interest of the 2016 Corporate Bonds (Third Tranche) formally started to accrue on March 24, 2016, and its first payment date was March 24, 2017. The interest payment date during the reporting period was March 24, 2020 in an amount of RMB364.60 million.

The interest of 2017 Corporate Bonds (First Tranche) formally started to accrue on August 18, 2017. Its first payment date was August 18, 2018. No payment of interest was due during the reporting period.

2. Relevant Information on the Bond Trustees and the Credit Rating Agency

(1) Bond Trustees

1. 2012 Corporate Bonds (First Tranche), 2013 Corporate Bonds (First Tranche) and 2017 Corporate Bonds (First Tranche)

Bond Trustee: CITIC Securities Company Limited

Legal Representative: Zhang Youjun

Contact Persons: Zhao Wei, Han Bing, Sun Xiaobo

Office Address: CITIC Office Tower, 48 Liangmaqiao

Road, Chaoyang District, Beijing

Tel.: 010-60836701

Fax: 010-60833504

2. 2016 Corporate Bonds (First Tranche)

Bond Trustee: China Galaxy Securities Co., Ltd.

Legal Representative: Chen Gongyan

Contact Persons: Xu Jinjun, Zhang Fan, Yu Junqin

Office Address: 2/F, Tower C, International Enterprise

Mansion, 35 Finance Street, Xicheng District, Beijing

Tel.: 010-66568206,010-83574533

Fax: 010-66568704

3. 2016 Corporate Bonds (Second Tranche) and

2016 Corporate Bonds (Third Tranche)

Bond Trustee: China Securities Co., Ltd.

Legal Representative: Wang Changqing

Contact Persons: Du Meina, Guo Yan, Wang Chonghe, Ren Xianhao, Yin Jianchao, Li Wenjie

Office Address: 2/F, Building B, Kaiheng Center, 2 Chaonei Street. Dongcheng District, Beijing

Tel.: 010-85130656,010-85156322,010-65608354,010-86451097

Fax: 010-65608445

(2) Credit Rating Agency

2012 Corporate Bonds (First Tranche), 2013 Corporate Bonds (First Tranche), 2016 Corporate Bonds (First Tranche), 2016 Corporate Bonds (Second Tranche), 2016 Corporate Bonds (Third Tranche) and 2017 Corporate Bonds (First Tranche)

Credit Rating Agency: United Credit Rating Co., Ltd.

Legal Representative: Wan Huawei

Contact Persons: Liu Hongtao, Gao Peng, Luo Yi

Office Address: 10/F, PICC Building, 2 Jianguomenwai

Street, Chaoyang District, Beijing

Tel.: 010-85172818

Fax: 010-85171273

3. Use of Funds Raised By Issuing Corporate Bonds

As at the end of the reporting period, the use of all funds raised by corporate bonds is consistent with the purpose, plan of use and other matters as undertaken in the offering circular, and such funds have been used up.

The receipt of the funds raised by corporate bonds and the payment of principal and interest are conducted in receipt accounts or special accounts, all of which are

RELEVANT INFORMATION ON CORPORATE BONDS 057

operating normally. Meanwhile, the Company formulated plans for the use of funds raised by bonds and use such raised funds in accordance with the internal procedures for use of funds and related agreements. The relevant business departments carried out strict inspections over the use of such funds to effectively ensure that all funds are used for their designated purposes, to guarantee the smooth operation of the investment, use and audit of funds raised in order to ensure that the funds raised by bonds are used in accordance with the resolution of the shareholders' general meeting and the purpose as disclosed in the offering circular.

4. Information on Follow-up Credit Rating of

Bonds

In accordance with the relevant requirements of the PRC regulatory authorities and United Credit Rating Co., Ltd. ("United Rating") in respect of follow-up credit rating, United Rating shall make a regular follow-up credit rating within two months upon the announcement of the Company's annual audit report every year during the terms of all corporate bonds of the Company, and shall also make follow-up credit ratings from time to time based on relevant circumstances during the terms of all corporate bonds of the Company. United Rating has disclosed the 2020 Track Rating Report on the Corporate Bonds of PetroChina at the Shanghai Stock Exchange, and the result of such rating is AAA, with a stable rating outlook. Investors are reminded to pay close attention to those ratings.

During the reporting period, there was no difference in credit rating by the credit rating agencies of other bonds and debt financing instruments issued by the Company in the PRC.

5. Credit Enhancement Mechanism, Debt

Repayment Plan and Safeguard Measures for

Debt Repayment

During the reporting period, the debt repayment plan and the safeguard measures for debt repayment were

consistent with the provisions and relevant undertakings as set out in the offering circulars without any change. Special accounts for debt repayment were set up and funds for debt repayment were withdrawn in accordance with the relevant provisions.

CNPC provided credit guarantee for the 2012 Corporate Bonds (First Tranche) and the 2013 Corporate Bonds (First Tranche) of the Company. Please refer to the annual report disclosed by CNPC for the information about the guarantor.

The 2016 Corporate Bonds (First Tranche), the 2016 Corporate Bonds (Second Tranche), the 2016 Corporate Bonds (Third Tranche) and 2017 Corporate Bonds (First Tranche) are all unsecured bonds.

6. Convening of Meetings of Bond Holders

During the reporting period, the Company had not encountered any matter requiring the convening of a bond holders' meeting and therefore did not convene any meeting for the bond holders.

7. Performance of Duties by the Bond Trustees

During the reporting period, the bond trustees performed the following duties in their capacity as a debt trustee in accordance with the provisions of the Measures for Administration of the Issue and Trading of Corporate Bonds and the Bond Trusteeship Agreement:

paying continuous attention to the credit status of the Company and the guarantors as well as the implementation of the credit enhancement measures and the safeguard measures for debt repayment;
supervising the use of the funds raised by the Company during the terms of bonds;
carrying out overall investigation and paying continuous attention to the solvency and the effectiveness of the credit enhancement measures of the Company, and making an announcement in connection with the report on

058 2020 INTERIM REPORT RELEVANT INFORMATION ON CORPORATE BONDS

trusteeship affairs to the market at least once every year; and

continuously supervising the performance of the information disclosure obligation by the Company during the terms of bonds.

No conflict of interest has occurred on the part of the trustees in performance of their duties.

CITIC Securities Company Limited, the bond trustee of the 2012 Corporate Bonds (First Tranche), the 2013 Corporate Bonds (First Tranche) and the 2017 Corporate Bonds (First Tranche), published the 2019 trusteeship report on April 8, 2020 and such disclosure was made in the Shanghai Stock Exchange.

China Galaxy Securities Co., Ltd., the bond trustee of the 2016 Corporate Bonds (First Tranche), published the 2019 trusteeship report on June 29, 2020 and such disclosure was made in the Shanghai Stock Exchange.

China Securities Co., Ltd., the bond trustee of the 2016 Corporate Bonds (Second Tranche) and 2016 Corporate Bonds (Third Tranche), published the 2019

trusteeship report on June 30, 2020 and such disclosure was made in the Shanghai Stock Exchange.

CITIC Securities Company Limited kept paying attention to significant events of the Company and published an interim trusteeship report after resignation of the Vice Chairman, Director and President of the Company and such disclosure was made in the Shanghai Stock Exchange.

China Galaxy Securities Co., Ltd. kept paying attention to significant events of the Company and published an interim trusteeship report after resignation of the Chairman, Vice Chairman, Director, President and Vice President of the Company and election of the Chairman and Vice Chairman of the Company and such disclosure was made in the Shanghai Stock Exchange.

China Securities Co., Ltd. kept paying attention to significant events of the Company and published an interim trusteeship report after resignation of the Chairman and Director of the Company and election of the Chairman, Vice Chairman and Directors of the Company and such disclosure was made in the Shanghai Stock Exchange.

8. Major Accounting Data and Financial Indicators Relating to Corporate Bonds

Items	As at June 30, 2020	As at December 31, 2019
Liquidity ratio	0.71	0.71

Quick ratio	0.45	0.43

Asset-liability ratio (%)	47.69	47.15

Items	The First Half of 2020	The First Half of 2019
EBITDA interest coverage ratio Note	12.26	19.47

Loan repayment ratio (%)	100	100

Interest coverage ratio (%)	100	100

Note: The EBITDA interest coverage ratio in the first half of 2020 decreased by 37.0% year-on-year, mainly due to the decrease in profit.

9. Mortgage, Pledge, Seizure, Freezing,

Conditional Realization, Impossible Realization of Assets, Impossibility of Using Assets

to Repay Debts and Other Situations and

Arrangements Involving the Rights Limitation over Assets

As at the end of the reporting period, the material assets of the Company were not subject to limitations.

10. Payment of Interest on Other Bonds and

Debt Financing Instruments

During the reporting period, the interest on other bonds and debt financing instruments of the Company was paid on schedule, without any delay or inability in the payment of interest and principals.

11. Credits Granted by Banks, Use of Credit

Facilities and Repayment of Bank Loans

The Company maintains a good long - ter m partnership with banks and other financial institutions and accordingly obtains relatively high credit lines, resulting in

RELEVANT INFORMATION ON CORPORATE BONDS 059

developing a strong indirect debt financing capacity. As at the end of the reporting period, the Company was granted a total amount of RMB454.4 billion credit facilities by a number of financial institutions, of which RMB71.5 billion were used and RMB382.9 billion remained unused.

During the reporting period, the Company repaid the bank loans on schedule, without any loan extension or forgiveness.

12. Relevant Provisions or Undertakings Stated in the Offering Circular

The Company strictly complies with the provisions of, and also performs the relevant undertakings made under, the Bond Trusteeship Agreement and the terms agreed in connection with each tranche of the relevant bonds.

13. Material Matters

During the reporting period, no material matters as set forth in Article 45 of the Measures for Administration of the Issue and Trading of Corporate Bonds occurred on the part of the Company.

060

FINANCIAL STATEMENTS

2020 INTERIM REPORT

PETROCHINA COMPANY LIMITED

UNAUDITED CONSOLIDATED AND COMPANY BALANCE SHEETS

AS OF JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

		June		December		June		December
ASSETS	Notes	30, 2020	31, 2019	30, 2020	31, 2019
The Group		The Group		The Company		The Company
Current assets
Cash at bank and on hand	7	113,749	110,665	21,136	6,636
Accounts receivable	8	63,550	64,184	8,365	10,072
Receivables financing	9	4,468	7,016	1,928	2,538
Advances to suppliers	10	25,631	17,038	13,888	6,980
Other receivables	11	21,929	21,199	8,915	8,997
Inventories	12	175,298	181,921	106,498	117,757
Other current assets		67,502	64,890	48,929	47,565
Total current assets		472,127		466,913		209,659		200,545
Non-current assets
Investments in other equity instruments	13	827	930	374	437
Long-term equity investments	14	104,103	102,165	406,359	402,584
Fixed assets	15	679,145	703,414	331,978	347,649
Oil and gas properties	16	800,269	831,814	580,419	599,230
Construction in progress	17	266,228	247,996	165,044	158,823
Right-of-use assets	56	152,099	189,632	71,348	107,852
Intangible assets	18	84,313	84,832	64,101	64,530
Goodwill	19	43,139	42,808	-	-
Long-term prepaid expenses	20	10,177	10,258	9,029	8,198
Deferred tax assets	33	29,391	24,259	20,378	14,725
Other non-current assets		35,806	28,169	13,782	10,571
Total non-current assets
	2,205,497		2,266,277		1,662,812		1,714,599
TOTAL ASSETS		2,677,624	2,733,190	1,872,471	1,915,144

The accompanying notes form an integral part of these financial statements.

Chairman		Director and President		Chief Financial Officer
Dai Houliang		Duan Liangwei		Chai Shouping

FINANCIAL STATEMENTS

061

PETROCHINA COMPANY LIMITED

UNAUDITED CONSOLIDATED AND COMPANY BALANCE SHEETS

AS OF JUNE 30, 2020 (CONTINUED)

(All amounts in RMB millions unless otherwise stated)

		June		December		June		December
LIABILITIES AND		30, 2020		31, 2019		30, 2020		31, 2019
SHAREHOLDERS' EQUITY	Notes	The Group		The Group		The Company		The Company
Current liabilities
Short-term borrowings	22	79,280	70,497	51,878	66,027
Notes payable	23	13,039	13,153	10,899	12,046
Accounts payable	24	190,933	260,102	80,158	102,780
Contracts liabilities	25	92,376	82,490	55,553	54,014
Employee compensation payable	26	11,483	10,169	8,976	7,931
Taxes payable	27	44,270	67,382	27,279	42,779
Other payables	28	81,901	34,699	90,398	60,291
Current portion of non-current liabilities	29	114,562	92,879	96,580	36,799
Other current liabilities		36,279	30,048	30,373	25,882
Total current liabilities		664,123		661,419		452,094		408,549
Non-current liabilities
Long-term borrowings	30	223,452	174,411	112,792	110,717
Debentures payable	31	91,511	116,471	87,000	113,000
Lease liabilities	56	129,417	164,143	52,008	85,449
Provisions	32	134,557	137,935	98,924	95,643
Deferred tax liabilities	33	22,058	21,418	-	-
Other non-current liabilities		11,841	12,815	5,787	6,511
Total non-current liabilities		612,836		627,193		356,511		411,320
Total liabilities		1,276,959	1,288,612	808,605	819,869
Shareholders' equity
Share capital	34	183,021	183,021	183,021	183,021
Capital surplus	35	127,365	127,314	127,845	127,845
Special reserve		14,369	12,443	7,907	6,513
Other comprehensive income	53	(29,070)	(27,756)	1,006	979
Surplus reserves	36	197,282	197,282	186,190	186,190
Undistributed profits	37	696,049		738,124		557,897		590,727
Equity attributable to equity holders of the		1,189,016	1,230,428	1,063,866	1,095,275
Company	38
Non-controlling interests	211,649		214,150		-		-
Total shareholders' equity		1,400,665		1,444,578		1,063,866		1,095,275
TOTAL LIABILITIES AND		2,677,624	2,733,190	1,872,471	1,915,144
SHAREHOLDERS' EQUITY

The accompanying notes form an integral part of these financial statements.


Chairman	Director and President	Chief Financial Officer
Dai Houliang		Duan Liangwei	Chai Shouping

062

FINANCIAL STATEMENTS

2020 INTERIM REPORT

PETROCHINA COMPANY LIMITED

UNAUDITED CONSOLIDATED AND COMPANY INCOME STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

					For the six		For the six		For the six	For the six
					months		months		months	months
					ended		ended		ended	ended
					June 30,		June 30,		June 30,	June 30,
Items		Notes	2020	2019	2020	2019
	The Group		The Group		The Company		The Company
Operating income	39	929,045	1,196,259	514,116	669,127
Less: Cost of sales	39	(770,193)	(944,943)	(427,129)	(514,313)
			Taxes and surcharges	40	(98,423)	(112,419)	(76,838)	(86,261)
			Selling expenses	41	(32,272)	(32,901)	(22,213)	(22,535)
			General and administrative expenses	42	(25,135)	(28,605)	(16,059)	(18,984)
			Research and development expenses	43	(6,775)	(7,687)	(5,636)	(6,902)
			Finance expenses	44	(13,505)	(14,028)	(11,103)	(10,120)
			Including: Interest expenses		14,886	15,197	11,216	10,336
			Interest income	45	1,396	1,893	351	465
Add: Other income	4,083	4,655	3,201	3,902
			Investment income	46	1,063	5,233	17,726	18,501
			Including: Income from investment in		570	4,707	1,392	2,210
			associates and joint ventures	47
			Credit (losses) / reversal	(351)	225	(139)	265
			Asset impairment (losses) / reversal	48	(8,151)	(784)	(1,967)	18
			Gains on asset disposal	49	861	87	856	75
Operating (loss) / profit	50(a)	(19,753)		65,092		(25,185)		32,773
Add: Non-operating income	1,460		1,524		1,122		1,265
Less: Non-operating expenses	50(b)	(230)	(4,843)	(2,796)	(4,372)
(Loss) / profit before taxation	51	(18,523)		61,773		(26,859)		29,666
Less: Taxation	(4,804)		(22,638)		6,111		(6,917)
Net (loss) / profit		(23,327)		39,135		(20,748)		22,749
Classified by continuity of operations:		(23,327)	39,135	(20,748)	22,749
	Net (loss) / profit from continuous operation
	Net profit from discontinued operation		-	-	-	-
Classified by ownership:		(29,986)	28,420	(20,748)	22,749
	Shareholders of the Company
	Non-controlling interests		6,659	10,715	-	-
Other comprehensive income, net of tax		(433)	3,007	27	321
Other comprehensive income (net of tax ) attributable		(1,314)	752	27	321
	to equity holders of the Company
(1) Item that will not be reclassified to profit or loss:
			Changes in fair value of investments in other		(66)	138	(48)	55
			equity instruments
(2) Items that may be reclassified to profit or loss:
			Other comprehensive income recognised		75	337	75	266
			under equity method
Translation differences arising from translation		(1,323)	277	-	-
			of foreign currency financial statements
Other comprehensive income (net of tax) attributable		881		2,255		-		-
	to non-controlling interests
Total comprehensive income		(23,760)		42,142		(20,721)		23,070
Attributable to:		(31,300)	29,172	(20,721)	23,070
	Equity holders of the Company
	Non-controlling interests		7,540	12,970	-	-
(Loss) / earnings per share	52	(0.164)	0.155	(0.113)	0.124
Basic (loss) / earnings per share (RMB Yuan)
Diluted (loss) / earnings per share (RMB Yuan)	52	(0.164)	0.155	(0.113)	0.124

The accompanying notes form an integral part of these financial statements.

Chairman		Director and President		Chief Financial Officer
Dai Houliang		Duan Liangwei		Chai Shouping

FINANCIAL STATEMENTS

063

PETROCHINA COMPANY LIMITED

UNAUDITED CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

		For the six		For the six		For the six	For the six
		months		months		months	months
		ended		ended		ended	ended
		June 30,		June 30,		June 30,	June 30,
		2020	2019	2020	2019
Items	Notes	The Group		The Group		The	The
		Company		Company
Cash flows from operating activities
Cash received from sales of goods and rendering of		1,055,994	1,359,181	578,461	773,837
services
Cash received relating to other operating activities		4,815	3,316	4,441	16,449
Sub-total of cash inflows		1,060,809		1,362,497		582,902	790,286
Cash paid for goods and services		(741,812)		(936,835)		(354,069)	(495,966)
Cash paid to and on behalf of employees		(60,409)	(61,177)	(43,123)	(46,305)
Payments of various taxes		(162,074)	(209,232)	(116,525)	(146,018)
Cash paid relating to other operating activities		(17,434)	(20,828)	(15,820)	(12,924)
Sub-total of cash outflows		(981,729)		(1,228,072)		(529,537)	(701,213)
Net cash flows from operating activities	55(a)	79,080		134,425		53,365	89,073
Cash flows from investing activities		212	1,750	8,386	6,513
Cash received from disposal of investments
Cash received from returns on investments		2,333	3,462	17,953	17,725
Net cash received from disposal of fixed assets, oil and gas		139	446	112	437
properties, intangible assets and other long-term assets
Sub-total of cash inflows		2,684		5,658		26,451	24,675
Cash paid to acquire fixed assets, oil and gas properties,		(109,259)	(123,715)	(69,267)	(86,099)
intangible assets and other long-term assets
Cash paid to acquire investments		(4,201)	(11,916)	(9,694)	(13,256)
Sub-total of cash outflows		(113,460)		(135,631)		(78,961)	(99,355)
Net cash flows used for investing activities		(110,776)		(129,973)		(52,510)	(74,680)
Cash flows from financing activities		143	288	-	-
Cash received from capital contributions
Including: Cash received from non-controlling		143	288	-	-
interests' capital contributions to subsidiaries
Cash received from borrowings		576,238	477,745	207,015	193,677
Sub-total of cash inflows		576,381		478,033		207,015	193,677
Cash repayments of borrowings		(515,816)		(447,904)		(179,095)	(189,803)
Cash payments for interest expenses and distribution of		(18,964)	(20,934)	(9,986)	(7,951)
dividends or profits
Including: Subsidiaries' cash payments for
distribution of dividends or profits to		(7,768)	(10,315)	-	-
non-controlling interests
Capital reduction of subsidiaries		-	(44)	-	-
Cash payments relating to other financing activities		(6,972)	(9,118)	(4,289)	(4,413)
Sub-total of cash outflows		(541,752)		(478,000)		(193,370)	(202,167)
Net cash flows from / (used for) financing activities		34,629		33		13,645	(8,490)
Effect of foreign exchange rate changes on cash and		993		201		-	-
cash equivalents
Net increase in cash and cash equivalents	55(b)	3,926	4,686	14,500	5,903
Add: Cash and cash equivalents at the beginning of the period		86,409		85,954		4,636	13,109
Cash and cash equivalents at the end of the period	55(c)	90,335	90,640	19,136	19,012

The accompanying notes form an integral part of these financial statements.


Chairman	Director and President	Chief Financial Officer
Dai Houliang		Duan Liangwei	Chai Shouping

064

FINANCIAL STATEMENTS

2020 INTERIM REPORT

PETROCHINA COMPANY LIMITED

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

			Shareholders' equity attributable to the Company						Total
							Other		Surplus		Undistri-		Non-	share-
Items	Share Capital Special comprehen-			buted		Sub-total		controlling		holders'
capital		surplus		reserve		sive income		reserves		profits		interests	equity
Balance at January 1,	183,021	128,683	13,831	(32,397)	194,245	727,187	1,214,570	196,373	1,410,943
2019
Adjustment for Dalian	-		516		-		-		-		(1,019)	(503)	(1,264)	(1,767)
West Pacific (note6(2))
Balance at January 1,	183,021	129,199	13,831	(32,397)	194,245	726,168	1,214,067	195,109	1,409,176
2019 (After adjustment)
Changes in the six
months ended June
30, 2019
Total comprehensive	-	-	-	752	-	28,420	29,172	12,970	42,142
income
Special reserve-safety
fund reserve
Appropriation	-	-	2,905	-	-	-	2,905	142	3,047
Utilisation	-	-	(674)	-	-	-	(674)	(38)	(712)
Profit distribution
Distribution to	-	-	-	-	-	(16,472)	(16,472)	(10,380)	(26,852)
shareholders
Other equity movement
Equity transaction
with non-controlling	-	(1,990)	-	-	-	-	(1,990)	987	(1,003)
interests
Capital contribution
from non-controlling	-	-	-	-	-	-	-	307	307
interests
Disposal of subsidiaries	-	-	-	-	-	-	-	70	70
Other	-		(43)		-		-		-		-	(43)	(15)	(58)
Balance at June 30,	183,021	127,166	16,062	(31,645)	194,245	738,116	1,226,965	199,152	1,426,117
2019

The accompanying notes form an integral part of these financial statements.


Chairman	Director and President	Chief Financial Officer
Dai Houliang		Duan Liangwei	Chai Shouping

FINANCIAL STATEMENTS

065

PETROCHINA COMPANY LIMITED

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2020 (CONTINUED)

(All amounts in RMB millions unless otherwise stated)

			Shareholders' equity attributable to the Company						Total
							Undistri-				Non-
	Share		Capital		Special		Other		Surplus				share-
Items				comprehen-			buted		Sub-total		controlling	holders'
capital		surplus		reserve		sive income		reserves		profits		interests	equity
Balance at January 1, 2020	183,021	127,314	12,443	(27,756)	197,282	738,124	1,230,428	214,150	1,444,578
Changes in the six
months ended June 30,
2020
Total comprehensive	-	-	-	(1,314)	-	(29,986)	(31,300)	7,540	(23,760)
income
Special reserve-safety
fund reserve
Appropriation	-	-	2,938	-	-	-	2,938	189	3,127
Utilisation	-	-	(1,012)	-	-	-	(1,012)	(48)	(1,060)
Profit distribution
Distribution to	-	-	-	-	-	(12,081)	(12,081)	(10,481)	(22,562)
shareholders
Other equity movement
Equity transaction
with non-controlling	-	-	-	-	-	-	-	(2)	(2)
interests
Capital contribution
from non-controlling	-	-	-	-	-	-	-	143	143
interests
Disposal of subsidiaries	-	1	-	-	-	-	1	(62)	(61)
Other	-		50		-		-		-		(8)	42	220	262
Balance at June 30, 2020	183,021	127,365	14,369	(29,070)	197,282	696,049	1,189,016	211,649	1,400,665

The accompanying notes form an integral part of these financial statements.

Chairman		Director and President		Chief Financial Officer
Dai Houliang		Duan Liangwei		Chai Shouping

066

FINANCIAL STATEMENTS

2020 INTERIM REPORT

PETROCHINA COMPANY LIMITED

UNAUDITED COMPANY STATEMENT OF CHANGES IN SHAREHOLDRS' EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

	Share		Capital		Special		Other		Surplus		Undistributed		Total
Items				comprehen-				shareholders'
capital		surplus		reserve		sive income		reserves		profits		equity
Balance at January 1, 2019	183,021	127,859	7,373	505	183,153	594,169	1,096,080
Changes in the six
months ended June 30,
2019
Total comprehensive	-	-	-	321	-	22,749	23,070
income
Special reserve-safety
fund reserve
Appropriation	-	-	1,921	-	-	-	1,921
Utilisation	-	-	(431)	-	-	-	(431)
Profit distribution
Distribution to	-	-	-	-	-	(16,472)	(16,472)
shareholders
Other equity movement	-		-		-		-		-		(39)		(39)
Balance at June 30, 2019	183,021		127,859		8,863		826		183,153		600,407		1,104,129
Balance at January 1,	183,021	127,845	6,513	979	186,190	590,727	1,095,275
2020
Changes in the six
months ended June 30,
2020
Total comprehensive	-	-	-	27	-	(20,748)	(20,721)
income
Special reserve-safety
fund reserve
Appropriation	-	-	2,009	-	-	-	2,009
Utilisation	-	-	(615)	-	-	-	(615)
Profit distribution
Distribution to	-	-	-	-	-	(12,081)	(12,081)
shareholders
Other equity movement	-		-		-		-		-		(1)		(1)
Balance at June 30, 2020	183,021	127,845	7,907	1,006	186,190	557,897	1,063,866

The accompanying notes form an integral part of these financial statements.


Chairman	Director and President	Chief Financial Officer
Dai Houliang		Duan Liangwei	Chai Shouping

FINANCIAL STATEMENTS

067

PETROCHINA COMPANY LIMITED

UNAUDITED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

1 COMPANY BACKGROUND

PetroChina Company Limited (the "Company") was established as a joint stock company with limited liability on November 5, 1999 by 中国石油天然氣集团公司 (China National Petroleum Corporation ("CNPC")) as the sole proprietor in accordance with the approval Guo Jing Mao Qi Gai [1999] No. 1024 "Reply on the approval of the establishment of PetroChina Company Limited" from the former State Economic and Trade Commission of the People's Republic of China ("China" or "PRC"). CNPC restructured ("the Restructuring") and injected its core business and the related assets and liabilities into the Company. 中国石油天然氣集团公司 was renamed 中国石油天然氣集团有限公司 ("CNPC" before and after the change of name) on December 19, 2017. CNPC is a wholly state- owned company registered in China. The Company and its subsidiaries are collectively referred to as the "Group".

The Group is principally engaged in (i) the exploration, development and production and marketing of crude oil and natural gas; (ii) the refining of crude oil and petroleum products, production and marketing of primary petrochemical products, derivative petrochemical products and other chemical products; (iii) the marketing of refined products and trading business; and (iv) the transmission of natural gas, crude oil and refined products and the sale of natural gas. The principal subsidiaries of the Group are listed in Note 6(1).

2 BASIS OF PREPARATION

The financial statements of the Group are prepared in accordance with Accounting Standards for Business Enterprises issued by the Ministry of Finance ("the MOF") and other regulations issued thereafter (hereafter referred to as the "Accounting Standard for Business Enterprises", "China Accounting Standards" or "CAS"). The financial statements have been prepared on the going concern basis.

3 STATEMENT OF COMPLIANCE WITH THE ACCOUNTING STANDARDS FOR BUSINESS ENTERPRISES

The consolidated and the Company's financial statements for the six months ended June 30, 2020 truly and completely present the financial position of the Group and the Company as of June 30, 2020 and their financial performance and their cash flows for the six months then ended in compliance with the Accounting Standards for Business Enterprises.

These financial statements also comply with the disclosure requirements of the financial statements and notes of "Regulation on the Preparation of Information Disclosures by Companies Issuing Securities, No.15: General Requirements for Financial Reports" as revised by the China Securities Regulatory Commission ("CSRC") in 2014.

4 PRINCIPAL ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES

Accounting Period

The accounting period of the Group starts on January 1 and ends on December 31.

068

FINANCIAL STATEMENTS

2020 INTERIM REPORT

PETROCHINA COMPANY LIMITED

UNAUDITED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

(2) Operating Cycle

The Company takes the period from the exploration or acquisition of the crude oil, natural gas and other assets for exploring, transporting and processing and etc. to their realisation in cash and cash equivalent as a normal operating cycle.

(3) Recording Currency

The recording currency of the Company and most of its subsidiaries is Renminbi ("RMB"). The Group's consolidated financial statements are presented in RMB.

(4) Measurement Properties

Generally are measured at historical cost unless otherwise stated at fair value, net realisable value or present value of the estimated future cash flow expected to be derived.

(5) Foreign Currency Translation

(a) Foreign currency transactions

Foreign currency transactions are translated into RMB at the exchange rates prevailing at the date of the transactions.

Monetary items denominated in foreign currencies at the balance sheet date are translated into RMB at the exchange rates prevailing at the balance sheet date. Exchange differences arising from these translations are recognised in profit or loss except for those arising from foreign currency specific borrowings for the acquisition, construction of qualifying assets in connection with capitalisation of borrowing costs. Non-monetary items denominated in foreign currencies measured at historical cost are translated into RMB at the historical exchange rates prevailing at the date of the transactions at the balance sheet date. The effect of exchange rate changes on cash is presented separately in the cash flow statement.

(b) Translation of financial statements represented in foreign currency

Assets and liabilities of each balance sheet of the foreign operations are translated into RMB at the closing rates at the balance sheet date, while the equity items are translated into RMB at the exchange rates at the date of the transactions, except for the retained earnings and the translation differences in other comprehensive income. Income and expenses for each income statement of the foreign operations are translated into RMB at the approximate exchange rates at the date of the transactions. The currency translation differences resulted from the above-mentioned translations are recognised as other comprehensive income. The cash flows of overseas operations are translated into RMB at the approximate exchange rates at the date of the transactions. The effect of exchange rate changes on cash is presented separately in the cash flow statement.

FINANCIAL STATEMENTS

069

PETROCHINA COMPANY LIMITED

UNAUDITED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

(6) Cash and Cash Equivalents

Cash and cash equivalents refer to all cash on hand and deposit held at call with banks, short-term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(7) Financial Instrument

Financial instruments include cash at bank and on hand, equity securities other than those classified as long- term equity investments, accounts receivables, accounts payables, borrowings, debentures payable and share capital, etc.

(a) Recognition and initial measurement of financial assets and financial liabilities

A financial asset or financial liability is recognised in the balance sheet when the Group becomes a party to the contractual provisions of a financial instrument.

A financial asset (unless it is an accounts receivable without a significant financing component) and financial liability is measured initially at fair value. For financial assets and financial liabilities at fair value through profit or loss, any related directly attributable transaction costs are charged to profit or loss; for other categories of financial assets and financial liabilities, any related directly attributable transaction costs are included in their initial costs. Accounts receivable without a significant financing component is initially measured at the transaction price according to Note 4(22).

(b) Classification and subsequent measurement of financial assets

(i) Classification of the financial assets held by the Group

The classification of financial assets is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. On initial recognition, a financial asset is classified as measured at amortised cost, at fair value through other comprehensive income ("FVOCI"), or at fair value through profit or loss ("FVTPL").

Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:

●it is held within a business model whose objective is to collect contractual cash flows;

●its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

070

FINANCIAL STATEMENTS

2020 INTERIM REPORT

PETROCHINA COMPANY LIMITED

UNAUDITED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

A financial asset is measured at FVOCI if it meets both of the following conditions and is not designated as at

FVTPL:

●it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets;

●its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to designate it as a financial assets at FVOCI. This election is made on an investment-by-investment basis, and from the perspective of the issuer, related investment is in line with the definition of equity instruments.

All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL.

The business model in which a financial asset is managed refers to how the Group manages its financial assets in order to generate cash flows. That is, the Group's business model determines whether cash flows will result from collecting contractual cash flows, selling financial assets, or both. The Group determines the business model for managing financial assets according to the facts and based on the specific business objectives for the managing the financial assets determined by the Group's key management personnel.

In assessing whether the contractual cash flows are solely payments of principal and interest on the principal amount outstanding, the Group considers the contractual cash flow characteristics of the instrument. For the purposes of this assessment, "principal" is defined as the fair value of the financial assets at initial recognition. "Interest" is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs, as well as a profit margin. The Group also assesses whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition.

(ii) Subsequent measurement of the financial assets

●Financial assets at FVTPL:

These financial assets are subsequently measured at fair value. Gains and losses, including any interest or dividend income, are recognised in profit or loss, unless the financial assets are a part of hedging relationship.

●Financial assets measured at amortised cost:

These assets are subsequently measured at amortised cost using the effective interest method. Gains or losses on financial assets that are measured at amortised cost and are not a part of any hedging relationship shall be recognised in profit or loss when the financial asset is derecognised, through the amortisation process or in order to recognise impairment gains or losses.

FINANCIAL STATEMENTS

071

PETROCHINA COMPANY LIMITED

UNAUDITED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

●Debt investments at FVOCI:

These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, impairment and foreign exchange gains and losses are recognised in profit or loss. Other gains and losses are recognised in other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are reclassified to profit or loss.

●Equity investments at FVOCI:

These assets are subsequently measured at fair value. Dividends are recognised in profit or loss. Other gains and losses are recognised in other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are reclassified to retained earnings.

Financial liabilities are classified as measured at FVTPL or amortised cost.

●Financial liabilities at FVTPL:

financial liability is classified as at FVTPL if it is classified as held-for-trading (including derivative financial liability) or it is designated as such on initial recognition.

Financial liabilities at FVTPL are subsequently measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss, unless the financial liabilities are part of a hedging relationship.

●Financial liabilities at amortised cost:

Other financial liabilities are subsequently measured at amortised cost using the effective interest method.

(d) Offsetting

Financial assets and financial liabilities are generally presented separately in the balance sheet, and are not offset. However, a financial asset and a financial liability are offset and the net amount is presented in the balance sheet when both of the following conditions are satisfied:

●the Group currently has a legally enforceable right to set off the recognised amounts;

●the Group intends either to settle on a net basis, or to realise the financial asset and settle the financial liability simultaneously.

(e) Derecognition of financial assets and financial liabilities

Financial asset is derecognised when one of the following conditions is met:

●the Group's contractual rights to the cash flows from the financial asset expire;

072

FINANCIAL STATEMENTS

2020 INTERIM REPORT

PETROCHINA COMPANY LIMITED

UNAUDITED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

●the financial asset has been transferred and the Group transfers substantially all of the risks and rewards of ownership of the financial asset; or

●the financial asset has been transferred, although the Group neither transfers nor retains substantially all of the risks and rewards of ownership of the financial asset, it does not retain control over the transferred asset.

Where a transfer of a financial asset in its entirety meets the criteria for derecognition, the difference between the two amounts below is recognised in profit or loss:

●the carrying amount of the financial asset transferred measured at the date of derecognition;

●the sum of the consideration received from the transfer and, when the transferred financial asset is a debt investment at FVOCI, any cumulative gain or loss that has been recognised directly in other comprehensive income for the part derecognised.

The Group derecognises a financial liability (or part of it) only when its contractual obligation (or part of it) is extinguished.

(f) Impairment

The Group recognises loss allowances for expected credit loss ("ECL") on financial assets measured at amortised cost , contract assets and debt investments measured at FVOCI.

Financial assets measured at fair value, including debt investments or equity investments at FVTPL, equity investments designated at FVOCI and derivative financial assets, are not subject to the ECL assessment.

(i) Measurement of ECLs

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive).

The maximum period considered when estimating ECLs is the maximum contractual period (including extension options) over which the group is exposed to credit risk.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the balance sheet date (or a shorter period if the expected life of the instrument is less than 12 months).

Loss allowances for trade receivables and contract assets are always measured at an amount equal to lifetime ECL. ECLs on these financial assets are estimated using a provision matrix based on the Group's historical credit loss experience, adjusted for factors that are specific to the debtors and an assessment of both the current and forecast general economic conditions at the balance sheet date.

FINANCIAL STATEMENTS

073

PETROCHINA COMPANY LIMITED

UNAUDITED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

Except for trade receivables and contract assets, the Group measures loss allowance at an amount equal to 12-month ECL for the following financial instruments that have low credit risk for which credit risk has not increased significantly since initial recognition, and at an amount equal to lifetime ECL for trade receivables and contract assets.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort, including forward-looking information.

(ii) Financial instruments that have low credit risk

The credit risk on a financial instrument is considered low if the financial instrument has a low risk of default, the borrower has a strong capacity to meet its contractual cash flow obligations in the near term and adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations.

(iii) Significant increases in credit risk

In assessing whether the credit risk of a financial instrument has increased significantly since initial recognition, the Group compares the risk of default occurring on the financial instrument assessed at the balance sheet date with that assessed at the date of initial recognition.

(iv) Credit-impaired financial assets

At each balance sheet date, the Group assesses whether financial assets carried at amortised cost and debt investments at FVOCI are credit-impaired. A financial asset is 'credit-impaired' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable data:

●significant financial difficulty of the borrower or issuer;

●a breach of contract, such as a default or delinquency in interest or principal payments;

●for economic or contractual reasons relating to the borrower's financial difficulty, the Group having granted to the borrower a concession that would not otherwise consider;

●it is probable that the borrower will enter bankruptcy or other financial reorganisation; or

●the disappearance of an active market for that financial asset because of financial difficulties.

074

FINANCIAL STATEMENTS

2020 INTERIM REPORT

PETROCHINA COMPANY LIMITED

UNAUDITED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

(v) Presentation of allowance for ECL

ECLs are remeasured at each balance sheet date to reflect changes in the financial instrument's credit risk since initial recognition. Any change in the ECL amount is recognised as an impairment gain or loss in profit or loss. The Group recognises an impairment gain or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for debt investments that are measured at FVOCI, for which the loss allowance is recognised in other comprehensive income.

(vi) Write-off

The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. A write-off constitutes a derecognition event. This is generally the case when the Group determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, according to the Group's procedures for recovery of amounts due, financial assets that are written off could still be subject to enforcement activities.

Subsequent recoveries of an asset that was previously written off are recognised as a reversal of impairment in profit or loss in the period in which the recovery occurs.

(g) Determination of financial instruments' fair value

Regarding financial instruments, for which there is an active market, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. If there is no active market for a financial instrument, valuation techniques shall be adopted to determine the fair value.

When measuring fair value, the Group takes into account the characteristics of the particular asset or liability (including the condition and location of the asset and restrictions, if any, on the sale or use of the asset) that market participants would consider when pricing the asset or liability at the measurement date, and uses valuation techniques that are appropriate in the circumstances and for which sufficient data and other information are available to measure fair value. Valuation techniques mainly include the market approach, the income approach and the cost approach.

(8) Inventories

Inventories include crude oil and other raw materials, work in progress, finished goods and turnover materials, and are measured at the lower of cost and net realisable value.

Inventories are initially measured at cost. Cost of inventories comprises all costs of purchase, costs of conversion and other expenditure incurred in bringing the inventories to their present location and condition. In addition to the purchase cost of raw materials, work in progress and finished goods include direct labour costs and an appropriate allocation of production overheads.

FINANCIAL STATEMENTS

075

PETROCHINA COMPANY LIMITED

UNAUDITED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

Cost of inventories is determined primarily using the weighted average method. The cost of finished goods and work in progress comprises cost of crude oil, other raw materials, direct labour and production overheads allocated based on normal operating capacity. Turnover materials include low cost consumables and packaging materials. Low cost consumables are amortised with graded amortisation method and packaging materials are expensed off in full.

Provision for decline in the value of inventories is measured as the excess of the carrying value of the inventories over their net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale and relevant taxes. The net realisable value of materials held for use in the production is measured based on the net realisable value of the finished goods in which they will be incorporated. The net realisable value of the inventory held to satisfy sales or service contracts is measured based on the contract price, to the extent of the quantities specified in sales contracts, and the excess portion of inventories is measured based on general selling prices.

The Group adopts perpetual inventory system.

(9) Long-term Equity Investments and Joint Operations

Long-term equity investments comprise the Company's equity investments in subsidiaries, and the Group's equity investments in joint ventures and associates.

Long-term equity investments acquired through business combinations: For a long-term equity investment acquired through a business combination under common control, the proportionate share of the carrying value of shareholders' equity of the combined entity in the consolidated financial statements of the ultimate controlling party shall be treated as initial cost of the investment on the acquisition date. For a long-term equity investment obtained through a business combination not involving entities under common control, the initial cost comprises the aggregate of the fair value of assets transferred, liabilities incurred or assumed, and equity securities issued by the Company, in exchange for control of the acquiree.

Long-term equity investments acquired through other than business combinations: For an acquisition settled in cash, the initial cost of investment shall be the actual cash consideration paid. For an acquisition settled by the issuance of equity securities, the initial cost of investment shall be the fair value of equity securities issued.

(a) Subsidiaries

Investments in subsidiaries are accounted for at cost in the financial statements of the Company and are consolidated after being adjusted by the equity method accounting in consolidated financial statements.

Long-term equity investments accounted for at cost are measured at the initial investment cost unless the investment is classified as held for sale. The cash dividends or profit distributions declared by the investees are recognised as investment income in the income statement.

A listing of the Group's principal subsidiaries is set out in Note 6(1).

076

FINANCIAL STATEMENTS

2020 INTERIM REPORT

PETROCHINA COMPANY LIMITED

UNAUDITED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

(b) Joint ventures and associates

Joint ventures are arrangements whereby the Group and other parties have joint control and rights to the net assets of the arrangements. Associates are those in which the Group has significant influence over the financial and operating policies.

The term "joint control" refers to the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities (activities with significant impact on the returns of the arrangement) require the unanimous consent of the parties sharing control.

The term "significant influence" refers to the power to participate in the formulation of financial and operating policies of an enterprise, but not the power to control, or jointly control, the formulation of such policies with other parties.

The investments in joint ventures and associates are accounted for using the equity method accounting. The excess of the initial cost of the investment over the share of the fair value of the investee's net identifiable assets is included in the initial cost of the investment. While the excess of the share of the fair value of the investee's net identifiable assets over the cost of the investment is instead recognised in profit or loss in the period in which the investment is acquired and the cost of the long-term equity investment is adjusted accordingly.

Under the equity method accounting, the Group's share of its investees' post-acquisition profits or losses and other comprehensive income is recognised as investment income or losses and other comprehensive income respectively. When the Group's share of losses of an investee equals or exceeds the carrying amount of the long- term equity investment and other long-term interests which substantively form the net investment in the investee, the Group does not recognise further losses as provisions, unless it has obligations to bear extra losses which meet the criteria of recognition for liabilities according to the related standards for contingencies. Movements in the investee owner's equity other than profit or loss, other comprehensive income and profit distribution should be proportionately recognised in the Group's equity, provided that the share interest of the investee remained unchanged. The share of the investee's profit distribution or cash dividends declared is accounted for as a reduction of the carrying amount of the investment upon declaration. The profits or losses arising from the intra-Group transactions between the Group and its investees are eliminated to the extent of the Group's interests in the investees, on the basis of which the investment income or losses are recognised. The unrealised loss on the intra-Group transaction between the Group and its investees, of which nature is asset impairment, is recognised in full amount, and the relevant unrealised loss is not allowed to be eliminated.

For investments in subsidiaries, joint ventures and associates, if the recoverable amount is lower than its carrying amount, the carrying amount shall be written down to the recoverable amount (Note 4(16)). After an impairment loss has been recognised, it shall not be reversed in future accounting periods for the part whose value has been recovered.

FINANCIAL STATEMENTS

077

PETROCHINA COMPANY LIMITED

UNAUDITED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

(d) Joint Operations

A joint operation is an arrangement whereby the Group and other joint operators have joint control and the Group has rights to the assets and obligation for the liabilities, relating to the arrangement.

The Group recognises items related to its interest in a joint operation as follows:

●its solely-held assets, and its share of any assets held jointly;

●its solely-assumed liabilities, and its share of any liabilities incurred jointly;

●its revenue from the sale of its share of the output arising from the joint operation;

●its share of the revenue from the sale of the output by the joint operation;

●its solely-incurred expenses, and its share of any expenses incurred jointly.

(10) Fixed Assets

Fixed assets comprise buildings, equipment and machinery, motor vehicles and other. Fixed assets purchased or constructed are initially recorded at cost. The fixed assets injected by the state-owned shareholder during the Restructuring were initially recorded at the valuated amount approved by the relevant authorities managing state- owned assets.

Subsequent expenditures for fixed assets are included in the cost of fixed assets only when it is probable that in future economic benefits associated with the items will flow to the Group and the cost of the items can be measured reliably. The carrying amount of the replaced part is derecognised. All other subsequent expenditures are charged to profit or loss during the financial period in which they are incurred.

Fixed assets are depreciated using the straight-line method based on the balance of their costs less estimated residual values over their estimated useful lives. For those fixed assets being provided for impairment loss, the related depreciation charge is determined based on the net value lessening the impairment recognised over their remaining useful lives.

The estimated useful lives, estimated residual value ratios and annual depreciation rates of the fixed assets are as follows:

	Estimated useful lives	Estimated residual	Annual depreciation
	value ratio %	rate %
Buildings	8 to 40 years	5	2.4 to 11.9
Equipment and Machinery	4 to 30 years	3 to 5	3.2 to 24.3
Motor Vehicles	4 to 14 years	5	6.8 to 23.8
Other	5 to 12 years	5	7.9 to 19.0

078

FINANCIAL STATEMENTS

2020 INTERIM REPORT

PETROCHINA COMPANY LIMITED

UNAUDITED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

The estimated useful lives, estimated residual values and depreciation method of the fixed assets are reviewed, and adjusted if appropriate, at year end.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its recoverable amount (Note 4(16)).

The carrying amounts of fixed assets are derecognised when the fixed assets are disposed or no future economic benefits are expected from their use or disposal. When fixed assets are sold, transferred, disposed or damaged, gains or losses on disposal are determined by comparing the proceeds with the carrying amounts of the assets, adjusted by related taxes and expenses, and are recorded in profit or loss in the disposal period.

(11) Oil and Gas Properties

Oil and gas properties include the mineral interests in properties, wells and related facilities arising from oil and gas exploration and production activities.

The costs of obtaining the mineral interests in properties are capitalised when they are incurred and are initially recognised at acquisition costs. Exploration license fee, production license fee, rent and other costs for retaining the mineral interests in properties, subsequent to the acquisition of the mineral interests in properties, are charged to profit or loss.

The Ministry of Natural Resources in China issues production licenses to applicants on the basis of the reserve reports approved by relevant authorities.

The oil and gas properties are amortised at the field level based on the unit of production method except for the mineral interests in unproved properties which are not subjected to depletion. Unit of production rates are based on oil and gas reserves estimated to be recoverable from existing facilities based on the current terms of production licenses.

The carrying amount of oil and gas properties other than the mineral interests in unproved properties is reduced to the recoverable amount when their recoverable amount is lower than their carrying amount. The carrying amount of the mineral interests in unproved properties is reduced to the fair value when their fair value is lower than their carrying amount (Note 4(16)).

(12) Construction in Progress

Construction in progress is recognised at actual cost. The actual cost comprises construction costs, other necessary costs incurred and the borrowing costs eligible for capitalisation to prepare the asset for its intended use. Construction in progress is transferred to fixed assets when the assets are ready for their intended use, and depreciation begins from the following month.

FINANCIAL STATEMENTS

079

PETROCHINA COMPANY LIMITED

UNAUDITED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

Oil and gas exploration costs include drilling exploration costs and the non-drilling exploration costs, the successful efforts method is used for the capitalisation of the drilling exploration costs. Drilling exploration costs included in the oil and gas exploration costs are capitalised as wells and related facilities when the wells are completed and economically proved reserves are found. Drilling exploration costs related to the wells without economically proved reserves less the net residual value are recorded in profit or loss. The related drilling exploration costs for the sections of wells with economically proved reserves are capitalised as wells and related facilities, and the costs of other sections are recorded in profit or loss. Drilling exploration costs are temporarily capitalised pending the determination of whether economically proved reserves can be found within one year of the completion of the wells. For wells that are still pending determination of whether economically proved reserves can be found after one year of completion, the related drilling exploration costs remain temporarily capitalised only if sufficient reserves are found in those wells and further exploration activities are required to determine whether they are economically proved reserves or not, and further exploration activities are under way or firmly planned and are about to be implemented. Otherwise the related costs are recorded in profit or loss. If proved reserves are discovered in a well, for which the drilling exploration costs have been expensed previously, no adjustment should be made to the drilling exploration costs that were expensed, while the subsequent drilling exploration costs and costs for completion of the well are capitalised. The non-drilling exploration costs are recorded in profit or loss when incurred. Oil and gas development costs are capitalised as the respective costs of wells and related facilities for oil and gas development based on their intended use. The economically proved reserves are the estimated quantities of crude oil and natural gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulation before the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether the estimate is a deterministic estimate or probabilistic estimate.

(13) Intangible Assets and Goodwill

Intangible assets include land use rights and patents, etc., and are initially recorded at cost. The intangible assets injected by the state-owned shareholder during the Restructuring were initially recorded at the valued amount approved by the relevant authorities managing the state-owned assets.

Land use rights are amortised using the straight-line method over 30 to 50 years. If it is impracticable to allocate the amount paid for the purchase of land use rights and buildings between the land use rights and the buildings on a reasonable basis, the entire amount is accounted for as fixed assets.

Patent and other intangible assets are initially recorded at actual cost, and amortised using the straight-line method over their estimated useful lives.

The carrying amount of intangible assets is written down to its recoverable amount when the recoverable amount is lower than the carrying amount (Note 4(16)). The estimated useful years and amortisation method of the intangible assets with finite useful life are reviewed, and adjusted if appropriate, at each financial year-end.

The initial cost of goodwill represents the excess of cost of acquisition over the acquirer's interest in the fair value of the identifiable net assets of the acquiree under a business combination not involving entities under common control.

080

FINANCIAL STATEMENTS

2020 INTERIM REPORT

PETROCHINA COMPANY LIMITED

UNAUDITED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

Goodwill is not amortised and is stated in the balance sheet at cost less accumulated impairment losses (Note 4(16)). On disposal of an asset group or a set of asset groups, any attributable goodwill is written off and included in the calculation of the profit or loss on disposal.

(14) Research and Development

Research expenditure incurred is recognised as an expense. Costs incurred on development projects shall not be capitalised unless they satisfy the following conditions simultaneously:

●In respect of the technology, it is feasible to finish the intangible asset for use or sale;

●It is intended by management to finish and use or sell the intangible asset;

●It is able to prove that the intangible asset is to generate economic benefits;

●With the support of sufficient technologies, financial resources and other resources, it is able to finish the development of the intangible asset, and it is able to use or sell the intangible asset; and

●The costs attributable to the development of the intangible asset can be reliably measured.

Costs incurred on development projects not satisfying the above conditions shall be recorded in profit or loss of the current period. Costs incurred on development recorded in profit or loss in previous accounting periods shall not be re-recognised as asset in future accounting periods. Costs incurred on development already capitalised shall be listed as development expenditure in the balance sheet, which shall be transferred to intangible asset from the date when the expected purposes of use are realised.

(15) Long-term Prepaid Expenses

Long-term prepaid expenses are the expenses that should be borne by current and subsequent periods and should be amortised over more than one year. Long-term prepaid expenses are amortised using the straight-line method over the expected beneficial periods and are presented at cost less accumulated amortisation.

(16) Impairment of Non-current Assets

Fixed assets, oil and gas properties except for mineral interests in unproved properties, construction in progress, intangible assets with finite useful life, long-term equity investments, long-term prepaid expenses and right-of-use assets are tested for impairment if there is any indication that an asset may be impaired at the balance sheet date. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount if the impairment test indicates that the recoverable amount is less than its carrying amount. The recoverable amount is the higher of an asset's fair value less costs to sell and the present value of the estimated future cash flow expected to be derived from the asset. Impairment should be assessed and recognised for each individual asset. If it is not possible to estimate the recoverable amount of an individual asset, the recoverable amount of the group of assets to which the asset belongs is determined. A group of assets is the smallest group of assets that is able to generate independent cash flow.

FINANCIAL STATEMENTS

081

PETROCHINA COMPANY LIMITED

UNAUDITED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

The goodwill, presented separately in financial statements, is allocated to each asset group or set of asset groups, which is expected to benefit from the synergies of the combination for the purpose of impairment testing, and should be subject to impairment assessment at least on an annual basis regardless whether there exists any indicators of impairment. Where the impairment assessment indicates that, for the cash-generating unit (that includes the allocated goodwill), the recoverable amount is lower than the carrying value, then an impairment loss will be recorded.

The mineral interests in unproved properties are tested annually for impairment. If the cost incurred to obtain a single property is significant, the impairment test is performed and the impairment loss is determined on the basis of the single property. If the cost incurred to obtain a single property is not significant and the geological structure features or reserve layer conditions are identical or similar to those of other adjacent properties, impairment tests are performed on the basis of a group of properties that consist of several adjacent mining areas with identical or similar geological structure features or reserve layer conditions.

Once an impairment loss of these assets is recognised, it is not allowed to be reversed even if the value can be recovered in subsequent period.

(17) Borrowing Costs

Borrowing costs incurred that are directly attributable to the acquisition and construction of fixed assets and oil and gas properties, which require a substantial period of time for acquisition and construction activities to get ready for their intended use, are capitalised as part of the cost of the assets when capital expenditures and borrowing costs have already incurred and the activities of acquisition and construction necessary to prepare the assets to be ready for their intended use have commenced. The capitalisation of borrowing costs ceases when the assets are ready for their intended use. Borrowing costs incurred thereafter are recognised as financial expense. Capitalisation of borrowing costs should be suspended during periods in which the acquisition or construction of a fixed asset is interrupted abnormally, and the interruption lasts for more than 3 months, until the acquisition or construction is resumed.

For a borrowing taken specifically for the acquisition or construction activities for preparing fixed asset and oil and gas property eligible for capitalisation, the to-be-capitalised amount of interests shall be determined according to the actual costs incurred less any income earned on the unused borrowing fund as a deposit in the bank or as a temporary investment.

Where a general borrowing is used for the acquisition or construction of fixed asset and oil and gas property eligible for capitalisation, the Group shall calculate and determine the to-be-capitalised amount of interests on the general borrowing by multiplying the part of the accumulative asset disbursements in excess of the weighted average asset disbursement for the specifically borrowed fund by the weighted average actual rate of the general borrowing used. The actual rate is the rate used to discount the future cash flow of the borrowing during the expected existing period or the applicable shorter period to the originally recognised amount of the borrowing.

082

FINANCIAL STATEMENTS

2020 INTERIM REPORT

PETROCHINA COMPANY LIMITED

UNAUDITED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

(18) Employee Compensation

(a) Short-term benefits

Employee wages or salaries, bonuses, social security contributions such as medical insurance, work injury insurance, maternity insurance and housing fund, measured at the amount incurred or at the applicable benchmarks and rates, are recognised as a liability as the employee provides services, with a corresponding charge to profit or loss or included in the cost of assets where appropriate.

(b) Post-employmentbenefits-Defined Contribution Plans

Pursuant to the relevant laws and regulations of the People's Republic of China, the Group participated in a defined contribution basic pension insurance in the social insurance system established and managed by government organisations. The Group has similar defined contribution plans for its employees in its overseas operations. The Group makes contributions to basic pension insurance plans based on the applicable benchmarks and rates stipulated by the government. Basic pension insurance contributions are recognised as part of the cost of assets or charged to profit or loss as the related services are rendered by the employees.

In addition, the Group joined the corporate annuity plan approved by relevant PRC authorities. Contribution to the annuity plan is charged to expense as incurred.

The Group has no other material obligation for the payment of pension benefits associated with schemes beyond the contributions described above.

(19) Government grants

Government grants are non-reciprocal transfers of monetary or non-monetary assets from the government to the Group except for capital contributions from the government in the capacity as an investor in the Group.

A government grant is recognised when there is reasonable assurance that the grant will be received and that the Group will comply with the conditions attaching to the grant.

If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or receivable. If a government grant is in the form of a transfer of a non-monetary asset, it is measured at fair value.

Government grants related to assets are grants whose primary condition is that the Group qualifying for them should purchase, construct or otherwise acquire long-term assets. Government grants related to income are grants other than those related to assets. A government grant related to an asset is recognised initially as deferred income and amortised to profit or loss in a reasonable and systematic manner within the useful life of the relevant assets. A grant that compensates the Group for expenses or losses to be incurred in the future is recognised initially as deferred income, and recognised in profit or loss or released to relevant cost in the period in which the expenses or losses are recognised. A grant that compensates the Group for expenses or losses already incurred is recognised to profit or loss or released to related cost immediately.

FINANCIAL STATEMENTS

083

PETROCHINA COMPANY LIMITED

UNAUDITED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

Government grants related to daily activities are recognised in other income or written down the related cost and expenses according to the nature of business activities. Government grants related to non-daily activities are recognised in non-operating income or expenses.

(20) Provisions

Provisions for product guarantee, quality onerous contracts etc. are recognised when the Group has present obligations, and it is probable that an outflow of economic benefits will be required to settle the obligations, and the amounts can be reliably estimated.

Provisions are measured at the best estimate of the expenditures expected to be required to settle the present obligation. Factors surrounding the contingencies such as the risks, uncertainties and the time value of money shall be taken into account as a whole in reaching the best estimate of provisions. Where the effect of the time value of money is material, the best estimate is determined by discounting the related future cash flows. The increase in the discounted amount of the provision arising from the passage of time is recognised as interest expense.

Asset retirement obligations which meet the criteria of provisions are recognised as provisions and the amount recognised is the present value of the estimated future expenditure determined in accordance with local conditions and requirements, while a corresponding addition to the related oil and gas properties of an amount equivalent to the provision is also created. This is subsequently depleted as part of the costs of the oil and gas properties. Interest expenses from the assets retirement obligations for each period are recognised with the effective interest method during the useful life of the related oil and gas properties.

If the conditions for the recognition of the provisions are not met, the expenditures for the decommissioning, removal and site cleaning will be expensed in profit or loss when occurred.

(21) Income tax

Current and deferred taxes are recognised in profit or loss, except for income tax arising from business combination or transactions or events which are directly included in owners' equity (including other comprehensive income).

Current tax is the expected tax payable on the taxable income for the year, using tax rates stipulated by the tax law, and any adjustment to tax payable in respect of previous years.

At the balance sheet date, current tax assets are offset against current tax liabilities if the Group has a legal right to settle on a net basis and intends to settle on a net basis, or to realise the asset and settle the liability simultaneously.

084

FINANCIAL STATEMENTS

2020 INTERIM REPORT

PETROCHINA COMPANY LIMITED

UNAUDITED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

Deferred tax assets and deferred tax liabilities are calculated and recognised based on the differences (temporary differences) arising between the tax bases of assets and liabilities and their carrying amounts. The deductible losses, which can be utilised against the future taxable profit in accordance with tax law, are regarded as temporary differences and a deferred tax asset is recognised accordingly. The deferred tax assets and deferred tax liabilities are not accounted for the temporary differences resulting from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profits (or deductible loss). Deferred tax assets and deferred tax liabilities are determined using tax rates that are expected to apply to the period when the related deferred tax asset is realised or the deferred tax liability is settled.

Deferred tax assets of the Group are recognised for deductible temporary differences and deductible losses and tax credits to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences, deductible losses and tax credits can be utilised.

Deferred tax liabilities are recognised for taxable temporary differences arising from investments in subsidiaries, associates and joint ventures, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets are recognised for deductible temporary differences arising from investments in subsidiaries, associates and joint ventures, to the extent that, and only to the extent that, it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

Deferred tax assets and liabilities which meet the following conditions shall be presented on a net basis:

●Deferred tax assets and liabilities are related to the income tax of the same entity within the Group levied by the same authority;

●This entity is legally allowed to settle its current tax assets and liabilities on a net basis.

(22) Revenue Recognition

Revenue is the gross inflow of economic benefits arising in the course of the Group's ordinary activities when the inflows result in increase in shareholders' equity, other than increase relating to contributions from shareholders.

Revenue is recognised when the Group satisfies the performance obligation in the contract by transferring the control over relevant goods or services to the customers.

Where a contract has two or more performance obligations, the Group determines the stand-alone selling price at contract inception of the distinct good or service underlying each performance obligation in the contract and allocates the transaction price in proportion to those stand-alone selling prices. The Group recognises as revenue the amount of the transaction price that is allocated to each performance obligation. For the contract which the Group grants a customer the option to acquire additional goods or services (such as, loyalty points), the Group assesses whether the option provides a material right to the customer. If the option provides a material right, the Group recognises the option as a performance obligation.

FINANCIAL STATEMENTS

085

PETROCHINA COMPANY LIMITED

UNAUDITED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

The transaction price is the amount of consideration to which the Group expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties. The Group recognises the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur when the uncertainty associated with the variable consideration is subsequently resolved. To determine the transaction price for contracts in which a customer promises consideration in a form other than cash, the Group measures the non-cash consideration at fair value. If the Group cannot reasonably estimate the fair value of the non-cash consideration, the Group measures the consideration indirectly by reference to the stand-alone selling price of the goods or services promised to the customer in exchange for the consideration. The consideration which the Group expects to refund to the customer is recognised as refund liabilities and excluded from transaction price. Where the contract contains a significant financing component, the Group recognises the transaction price at an amount that reflects the price that a customer would have paid for the promised goods or services if the customer had paid cash for those goods or services when (or as) they transfer to the customer. The difference between the amount of promised consideration and the cash selling price is amortised using an effective interest method over the contract term. The Group does not adjust the consideration for any effects of a significant financing component if it expects, at contract inception, that the period between when the Group transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

The Group satisfies a performance obligation over time if one of the following criteria is met; or otherwise, a performance obligation is satisfied at a point in time:

●The customer simultaneously receives and consumes the benefits provided by the Group's performance as the Group performs;

●The customer can control the asset created or enhanced during the Group's performance; or

●The Group's performance does not create an asset with an alternative use to it and the Group has an enforceable right to payment for performance completed to date.

For performance obligation satisfied over time, the Group recognises revenue over time by measuring the progress towards complete satisfaction of that performance obligation. When the outcome of that performance obligation cannot be measured reasonably, but the Group expects to recover the costs incurred in satisfying the performance obligation, the Group recognises revenue only to the extent of the costs incurred until such time that it can reasonably measure the outcome of the performance obligation.

086

FINANCIAL STATEMENTS

2020 INTERIM REPORT

PETROCHINA COMPANY LIMITED

UNAUDITED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

For performance obligation satisfied at a point in time, the Group recognises revenue at the point in time at which the customer obtains control of relevant goods or services. To determine whether a customer has obtained control of goods or services, the Group considers the following indicators:

●The Group has a present right to payment for the product or service;

●The Group has transferred physical possession of the goods to the customer;

●The Group has transferred the legal title of the goods or the significant risks and rewards of ownership of the goods to the customer; and

●The customer has accepted the goods or services.

A contract asset is the Group's right to consideration in exchange for goods or services that it has transferred to a customer when that right is conditional on something other than the passage of time. The Group recognises loss allowances for expected credit loss on contract assets (Note 4(7)(f)). Accounts receivable is the Group's right to consideration that is unconditional (only the passage of time is required). A contract liability is the Group's obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer.

The following is the description of accounting policies regarding revenue from the Group's principal activities:

(a) Sales of goods

The Group shall recognise revenue when (or as) the customer obtains control of relevant product. Obtaining control of relevant product means that a customer can dominate the use of the product and obtain almost all the economic benefits from it.

(b) Rendering of services

The Group recognises its revenue from rendering of services on performance progress. Customers simultaneously receive the service as the Group performs its obligation over time and consume the benefits arising from the Group's performance. Otherwise, a performance obligation is satisfied at a point in time, the Group shall recognise revenue when (or as) the customer obtains control of revenue service.

Under its customer loyalty programme, the Group allocates a portion of the transaction price received to loyalty points that are redeemable against any future purchases of the Group's goods or services. This allocation is based on the relative stand-alone selling prices. The amount allocated to the loyalty programme is deferred, and is recognised as revenue when loyalty points are redeemed or expire.

FINANCIAL STATEMENTS

087

PETROCHINA COMPANY LIMITED

UNAUDITED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

(23) Contract costs

Contract costs are either the incremental costs of obtaining a contract with a customer or the costs to fulfil a contract with a customer.

Incremental costs of obtaining a contract are those costs that the Group incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained. The Group recognises as an asset the incremental costs of obtaining a contract with a customer if it expects to recover those costs, unless the expected amortisation period is one year or less from the date of initial recognition of the asset, in which case the costs are expensed when incurred. Other costs of obtaining a contract are expensed when incurred.

If the costs to fulfil a contract with a customer are not within the scope of inventories or other accounting standards, the Group recognises an asset from the costs incurred to fulfil a contract only if those costs meet all of the following criteria:

●The costs relate directly to an existing contract or to a specifically identifiable anticipated contract, including direct labour, direct materials, allocations of overheads (or similar costs), costs that are explicitly chargeable to the customer and other costs that are incurred only because the Group entered into the contract;

●The costs generate or enhance resources of the Group that will be used in satisfying (or in continuing to satisfy) performance obligations in the future; and

●The costs are expected to be recovered.

Assets recognised for the incremental costs of obtaining a contract and assets recognised for the costs to fulfil a contract (the "assets related to contract costs") are amortised on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the assets relate and recognised in profit or loss for the current period. The Group recognises the incremental costs of obtaining a contract as an expense when incurred if the amortisation period of the asset that the entity otherwise would have recognised is one year or less.

The Group recognises an impairment loss in profit or loss to the extent that the carrying amount of an asset related to contract costs exceeds:

●Remaining amount of consideration that the Group expects to receive in exchange for the goods or services to which the asset relates; less

●The costs that relate directly to providing those goods or services that have not yet been recognised as expenses.

088

FINANCIAL STATEMENTS

2020 INTERIM REPORT

PETROCHINA COMPANY LIMITED

UNAUDITED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

(24) Leases

A contract is lease if the lessor conveys the right to control the use of an identified asset to lessee for a period of time in exchange for consideration.

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:

●the contract involves the use of an identified asset. An identified asset may be specified explicitly or implicitly specified in a contract and should be physically distinct, or capacity portion or other portion of an asset that is not physically distinct but it represents substantially all of the capacity of the asset and thereby provides the customer with the right to obtain substantially all of the economic benefits from the use of the asset. If the supplier has a substantive substitution right throughout the period of use, then the asset is not identified;

●the lessee has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use;

●the lessee has the right to direct the use of the asset.

For a contract that contains more separate lease components, the lessee and the lessor separate lease components and account for each lease component as a lease separately. For a contract that contains lease and non-lease components, the lessee and the lessor separate lease components from non-lease components. For a contract that contains lease and non-lease components, the lessee allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. The lessor allocates the consideration in the contract in accordance with the accounting policy in Note 4(22).

(a) The Group as a lessee

The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of- use asset is initially measured at cost, which comprises the initial amount of the lease liability, any lease payments made at or before the commencement date (less any lease incentives received), any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the site on which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease.

The right-of-use asset is depreciated using the straight-line method. If the lessee is reasonably certain to exercise a purchase option by the end of the lease term, the right-of-use asset is depreciated over the remaining useful lives of the underlying asset. Otherwise, the right-of-use asset is depreciated from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. Impairment losses of right-of-use assets are accounted for in accordance with the accounting policy described in Note 4(16).

FINANCIAL STATEMENTS

089

PETROCHINA COMPANY LIMITED

UNAUDITED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate.

A constant periodic rate is used to calculate the interest on the lease liability in each period during the lease term with a corresponding charge to profit or loss or included in the cost of assets where appropriate. Variable lease payments not included in the measurement of the lease liability is charged to profit or loss or included in the cost of assets where appropriate as incurred.

Under the following circumstances after the commencement date, the Group remeasures lease liabilities based on the present value of revised lease payments:

●There is a change in the amounts expected to be payable under a residual value guarantee;

●There is a change in future lease payments resulting from a change in an index or a rate used to determine those payments;

●There is a change in the assessment of whether the Group will exercise a purchase, extension or termination option, or there is a change in the exercise of the extension or termination option.

When the lease liability is remeasured, a corresponding adjustment is made to the carrying amount of the right- of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Group recognises the lease payments associated with these leases in profit or loss or as the cost of the assets where appropriate using the straight-line method over the lease term.

(b) The Group as a lessor

The Group determines at lease inception whether each lease is a finance lease or an operating lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset irrespective of whether the legal title to the asset is eventually transferred. An operating lease is a lease other than a finance lease. There are no significant finance leases for the Group.

Lease receipts from operating leases is recognised as income using the straight-line method over the lease term. The initial direct costs incurred in respect of the operating lease are initially capitalised and subsequently amortised in profit or loss over the lease term on the same basis as the lease income. Variable lease payments not included in lease receipts are recognised as income as they are earned.

090

FINANCIAL STATEMENTS

2020 INTERIM REPORT

PETROCHINA COMPANY LIMITED

UNAUDITED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

(25) Assets held for sale and discontinued operations

(a) Assets held for sale

The Group classified a non-current asset or disposal group as held for sale when the carrying amount of a non- current asset or disposal group will be recovered through a sale transaction rather than through continuing use.

A disposal group refers to a group of assets to be disposed of, by sale or otherwise, together as a whole in a single transaction and liabilities directly associated with those assets that will be transferred in the transaction.

A non-current asset or disposal group is classified as held for sale when all the following criterias are met:

●According to the customary practices of selling such asset or disposal group in similar transactions, the non- current asset or disposal group must be available for immediate sale in their present condition subject to terms that are usual and customary for sales of such assets or disposal groups;

●Its sale is highly probable, that is, the Group has made a resolution on a sale plan and has obtained a firm purchase commitment. The sale is to be completed within one year.

Non-current assets or disposal groups held for sale are stated at the lower of carrying amount and fair value less costs to sell (except financial assets (see note 4(7)), deferred tax assets (see note 4(21)) and investment properties with subsequent measurement using the fair value model initially and subsequently). Any excess of the carrying amount over the fair value less costs to sell is recognised as an impairment loss in profit or loss.

(b) Discontinued operations

The Group classifies a separate component as a discontinued operation either upon disposal of the operation or when the operation meets the criteria to be classified as held for sale if it is separately identifiable and satisfies one of the following conditions

●It represents a separate major line of business or a separate geographical area of operations;

●It is part of a single co-ordinated plan to dispose of a separate major line of business or a separate geographical area of operations;

●It is a subsidiary acquired exclusively with a view to resale.

Where an operation is classified as discontinued in the current period, profit or loss from continuing operations and profit or loss from discontinued operations are separately presented in the income statement for the current period. Profit or loss from continuing operation in the comparative income statement is re-presented as if the operation had been discontinued from the start of the comparative year.

FINANCIAL STATEMENTS

091

PETROCHINA COMPANY LIMITED

UNAUDITED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

(26) Dividend Distribution

Dividend distribution is recognised as a liability in the period in which it is approved by a resolution of shareholders' general meeting or by the board of directors authorized by shareholders' general meeting.

(27) Business Combination

A business combination is a transaction or event where the Group obtains the control of one or more enterprises (or a group of assets or net assets) that constitute a business. Business combinations are classified into business combinations involving enterprises under common control and business combinations not involving enterprises under common control.

For a business combination not involving enterprises under common control, the acquirer will consider whether to adopt the simplified method of "concentration test" to determine whether the acquired asset group and others constitute a business. If the concentration test is passed, the asset group will not be deemed as a business. And if the asset group fails the test, it shall be further assessed based on other business criteria.

Where a group of assets or net assets constituting no business are acquired, the Group shall allocate the acquisition cost based on the relative fair value of each identifiable assets acquired and liabilities assumed on the acquisition date, other than adopting the following accounting treatments for business combinations.

(a) Business combination under common control

A business combination involving entities under common control is a business combination in which all of the combining entities are ultimately controlled by the same party or parties both before and after the business combination, and that control is not transitory. The net assets obtained by the acquirer are measured based on their carrying value in the consolidated financial statement of the ultimate controlling party at the combination date. The difference between the carrying value of the net assets obtained and the carrying value of the consideration is adjusted against the capital surplus. If the capital surplus is not sufficient to be offset, the remaining balance is adjusted against retained earnings.

Costs incurred directly attributable to the business combination are recorded in profit or loss when incurred. The transaction costs of the equity securities or debt securities issued which are attributable to the business combination are recorded in the initial recognition costs when acquired. The combination date is the date on which one combining entity obtains control of other combining entities.

(b) Business combination not under common control

A business combination involving entities not under common control is a business combination in which all of the combining entities are not ultimately controlled by the same party or parties both before and after the business combination. The acquisition costs paid and the acquiree's identifiable asset, liabilities and contingent liabilities, if the recognition criteria are met, are measured at their fair value at the acquisition date. Where the cost of combination exceeds the acquirer's interest in the fair value of the acquiree's identifiable net assets, the difference is recognised as goodwill. Where the cost of combination is less than the acquirer's interest in the fair value of the acquiree's identifiable net assets, the difference is recognised directly in profit or loss.

092

FINANCIAL STATEMENTS

2020 INTERIM REPORT

PETROCHINA COMPANY LIMITED

UNAUDITED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

Costs which are directly attributable to the business combination are recorded in profit or loss when incurred. The transaction costs of the equity securities or debt securities issued which are attributable to the business combination are recorded in the initial recognition costs when acquired. The acquisition date is the date on which the acquirer obtains control of the acquiree.

(28) Basis of Preparation of Consolidated Financial Statements

The scope of consolidated financial statements includes the Company and its subsidiaries controlled by the Company. Control exists when the Group has all the following: power over the investees; exposure, or rights to variable returns from its involvement with the investees and has the ability to affect those returns through its power over the investee. When assessing whether the Group has power, only substantive rights (held by the Group and other parties) are considered.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de- consolidated from the date that control ceases. Where a subsidiary was acquired, through a business combination involving entities under common control, the financial statements of the subsidiary are included in the consolidated financial statements based on the carrying amounts of the assets and liabilities of the subsidiary in the financial statements of the ultimate controlling party as if the combination had occurred at the date that the ultimate controlling party first obtained control. The opening balances and the comparative figures of the consolidated financial statements are also restated. And their net profit earned before the combination date shall be presented separately in the consolidated income statement.

When the accounting policies and accounting periods of subsidiaries are not consistent with those of the Company, the Company will make necessary adjustments to the financial statements of the subsidiaries in accordance with the Company's accounting policies and accounting periods. Where a subsidiary was acquired during the reporting period, through a business combination involving entities not under common control, the identifiable assets and liabilities of the acquired subsidiaries are included in the scope of consolidation from the date that control commences, based on the fair value of those identifiable assets and liabilities at the acquisition date.

All material intercompany balances, transactions and unrealised gains within the Group are eliminated upon consolidation. The portion of the shareholders' equity or net profit of the subsidiaries that is not attributable to the Company is treated as non-controlling interests and total comprehensive income and presented separately within shareholders' equity in the consolidated balance sheet or within net profit and total comprehensive income in the consolidated income statement.

(29) Segment Reporting

The Group determines its operating segments based on its organisational structure, management requirements and internal reporting system. On the basis of these operating segments, the Group determines the reporting and disclosure of segmental information.

FINANCIAL STATEMENTS

093

PETROCHINA COMPANY LIMITED

UNAUDITED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

An operating segment refers to a component of the Group that simultaneously meet the following criteria: (1) the component can generate revenue and incur expenses in ordinary activities; (2) the component's operating results can be regularly reviewed by the Group's management to make decisions about resource allocation to the component and assess its performance; (3) the Group can obtain financial information relating to the financial position, operating results and cash flows, etc. of the component. When two or more operating segments exhibit similar economic characteristics and meet certain requirements, the Group may aggregate these operating segments into a single operating segment.

The Group also discloses total external revenue derived from other regions outside Chinese mainland and the total non-current assets located in other regions outside Chinese mainland.

(30) Related Party

If a party has the power to control, jointly control or exercise significant influence over another party, or vice versa, or where two or more parties are subject to common control or joint control from another party, they are considered to be related parties. Related parties may be individuals or enterprises. Enterprises with which the Company is under common control only from the State and that have no other related party relationships are not regarded as related parties.

In addition to the related parties stated above, the Company determines related parties based on the disclosure requirements of Administrative Procedures on the Information Disclosures of Listed Companies issued by the CSRC.

(31) Critical Accounting Estimates and Judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The critical accounting estimates and key assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next accounting periods are outlined below:

(a) Estimation of oil and natural gas reserves

Estimates of oil and natural gas reserves are key elements in the Group's investment decision-making process. They are also an important element in testing for impairment related to oil and gas production activities. Changes in proved oil and natural gas reserves, particularly proved developed reserves, will affect unit-of-production depreciation, depletion and amortisation recorded in the income statements for property, plant and equipment related to oil and gas production activities. A reduction in proved developed reserves will increase depreciation, depletion and amortisation charges. Proved reserve estimates are subject to revision, either upward or downward, based on new information, such as from development drilling and production activities or from changes in economic factors, including product prices, contract terms, evolution of technology or development plans, etc.

094

FINANCIAL STATEMENTS

2020 INTERIM REPORT

PETROCHINA COMPANY LIMITED

UNAUDITED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

(b) Estimation of impairment of fixed assets and oil and gas properties

Fixed assets and oil and gas properties are reviewed for possible impairments when events or changes in circumstances indicate that the carrying amount may not be recoverable. Determination as to whether and how much an asset is impaired involves management estimates and judgements such as future price of crude oil and natural gas, refined and chemical products, the production costs, the product mix, production volumes, production profile and the oil and gas reserves. However, the impairment reviews and calculations are based on assumptions that are consistent with the Group's business plans taking into account current economic conditions. Favourable changes to some assumptions, or not updating assumptions previously made, may allow the Group to avoid the need to impair any assets, whereas unfavourable changes may cause the assets to become impaired. For example, when the assumed future price and production profile of crude oil used for the expected future cash flows are different from the actual price and production of crude oil respectively experienced in the future, the Group may either over or under recognise the impairment losses for certain assets.

The recoverable amount cash-generating unit containing goodwill is the greater of its value in use and the fair value less costs to sell. It is difficult to precisely estimate selling price of the Group's long-lived assets because quoted market prices for such assets may not be readily available. In determining the value in use, expected future cash flows generated by the assets are discounted to their present value, which requires significant judgement relating to forecast sales volume, selling price and operating costs, and discount rate. Management uses all readily available information in determining an amount that is a reasonable approximation of recoverable amount, including estimates based on reasonable and supportable assumptions. Changes to key assumptions can significantly affect the result of the impairment assessment of goodwill.

(d) Estimation of asset retirement obligations

Provision is recognised for the future decommissioning and restoration of oil and gas properties. The amounts of the provision recognised are the present values of the estimated future expenditures. The estimation of the future expenditures is based on current local conditions and requirements, including legal requirements, technology, price level, etc. In addition to these factors, the present values of these estimated future expenditures are also impacted by the estimation of the economic lives of oil and gas properties and estimates of discount rates. Changes in any of these estimates will impact the operating results and the financial position of the Group over the remaining economic lives of the oil and gas properties.

(e) Deferred tax assets

According to the requirements of the competent tax authority, the Company paid income taxes of its branches in the Eastern and Western China Regions in aggregate. The tax losses recorded by the branches in the Eastern China Region has given rise to deferred tax assets, which are expected to be recoverable from future taxable profits generated by the branches in the Eastern China Region. Any policy adjustments may increase or decrease the amount of income tax expenses of the Company.

FINANCIAL STATEMENTS

095

PETROCHINA COMPANY LIMITED

UNAUDITED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

(32) Changes in significant accounting policies

In 2020, the Group has adopted relevant provisions of the Interpretation No. 13 of the Accounting Standards for Business Enterprises (Caikuai [2019] No. 21) ( "Interpretation No. 13") issued by the Ministry of Finance.

Interpretation No. 13 revised three elements that constitute a business, detailed the definition of a business and introduced an optional "concentration test" for acquirers involved in business combinations not involving enterprises under common control to identify whether an acquired business activity or asset group is a business.

In addition, Interpretation No. 13 further clarified that the related parties of the company shall include joint ventures or associates of other group members (the parent and subsidiaries included) and other joint ventures or associates of investors obtaining common control over the company.

The effective date of Interpretation No. 13 is January 1, 2020 and a prospective application of the above changes of accounting policies have been made by the Group. The adoption of Interpretation No. 13 has no material effect on the financial position, financial performance and related party disclosures of the Group.

5 TAXATION

The principal taxes and related tax rates of the Group are presented as below:

Types of taxes	Tax rate	Tax basis and method
Value-Added Tax (the "VAT")	16% or 13%,	Based on taxable value added amount. Tax payable
	10% or 9%, 6%	is calculated using the taxable sales amount
		multiplied by the applicable tax rate less current
		period's deductible VAT input.
Resource Tax	6%	Based on the revenue from sales of crude oil and
		natural gas.
Consumption Tax	Based on quantities	Based on sales quantities of taxable products. RMB
		1.52 yuan per litre for unleaded gasoline, naphtha,
		solvent oil and lubricant. RMB 1.2 yuan per litre for
		diesel and fuel oil.
Corporate Income Tax	5% to 82%	Based on taxable income.
Crude Oil Special Gain Levy	20% to 40%	Based on the sales of domestic crude oil at prices
		higher than a specific level.
City Maintenance and Construction Tax	1%, 5% or 7%	Based on the actual paid VAT and consumption tax.

096

FINANCIAL STATEMENTS

2020 INTERIM REPORT

PETROCHINA COMPANY LIMITED

UNAUDITED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(All amounts in RMB millions unless otherwise stated)

The MOF, the State Administration of Taxation ("SAT") and the General Administration of the Customs jointly issued the Notice on Deepening the Policies Related to Value-Added Tax Reform (Notice No.39 of 2019 of the MOF, the SAT and the General Administration of Customs) on March 20, 2019. Since April 1, 2019, the tax rate for the occurrence of a taxable sale or imported goods by a taxpayer, was adjusted respectively from 16% and 10% to 13% and 9%.

Pursuant to the Circular jointly issued by the MOF, the General Administration of Customs of the PRC and the SAT on Issues Concerning a Proportionate Refund of VAT on Imported Natural Gas between 2011 and 2020 as well as Natural Gas Imported from Central Asia before the end of 2010 (Cai Guan Shui [2011] No.39), if the price of imported natural gas under any state-sanctioned natural gas import program is higher than the selling price fixed by the State, the VAT as paid by the Group on imported natural gas (including LNG) under the above program is refunded on a pro-rata basis by reference to the extent of the import price above the selling price fixed by the State.

The MOF and SAT issued the Notice on Reduction of Resource Tax Assessed on Shale Gas (Cai Shui [2018] No.26) on March 29, 2018. Pursuant to such notice, in order to promote the development and utilization of shale gas and effectively increase natural gas supply, from April 1, 2018 to March 31, 2021, a reduction of 30% will apply to the resource tax assessed on shale gas (at the prescribed tax rate of 6%).

Pursuant to the Notice from the MOF on the Increase of the Threshold of the Crude Oil Special Gain Levy (Cai Shui [2014] No. 115), the threshold of the crude oil special gain levy shall be US$65, which has 5 levels and is calculated and charged according to the progressive and valorem rates on the excess amounts from January 1, 2015.

In accordance with the Circular jointly issued by the MOF, the General Administration of Customs of the PRC and the SAT on Issues Concerning Tax Policies for In-depth Implementation of Western Development Strategy (Cai Shui [2011] No.58), the corporate income tax for the enterprises engaging in the encouraged industries in the Western China Region is charged at a preferential corporate income tax rate of 15% from January 1, 2011 to December 31, 2020. Certain branches and subsidiaries of the Company in the Western China Region obtained the approval for the use of the preferential corporate income tax rate of 15%. The MOF, the SAT and the NDRC issued the Announcement on Continuing the Income Tax Policy for Western Development (Notice No.23 of 2020 of Cai Zheng Bu), the corporate income tax for the enterprises engaging in the encouraged industries in the Western China Region is charged at a preferential corporate income tax rate of 15% from January 1, 2021 to December 31, 2030.

This is an excerpt of the original content. To continue reading it, access the original document here.

Attachments

Original document
Permalink

Disclaimer

PetroChina Company Ltd. published this content on 18 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 September 2020 08:44:10 UTC

Delayed Hong Kong S.E. Other stock markets 02:43:34 2024-04-23 am EDT			5-day change	1st Jan Change
7.23 ^HKD	-0.82%		-3.98%	+40.12%

Apr. 19	PetroChina lifts first spot LNG cargo from PNG national oil firm	RE
Apr. 19	Oil Stocks Rise in Asia on Reports of Israeli Counterstrikes on Iran	DJ

PetroChina lifts first spot LNG cargo from PNG national oil firm	Apr. 19	RE
Oil Stocks Rise in Asia on Reports of Israeli Counterstrikes on Iran	Apr. 19	DJ
Emei Shan Tourism Inks Cooperation Agreement With CNPC Branch	Apr. 16	MT
Wall Street Cues, China Economy Reports Blunt Asian Stocks Markets	Apr. 16	MT
MOVES-PetroChina International promotes crude trading exec to head of Americas	Apr. 16	RE
China's oil majors face uphill climb to adapt to EV future	Apr. 11	RE
China National Petroleum to Boost LNG Tanker Fleet to 25 by 2030	Apr. 11	MT
China National Petroleum's Ex-Deputy General Manager Charged With Taking Bribes	Apr. 09	MT
Tianjin Tianbao Energy Unit Renews Natural Gas Procurement Contract for Another Year	Apr. 04	MT
News Highlights : Top Energy News of the Day - Wednesday at 7 AM ET	Apr. 03	DJ
News Highlights : Top Energy News of the Day - Tuesday at 4 PM ET	Apr. 02	DJ
News Highlights : Top Energy News of the Day - Tuesday at 7 AM ET	Apr. 02	DJ
News Highlights : Top Energy News of the Day - Tuesday at 4 AM ET	Apr. 02	DJ
News Highlights : Top Energy News of the Day - Tuesday at 12 AM ET	Apr. 02	DJ
China's oil majors face uphill climb to adapt to EV future	Apr. 01	RE
News Highlights : Top Energy News of the Day - Monday at 4 PM ET	Apr. 01	DJ
News Highlights : Top Energy News of the Day - Monday at 11 AM ET	Apr. 01	DJ
News Highlights : Top Energy News of the Day - Monday at 7 AM ET	Apr. 01	DJ
News Highlights : Top Energy News of the Day - Monday at 4 AM ET	Apr. 01	DJ
News Highlights : Top Energy News of the Day - Monday at 12 AM ET	Apr. 01	DJ
News Highlights : Top Energy News of the Day - Friday at 4 PM ET	Mar. 29	DJ
News Highlights : Top Energy News of the Day - Friday at 11 AM ET	Mar. 29	DJ
News Highlights : Top Energy News of the Day - Friday at 7 AM ET	Mar. 29	DJ
News Highlights : Top Energy News of the Day - Friday at 4 AM ET	Mar. 29	DJ
News Highlights : Top Energy News of the Day - Friday at 12 AM ET	Mar. 29	DJ

PetroChina Company Limited

Equities

857

CNE1000003W8

Integrated Oil & Gas

PetroChina : 2020 INTERIM REPORT

Latest news about PetroChina Company Limited

Chart PetroChina Company Limited

Company Profile

Income Statement Evolution

Ratings for PetroChina Company Limited

Analysts' Consensus

EPS Revisions

Quarterly earnings - Rate of surprise

Sector Integrated Oil & Gas

	1st Jan change	Capi.
PETROCHINA COMPANY LIMITED	+40.12%	257B
SAUDI ARABIAN OIL COMPANY	-8.64%	1,945B
EXXON MOBIL CORPORATION	+20.58%	477B
SHELL PLC	+13.05%	230B
TOTALENERGIES SE	+10.23%	173B
PETROBRAS	+11.44%	107B
EQUINOR ASA	-7.87%	78.63B
GAZPROM	-.--%	50.03B
SUNCOR ENERGY INC.	+26.12%	50.21B
CENOVUS ENERGY INC.	+31.07%	39.32B