2012Annual report

Integrity, Compliance, Cooperation, Win-Win

Contents

Company ProfileChina Petrochemical Corporation ( Sinopec Group ) is an integrated energy and chemical company with principal businesses in exploration, development, production and trading of petroleum and natural gas; pipeline transportation; refining, marketing and distribution of petroleum products; production and marketing of chemicals; petroleum and petrochemical engineering services; manufacturing and maintenance of petroleum and petrochemical equipment; international trade; research and development, as well as alternative energy development and non-fuel businesses.

● Exploration, Development and Production of Petroleum and Natural Gas

The oil & gas exploration and development businesses of Sinopec are mostly distributed in the hydrocarbon-rich areas both domestically and overseas. In 2012, Sinopec produced 69.49 million tons of crude oil, in which domestic production was 43.18 million tons and overseas equity oil production was 26.31 million tons. Natural gas output was 20.2 billion cubic meters, including 16.9 billion cubic meters domestically and 3.3 billion cubic meters overseas.

● Petroleum Refining, Marketing and Distribution

Sinopec is the largest producer and supplier of chemical products in China. The Company’s major chemical products include petrochemical intermediates, synthetic resins, monomers and polymers for synthetic fibers, synthetic fibers, synthetic rubbers and chemical fertil izers. In 2012, the Company’s ethylene production reached 9.54 million tons, ranking top in China and taking a leading position worldwide. The sales volume of chemical products reached 54.35 million tons.

● Chemicals Production and Marketing

Sinopec is the largest producer and distributor of chemical products in China. The Company’s major chemical products include petrochemical intermediates, synthetic resins, monomers and polymers for synthetic fibers, synthetic fibers, synthetic rubbers and chemical fertilizers. In 2012, the Company’s ethylene production reached 9.54 million tons, ranking top in China and taking a leading position worldwide. The sales volume of chemical products reached 54.35 million tons.

● Petroleum and Petrochemical Engineering Services

Sinopec carries out petroleum and petrochemical engineering services both domestically and overseas, including exploration,

engineering design and construction services. The Company provides petroleum and petrochemical engineering services to support the businesses of Sinopec and other customers in China as well as in international markets. In 2012, Sinopec executed over 498 petroleum engineering and technical service contracts in 43 overseas countries and 26 petrochemical engineering contracts in 8 overseas countries.

● International Trade

Sinopec is engaged in the trading of crude oil, refined oil products, chemicals, equipment and materials. In 2012, the Company’s total trading volumes of crude and refined products were 225 million tons and 25.54 million tons respectively. The Company witnessed rapid growth in the trading of chemicals, equipment and materials.

● Storage Facilities & Logistics

Sinopec has oil and gas pipelines with a total length of nearly 14,000 km and has the largest storage capacity as well as the longest pipeline network for petroleum products in China. By the end of 2012, the total length of Sinopec’s crude oil pipelines was 7,100 km and that of natural gas pipelines was 6,856 km. The total length of the petroleum product pipelines reached 9,615 km.

● Research and Development

Sinopec leverages the research and development strengths across the integrated business value chain. We focus on R&D of core technologies and proprietary technologies, pursuing breakthroughs in new business spectrums while supporting conventional business. With 20 members of the Chinese Academy of Sciences and the Chinese Academy of Engineering as well as 28,000 fulltime research and development staff, Sinopec has applied for 4,865 domestic and international patents, with a total of 1,855 patents granted. Meanwhile, the Company has obtained one Special National Award for Science & Technology Progress and two Golden National Patent Awards.

Chairman's Address 02

Key Figures 04

Corporate Governance 05

CSR Management 06

1. Securing Energy Supply 10

2. Providing Premium Services 18

3. Safe and Reliable Operations 26

4. Green and Low-carbon Growth 36

5. Building Happy Organization 46

6. Rewarding the Society 54

Overseas CSR Report 62

2013 Outlook 70

Public Recognition 72

2012 CSR Chronicles 73

Third-party Review 74

Appendix 75

2012 CSR Report 01

Chairman’s Address Fu ChengyuChairman

China Petrochemical Corporation

Dear friends,

Thank you for taking the time to read our corporate social responsibility report, we look forward to hearing any comments and feedback that you may have.

We believe it is a company’s undeniable duty as well as its moral obligation to meet its social responsibilities. Sinopec has always been committed to building a highly responsible and respectable company, through growing the company, rewarding its shareholders, contributing to social development and benefiting its employees. Our company’s development depends on working closely with society and the environment.

Our ability to fulfill our corporate responsibility commitments was further strengthened in 2012 despite the challenging operating climate and market conditions. We became a member of UN Global Compact Lead and Caring for Climate initiative, and made ten voluntary commitments at Rio+20 United Nations Conference on Sustainable Development. We issued the first environmental protection report among all Chinese industrial enterprises, as well as Sinopec in Brazil, our first country report on corporate social responsibility.

Meeting national energy needs and securing market supply continued to be our major corporate social responsibility strategy in 2012. Our work focused on creating access to more resources. In China, our upstream programmes helped us to increase reserves and boost production. Overseas, we maintained strong growth momentum while managing risks in the upstream business. Despite the regulated products prices, we endeavored to keep the market well supplied with premium oil products throughout the year, including during the consumption peaks in summer and autumn.

In 2012, we maintained emphasis on safe operations and low carbon development. In addition to safe and clean production, we were able to decrease our energy consumption and emissions whilst continually expanding our business scale. We further developed low carbon and renewable energy by growing

our natural gas and geothermal businesses, completing the airworthiness of bio aviation fuel, and making a breakthrough in bio diesel technology. Low carbon development was further embedded through the start of a carbon auditing pilot programme.

We created a better business environment by forming strategic partnerships with numerous provincial and municipal governments, engaging with local communities and promoting common progress. We were recognized by our shareholders for providing more open and transparent governance, for efficiently managing capital markets expectations, and for increasing shareholder return. We upheld our ‘people first’ philosophy and participated in social welfare programmes by sponsoring education, helping alleviate poverty, providing disaster relief, and caring for employees’ needs.

Our efforts have received wide recognition from all walks of society, which has been extremely encouraging for the Company. I am honoured to say that we have been awarded a number of accolades, including Outstanding Corporate Social Responsibility Report prize, UNGC China Best Practice, Special Brightness Prize of China Lifeline Express, Most Socially Responsible Brand by the American International Data Group and Excellence in Implementing Sustainable Environment and Development by UNEP. On behalf of the Board of Directors and all the employees, I’d like to thank all our friends for their continued support.

2013 marks the Company’s 30th anniversary, and whilst we anticipate there to be both valuable opportunities and crucial challenges, it will be critical for us to further consolidate our strength. In opening a new chapter on our journey to becoming a world leading energy and chemical company, we shall strive to increase the quality and efficiency of our expansion, whilst pursuing socially responsible and sustainable development, and striking a balance among the Company, the shareholders, the employees and the society as a whole.

I’d like to conclude by thanking you again, and let’s work together for a better tomorrow.

Mr. Fu Chengyu, Chairman

2012 CSR ReportChina Petrochemical Corporation 0302

Key FiguresItem 2010 2011 2012Operating Performance

Total Assets ( in RMB 100 million ) 14852 17450 19568

Sales Revenue ( in RMB 100 million ) 19690 25520 28306

Taxes & Fees ( in RMB 100 million ) 2813 3298 3223

Crude Production ( in 10,000 tons ) 6096 6480 6949

Natural Gas Output ( in 100 million cubic meters ) 125 156 202

Crude Throughput ( in 10,000 tons ) 21297 21892 22309

Sales Volume of Petroleum Products ( in 10,000 tons ) 14923 16232 17300

Number of Service Stations 30116 30121 30836

Sales Volume of Chemical Products ( in 10,000 tons ) 4350 5080 5435

Customer Satisfaction in the Marketing of Chemicals ( % ) 89.7 92.5 94.2

Number of Patents Applied 2613 3732 3893

Number of Patents Granted 843 1290 1451

Corporate Governance

Anti-Corruption Training Sessions ( in 100,000 ) - 1.1 46.0

Number of Employees signed Anti-Corruption and Self-Discipline Commitment ( in 10,000 persons )

- 7.4 5.3

Safety & Environmental Protection

Accident mortality rate per 1,000 employees ( ‰ ) 0.0048 0.011 0.0030

Number of reported accidents 12 11 3

Fatality 3 7 3

Compliance rate of effluent discharge ( % ) >96 >96 >96

Year-on-year change in industrial water consumption ( % ) -2.01 -1.95 0.36

Year-on-year change in COD in waste water ( % ) - 0.33 -2.62

Year-on-year change in SO2 emission rate ( % ) - -2.24 -3.9

Employees

Collective contract coverage ( % ) 100 100 100

Social insurance coverage ( % ) 100 100 100

Annuity coverage ( % ) 100 100 100

Employee health examination coverage ( % ) 91.2 98.7 98.7

Cases of occupational disease 13 8 13

Social Responsibility

Charitable donations ( in RMB100 million ) 1.9 1.5 1.8

Contributions to poverty relief program ( in RMB10,000 ) 1223 1280 1394

Financial aid to Qinghai and Tibet ( in RMB10,000 ) 2583 3187 4366

Aid-to-Tibet programs implemented 5 9 11

Number of beneficiaries under Lifeline Express Program 3358 3059 3218

Corporate Governance

The Group strengthened its culture in rule of law, compliance management, and vigorously promoted legal reviews in rules and regulations, economic contracts as well as major decision-making. The Administrative License Guide on Large-Scale Petrochemical Project Construction and Business Guide on Compliant Operations in Marketing Segment were published to promote law and compliance in Sinopec subsidiaries.

We have developed and kept refining a company-wide internal control system. Following the internal training programme in 2012, we have been able to further develop the execution and management in internal control, including day-to-day supervision, special inspections and popularization of the information system. The Internal Control Handbook of Sinopec Group (Sinopec Corporation）(Version 2013), which has been updated, has improved standards for identifying defects in the internal control system, revised the evaluation template, and designated internal control requirements to positions at all levels through online inspection. Internal control at the headquarters was enhanced when the amendments came into use on January 1st, 2013.

We further developed a punitive and anti-corruption system. We formulated the key points and task-breakdown for the 2012 punitive and anti-corruption system. According to “2008-2012 Work Plan on Punitive and Anti-Corruption System Construction”, we completed 21 phase-tasks, making progress in 42 long term tasks. We strengthened education on anti-corruption by publishing thematic reports, brochures and TV films about anti-corruption models. 459,753 people have participated in 4,823 anti-corruption courses. We took action to control the risks in occupational integrity. We compiled an Instruction Guide on the pilot work being done on Risk Control in Occupational Integrity and a Guidebook on Integrity Risk Control Work. We selected 14 units under the pilot programme to pave the way for wider implementation.

We strengthened the monitoring of decision making on key items by the central government or the executive committee of the Company. We sent out 10 supervision and inspection teams to monitor 30 items in 46 key projects, formulating the Supervision, Inspection and Accountability Measures on Overseas State Assets of Sinopec (trial version) to standardize the overseas business branches and project operations. Disclose Business to the Public. We focused on developing the 2nd-phase of the Public Information System. More functions were added including statistical analysis, problem screening, price comparison, and non-compliance precaution. We set up 25 precaution check spots, 59 problem screening items and a price comparison platform. As a result, the system’s functions became more sophisticated and flexible.Effective. Set up 489 items to increase the effectiveness of supervision, including material procurement, engineering construction, product sales, capital expenditure, cash management, cost control, asset disposal, safety and environment, and tender and bidding management.

We constantly carried out comprehensive risk management assessments to establish effective risk management standards, organize risk identification and evaluation, and develop strategies and counter-measures to address material risks. After each risk management assessment, we compiled a comprehensive risk management report. In 2012, in line with SASAC requirements to strengthen comprehensive risk management and create a group risk control center, and following in-depth research in reference to the latest theoretical comprehensive risk management framework at home and abroad, a number of measures and standards were put in place to strengthen comprehensive risk management, including a guideline on risk assessment, precaution, supervision and reporting systems, so as to promote comprehensive risk management.

We advocated fair competition and opposition to market monopoly, in accordance with international and Chinese laws and regulations on antitrust and in compliance with competition law. We steadfastly upheld our principles of honest operation and fair competition, in respect for peers, intellectual property rights, consumer rights, and anti-monopoly laws and regulations. This was consistent across all countries where we have contact through investments, trading partners, or customers, so as to protect the interests of each stakeholder.

In 2012, we carried out 1,313 internal audits. Our focus has been on structural adjustments, continued reform, risk prevention and efficiency and we aim to be both world-class and a leader in China in internal audit. We continued to deepen the audits on economic responsibility, management efficiency, investment on fixed assets, internal control and risk management, putting into practice the major audit philosophies.

●Establishment of the Board of Directors

Sinopec made continuous improvements in corporate governance in accordance with the modern enterprise system. Efforts have been focused in 2012 on reinforcing the board of directors’ structure. There are 5 external directors and 1 employee representative director in the 9-director board. Sinopec has standardized the establishment of the Group Board of Directors, separating the decision-making, execution and supervision, and building a corporate governance system which defines the clear division of different functions and responsibilities. The internal control and risk management systems were further improved with a strong emphasis on risk assessment, auditing and supervision, as well as combating corruption and professional crime. In accordance with the law, the Group is pressing ahead with corporate governance, compliant operation and tax-paying, fair competition as well as anti-bribery and anti-trust in the business.

Compliance Discipline Investigation and Supervision

Antitrust

Anti-Corruption

Internal Control

Risk Management

Internal Audit


CSR Management ●Establish CSR Committee under Board of Directors

The structure of Board of Directors was further improved to include functions on strategy, nomination, remuneration and performance assessment.

Five specialized committees were set up under the Board of Directors, including Auditing, Risk Management, CSR, etc. The decision-making system was in place. The Articles of Association for the Group was formulated, which defines the working protocols and by-laws for the Board, Special Committees and Presidents’ Office. The Board is committed to fulfill its responsibilities and functions and meet operational compliance, giving respective play to its external directors and Special Committees, providing scientific decision-making consultancy for corporate production and operation, strategic planning, significant matters and important systems and regulations, which effectively improved corporate governance and growth.

With the CSR Committee set up under the Board of Directors, Sinopec becomes the first State Owned Enterprise to have a Special Committee of this kind in China. The CSR Committee oversees the policy, governance, strategy and plans on CSR management by providing suggestions and proposals to the Board and reviewing the annual CSR plan. Responsibilities include safety and environmental issues, green and low-carbon development, external donations, reviewing CSR implementation and the CSR report, as well as other matters authorized by the Board.

This management model is a result of the continuous exploration by Sinopec in fulfilling its corporate social responsibility as a State-Owned Company, demonstrating our strong emphasis on CSR practice. It is conducive for Sinopec to promote CSR management at a strategic level and build its highly responsible and highly respected corporate image.

CSR Committee

Nomination Committee

Strategy Committee

Auditing and Risk

Management Committee

Remuneration and Performance

Assessment Committee

Our Progress in

CSR Practice

Performance Strategy

Governance

ResearchIntegration

Communication

We better understand the needs of our stakeholders. Focusing on 6 core CSR subjects: energy supply, customer services, HSE, green development, employee development and social welfare.

We have initially established the organizational system, institutional system and responsibility system for CSR management.

In 2009, we established Sinopec CSR Work Leading Group to ensure social responsibility concepts were thoroughly implemented in our day-to-day businesses. Sinopec General Office is authorized to address CSR management issues.

We actively put forward CSR research through a variety of methods. We have established a research base with the CASS Research Center for Corporate Social Responsibility.

We analyzed the medium and long term development trends in economy, society, technology and industrial sectors home and abroad, studying the future CSR direction among international organizations and companies, providing sensible guidance for our CSR practice.

The slogan of “Making Every Drop Count” has been initiated to ensure CSR is embedded into our corporate strategy, operations, corporate culture and social practices.

We have been paying close attention to the impact of corporate operations on economy, society, environment, resources and culture, making continuous improvements in value creation and core competitiveness.

Good communication is vital to promoting our CSR management. We have engaged our stakeholders that par t ic ipate in corporate operations, and their demands and interests have been wel l understood and taken carefully into consideration. We have also shared best practice advice and encouraged our partners to jointly fulf i l l their CSR commitments, promoting win-win results with our stakeholders while continuing to develop the Company.

●Rio+20, we are taking actions

At the 2012 Rio+20 UN Conference on Sustainable Development, Chairman Fu Chengyu proposed that sustainable development across businesses contributes to sustainable development across the globe. He called upon the business community, governments, among other stakeholders to work together to proactively respond to global climate change and strive for a low-carbon economy, and to lead other business players to make progress in sustainability and create a sustainable future for economic growth, social progress and environmental protection.

Sinopec also made 10 voluntary commitments, including the development of a sustainability strategy and policy. Areas Sinopec pledged to address include water, climate change, sustainable energy, chemicals and wastes, sustainable management, technology and innovat ion, sustainable product ion and consumption, measurable sustainability achievements, as well as the publication and communication of sustainability practices. Our commitments are demonstrated in our CSR strategy and our responsibility will be developed through the CSR practice.

CSR Strategy • Committed to being a world leading energy and chemical company which is highly responsible and respectable

• Green and low-carbon strategy

CSR Integration • Carry out educational programmes focusing on green and low-carbon strategy

CSRCommunication

• Issue CSR report• Issue 1st Country Report—Sinopec in Brazil• Issue 1st Sinopec Environmental Protection Report• Workshops with industrial counterparts• Recruit public supervisors

CSR Governance

• Set up Board of Directors• Set up the CSR Committee under the Board

of Directors

CSR Performance

• 2011 CSR report rated 5-Star report• UN Global Compact China Best Practice Award• Leader Award for Outstanding Corporate

Social Responsibility Report

CSR Research • Publish “Making Every Drop Count---Sinopec CSR Practice”

• Research on the Development Environment of Sinopec in the Next Five to Ten Years

• Global and China’s Shale gas Development Research

• Sinopec’s Green and Low-Carbon Strategy• Study on Sinopec’s status-quo, challenges

and development regarding energy saving and emission reduction

CSRCommittee

Policy Board of DirectorsStrategy PlanningResearch Suggestions

Review

Review

Responsible

Corporate Annual CSR Implementation

Other matters authorized by the Board

CSR Report&

Corporate Annual CSR Plan

Safety and Environment

Green and Low-Carbon Development

External Donations

Gover-nance


●Sinopec Publishes First Environmental Protection Report

Sinopec officially released the Sinopec Environmental Protection Report in November, 2012. The issuance of the report demonstrates the objective of “developing a world-class energy and chemical company” and highlights Sinopec’s environmental protection progress and achievements in corporate governance, green growth strategy creation, resource efficiency improvements, clean production, green product supply, ecological civilization development, emergency response system upgrades, environmental risks precaution, environmentally-friendly technologies innovation, and successful cooperation with international partners. The report expresses Sinopec’s conviction in implementing a scientific outlook on the development and transformation of economic development pattern, and the development of an energy-saving and environmentally-friendly society.

Today, Sinopec releases its environmental protection report and public commitment,

indicating indicates that Sinopec is taking a global lead to fulfill the target of sustainability proposed by the United Nations Global Compact. I sincerely hope that Sinopec will continue to take the lead and encourage other businesses to jointly strive for green and low-carbon growth and sustainable development.

- Georg KellExecutive Director of UN Global Compact.

Sinopec issues its environmental protection report.From left to right: Georg Kell, Executive Director of UN Global Compact, Fu Chengyu, Chairman of Sinopec Group, Li Ganjie, Chinese Vice Minister of the Ministry of Environmental Protection, Wang Tianpu, President of Sinopec Group.

●Sinopec Issues First Country Report

During the United Nations Conference on Sustainable Development in June 2012, we released Sinopec in Brazil, our first country report on corporate social responsibility.

The report thoroughly discussed Sinopec’s practices in fulfilling all kinds of corporate social responsibility in Brazil, which received a lot of attention from the overseas stakeholders such as local government, community and media.

It is the first report of this kind issued by Sinopec and also the first one by a Chinese

enterprise. Sinopec has continuously made a significant contribution to China’s economic growth and social progress. Sinopec has also implemented an effective practice for developing environmentally-friendly culture, green energy and clean products, making active commitments in promoting sustainability and in addressing climate change. I hope Sinopec will be able to honor its commitment and build a beautiful nation together with its stakeholders, so as to provide a clear sky, a green land and clean water and resources for future generations.

- Li Ganjie, Chinese Vice Minister of Environmental Protection.

●Stakeholders communications

Our stakeholders include government, employees, shareholders and creditors, customers, business partners, communities and the public, NGOs and relevant organizations. The trust and support of our stakeholders is critical to our sustainable growth. We seek to establish cooperative and mutually beneficial relationships with our stakeholders to help promote the balanced and sustainable development of the economy and the society in an environmentally-friendly manner.

Sinopec Open to Car Users

Nearly 100 car users from several car clubs were invited to visit Sinopec’s facilities in Beijing on September 23, 2012. The visitors were deeply impressed by Sinopec’s efforts in constantly upgrading the quality of its products to ensure fuel supply, protect the environment and fulfill the commitment of “Making Every Drop Count”. Some visitors said “As one of the largest companies, Sinopec really makes a difference.”The visitors visited Taijin service station, Changxindian Oil Depot and Refinery and the Niukouyu Water Reservoir of Beijing Yanshan Company, gaining firsthand experience of Sinopec’s operational management and corporate culture.The visitors jointly made a proposal calling on car owners to participate in the “Caring for Environment and Green Transportation” campaign and develop a healthy automobile culture.

Community & the Public

Customers

EmployeesGovernment

Mutual SupportMutual Benefits

Cooperation and Win-win

Economic GrowthEnvironmental ProtectionSocial Progress

Shareholders &Creditors

Business Partners

NGOs

RelevantOrganizations

Balanced and Sustainable

Development

Car owners in the central control room at Sinopec Beijing Yanshan Company.

Case


Energy is vital to the existence and development of the world, and fundamental to the progression of modern society. The growth of the world’s population and the improvement in people’s living standards will continue to boost future global energy demand, however, the world is facing a number of growing challenges – limited resources, climate change and environmental pollution, among others.

As an integrated energy and chemical company underpinned by technological innovation, international cooperation and the determined contribution from over one million employees, Sinopec has been devoted to increasing investment to diversify energy mix, develop an integrated value chain, enhance energy supply capacity and provide safe, stable, economically viable and clean energy for the sustainable development of the economy and the society.

1 Securing Energy Supply

2012 CSR Report 11China Petrochemical Corporation10

The recent years have witnessed Sinopecincreasing increasing investment in the development of global energy resources consistently. The Company’s oil and gas exploration and production activities are present in 25 countries and regions across Asia-Pacific, Africa, South America, the Middle East, Russia-Central Asia and North America, which has laid a solid foundation to achieve sustainable hydrocarbon production and sharpen its energy supply capabilities.

2026,949 7.2% 29.5%

The Company’s capital expenditure (CAPEX) for oil and gas exploration and production was RMB181.1 billion in 2012, up by 34% year on year. Total CAPEX through 2007 to 2012 amounted to RMB746.2 billion. In 2012, Sinopec launched the “Five Campaigns” in Shengli Oilfield, Erdos Basin, Sichuan Basin, Tarim Basin and unconventional resources to increase reserves and production in domestic China and accelerate capital operation and new project development in overseas markets. By doing so, the Company realized rapid growth in crude oil and natural gas production.

1.1

North America

South America

Africa

Middle East

Russia – Central Asia

Asia Pacific

17 Years of Consistent Hard Work in Remote Well Station

Oil workers have made selfless contributions to securing energy supply. Xue Mei and her husband Sun Bin, who take care of a remote well station, are just one good example of the “Petroleum Spirit”.

Xue Mei and Sun Bin live in a plain-looking tile house 15 kilometers northwest of Dongxin Oil Extraction Plant of Sinopec Shengli Oilfield. The couple have been living in this remote area for 17 years, taking good care of 5 oil wells, 2 water wells and over 2 kilometers of pipelines, covering an area of 16 square kilometers.

For more than 6,000 days and nights, the couple have devoted their time to keeping the wells and pipelines in good shape. They have worn out more than 200 pairs of shoes and the distance they have walked in their patrol is equivalent to that of 24 Long Marches of the Red Army. The wells under their management have produced over 100,000 tonnes of crude oil.

A More Diversified Energy Mix

Oil and natural gas have played a significant role in securing energy supply. However, we need to diversify the energy mix and find more reliable and cleaner energy sources to replace the non-renewable oil and natural gas.

Sinopec has been actively developing new energy businesses, optimizing energy supply structure, improving supply capability and exploiting unconventional resources including oil sands, CBM and shale gas. The Company has also made efforts in clean coal utilization and promoting the use of biomass energy resources including ethanol gasoline, biodiesel and bio-jet fuel. The development of geo-thermal resources has been scaled up. Sinopec invested a total of RMB8.2 billion in coal-based chemicals, biomass and geothermal development through 2007 to 2012.

1.2

Sinopec continued to optimize energy mix in 2012

2012

New Subsidiary Founded to Promote Clean Coal Utilization

Coal production is estimated to continue for over 100 years based on the world’s current reserves and production capacity, much longer than that of crude oil and natural gas. Clean and efficient utilization of coal is critical to securing energy supply.

Sinopec gives full play to the technological and talent advantages in the energy and petrochemical sector, adheres to “Green, Low-Carbon, Clean and Healthy” development path, promotes coal-to-chemical technology research and project development and strives to take the leading position in the efficient use of coal resources.

With Sinopec Great Wall Energy and Chemical Co., Ltd. established on September 28, 2012, the Company’s coal-based chemical business ushered in a new fast-growing stage which would give strong impetus to the development of coal-based chemical plants in Nei Monggol, Xinjiang, Guizhou, Anhui, Henan and Ningxia.

Strengthening Oil and Gas Resource Basis

Global Presence of Sinopec’s Oil & Gas Business

2012 Crude Oil Output 2012 Natural Gas Output( 10,000 tonnes ) ( 10,000 million m3 )

Xue Mei and her husband Sun Bin on their patrol.

Coal

UnconventionalOil and Gas

Conventional Oil and Gas

Geothermal

Biomass

Promoted clean coal utilization and established Sinopec Great Wall Energy and Chemical Co., Ltd., focusing on the development of coal-based chemicals

Expedited shale gas evaluation, achieving commercial shale gas flow in Sichuan Basin and surrounding areas including Fuling, Yuanba and Pengshui and launched Sinopec’s first shale gas production pi lot programme in Fuling.

Launched the “Five Campaigns” in China, accelerated overseas capital operations and new project development and increased reserves and production to a new high

Scaled up geothermal development, expanded geothermal heating areas and strengthened international cooperation

Turned waste into energy, launched ethanol, biodiesel and bio-jet fuel projects and promoted bio-fuel application through existing distribution networks

Case Study

Case Study


Integrated Value Chain System

Sinopec has been devoted to developing diversified, balanced and integrated businesses to enhance its energy supply capability. The Company’s business covers not only the entire traditional oil and gas value chain, but also technological research, engineering services, international trade as well as bio-fuel and coal-based chemicals.

Sinopec continued to explore new business areas, increase the number of operation locations and provide customers with diversified and higher quality products and services in 2012. The number of CNG stations exceeded 600. The construction of Yanbu Refinery, Sinopec’s first overseas refining joint venture progressed ahead of schedule. Joint ventures were also established for the nitrile butadiene rubber project in Krasnoyarsk of Russia and the storage projects in Fujairah of UAE and Batam of Indonesia.

Stronger Scientific and Technological Support

The development and application of energy resources is facing more and more challenges. Sinopec has focused on scientific and technological innovation and made great efforts in the research and development of applied, fundamental and forward-looking technologies. A number of technological breakthroughs have been achieved in 2012.

1.3 1.4

Sinopec Cooperates with Saudi Aramco to Boost the Development of Saudi Refining Industry

Mr. Fu Chengyu, Chairman, Sinopec Group and Mr. Khalid A. Al-Falih, President and CEO, Saudi Aramco signed the joint venture agreement for Yanbu Aramco Sinopec Refining Company (YASREF) Limited in Riyadh, Saudi Arabia on Jan. 15, 2012.

The refinery is estimated to cost USD8.5 billion and designed to process 400,000 barrels per day of crude after start-up in the second half of 2014. This is Sinopec’s first overseas refining joint venture and China’s biggest investment in Saudi Arabia.

Sinopec and Saudi Arabia have already partnered in natural gas exploration, refining, oil trade and engineering service. Benefiting from the complementary advantages of both sides, YASREF will promote the development of Saudi’s refining industry and meet the global energy demand.

The 2012 State Science and Technology Progress Special Award Granted to Sinopec

Sinopec was granted the 2012 State Science and Technology Progress Special Award for its “Safe and Effective Development Technology and Application in Super-Giant, Ultra-Deep and High-Sulfur Gas Field”.

Thanks to the innovation in five areas, the technology addressed four huge challenges in the development of super-giant, ultra-deep and high-sulfur gas field, making China one of the few countries able to develop such gas field. The technology will benefit the safe and efficient production of Puguang gas field and boost the development of the natural gas industry in China and around the world.

Conventional oil and gas production

“Safe and Effective Development Technology and Application in Super-Giant, Ultra-Deep and High-Sulfur Gas Field” was granted the 2012 State Science and Technology Progress Special Award

Shale oil and gas development

Shale gas evaluation standard for Sichuan Basin and its surrounding area was set up, favorable target areas were identified and 24-stage fracturing technology of horizontal wells was mastered.

Bio-fuel The technology for bio-jet fuel production from palm oil and used cooking oil was developed and Sinopec became the first bio-jet fuel manufacturer with self-developed technologies in China.

Clean coal technology

Performance of the 600 KTA methanol-to-olefin demo plant reached a globally advanced level. The world’s first 200 KTA xylene demo plant using methylation of toluene with methanol came on stream.

CO2 emission cut

China’s first algae breeding unit using CO2 from refinery tail gas was put into operation.

Forward-looking research

Technology research for crude oil underground cracking, microbial enhanced oil recovery, molecular-level refining, bio-chemical and CO2

capture and utilization was carried out.

Diagram of Sinopec’s Integrated Value Chain

Key technological progress in 2012

Bio-fuel Distribution, wholesale and

retail of oilproducts

Distribution, wholesale and retail

of chemical products

Refining

Chemicalproduction

Coal-based chemical

Natural gas processing

Natural gas distribution and

marketing

International and domestic trade

Industrial, corporate and individual customers

Exploration, development and production of oil and gas Crude oil output: 69.49 million tonnesNatural gas output: 20.2 billion m3

Crude oil sales

Refinery throughput: 223 million tonnes

Self-produced crude oil

Imported crude oil

Chemical import

Self-produced natural gas

LNG import contract: 9.6 million tonnes per annum

Crude oil pipelines: 7,100 km

Natural gas sales: 15.4 billion m3

Natural gas pipelines: 6,856 km

Oil products sales: 173 million tonnesOil products pipelines: 9,614 km

Chemical sales: 54.35 million tonnesRail tank car: over 4000

Service station: 30836 CNG station: 633

Transit warehouse: over 80Tank farm and terminals: 4

Ethanol gasoline sales: 9.66 million tonnes

Oil products import: 6.49 million tonnes Ethylene output: 9.54 million tonnesOutput of synthetic resins, rubber and fiber: 16.36 million tonnes

Refined oil products output: 134 million tonnes

Oilfield and petrochemical engineering services

Research and development

Ice-breaker in operation at Chengdao of Shengli oilfield.

Giant bulldozers working in Tarim basin.

Case Study

Case Study


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Natural gas is a clean, efficient and low-carbon energy resource for chemical, power generation, industrial production, transportation and civil uses, representing the energy trend for the 21st century. Sinopec’s natural gas business has gained strong momentum despite its late start and production has doubled in the past three years. While integrating resources, pipelines and markets across the natural gas value chain, the Company also makes intensified efforts in developing unconventional resources such as CBM and shale gas and increased LNG import to realize balanced development and better serve the market.

Currently, Sinopec has five natural gas production bases, namely

Sichuan, Erdos, Southern Songliao, Tarim and Bohai Bay and supplies natural gas to the markets along the Sichuan-to-East China pipeline and the Yulin-Jinan pipeline as well as the markets in China’s northwest, northeast and west Sichuan, covering 17 provinces and municipalities. The Company also entered into long-term LNG sale and purchase agreements with international suppliers under which 9.6 million tonnes of annual LNG volumes are expected to be delivered to the Company. The first shipment is due in 2014.

We expect that by 2015, the Company’s natural gas production will be more than double the volume in 2010 with secured LNG supply and 2 billion cubic meters of annual unconventional gas production.

250

200

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

150

100

50

0

Resource

Pipelines

Market

Resource Development in Sichuan BasinSichuan Basin has abundant resources, with Puguang gas field in the northeast, Yuanba gas field in the north and Fuling shale gas pilot program in the southeast. Puguang gas field is China’s first high-sulfur gas field that pumps natural gas into the Sichuan-to-East China pipeline. Yuanba gas field is the deepest marine-facies gas field in China. Fuling shale gas pilot program is the first of its kind in Sinopec.

Puguang Gas FieldChina’s Largest and Most Abundant Mono-Block Marine Facies Gas Field

Puguang gas field was discovered in 2003 and commenced production in 2009 after construction started in 2005. Sinopec achieved significant theoretical and technological breakthroughs during the exploration and development of this marine facies gas field. Technological achievements include 41 national patents, 23 proprietary technologies, 63 company standards, 3 industrial standards and 5 provincial-level scientific and technological progress first prizes. Puguang currently produces 11 bi l l ion cubic meters of natural gas (purified natural gas 8 billion cubic meters) and 2.4 million tonnes of sulfur, thus securing sufficient gas for the Sichuan-to-East China pipeline.

Yuanba Gas FieldChina’s Deepest Marine Facies Gas Field

The reservoir of Yuanba gas field is buried deeper than 7,000 meters. In order to produce natural gas efficiently, Sinopec has adopted innovat i ve concepts , theories and technologies and addressed huge challenges brought about by the high temperature, high pressure, high product iv i ty, h igh sul fur and subt le gas rese rvo i r s . The Company has accomplished 11 major national science and technology projects, 24 Sinopec key science and technology projects and over 100 other research and development p r o j e c t s . W i t h a n u m b e r o f k e y technologies having been developed and improved, the Company has considerably enhanced the explorat ion capabi l i ty in ultra-deep, high-sulfur and reef and bioclastic shoal complex formations. The reserve of Yuanba was registered in 2011 followed by the start of the Phase I of the production capacity building project.

Fuling Shale Gas Pilot ProgramTaking the Lead in Shale Gas Development

The program was launched on May 8, 2012. The drilling of the first well, Fuye 2-2 HF was completed on September 24, 2012. J iaoye 1 HF wel l started commissioning on January 8, 2013, representing the commercial breakthrough by Sinopec in marine facies shale gas development.

The construction of this project began in 2007 and came on stream in 2010. The pipeline with the total length of 1,702 kilometers and the designed annual capacity of 12 billion cubic meters is configured for the long-distance transmission of natural gas from Puguang gas field to the markets in 6 provinces and 2 municipalities including Sichuan, Chongqing, Hubei, Jiangxi, Anhui, Jiangsu, Zhejiang and Shanghai. The pipeline supplies clean energy to over 80 cities, 200 million people and thousands of enterprises and benefits the environment by reducing 16.8 million tonnes of CO2 and 698,000 tonnes of SO2 and NOX every year.

Diagram of Sichuan-to-East China Natural Gas Pipelines.

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Promoting Natural Gas Development and Supplying Clean Energy

Years

Growth of Sinopec’s Natural Gas Production (100 million cubic meters)

Sinopec’s Integrated Natural Gas Value Chain

Discovery of Puguanggas field

Production of Puguang gas fieldGround breaking of Shangdong LNG Project

Discovery of Yuanba gas field

Fast growth of overseas equity production

Fuling shale gas pilot program

Natural gas output: 20.2 billion cubic meters per annum

LNG import contracts: 9.6 million tonnes per annum

Length: 6,856 kilometers

ichuan-to-East China pipeline, Yulin-to-Jinan pipeline

633 CNG stationsLNG terminals under construction or being plannedShandong, Guangxi , T ian j in, Wenzhou and Lianyungang, etc.

Sichuan-to-East China Gas Transmission Project Benefiting 80 Cities and 200 Million People


2

As a pillar of national economic development, the petroleum and petrochemical industries serve many other sectors, including automobiles, textiles, dyeing and printing, electronics, construction, packaging, transportation, agriculture and aerospace. Technological development has led to continued improvements in the quality and performance of petrochemical products which better serve our daily lives.

Sinopec adheres to the principle of “Integrity, Service and Cooperation” and provides premium products and the best service to meet the every demand of our customers. With a well-established service network, Sinopec seeks to grow with downstream partners and customers with the aim of contributing to Chinese economic prosperity and social harmony.

Providing Premium Services

1918 2012 CSR ReportChina Petrochemical Corporation

2.1 2.2

Sinopec’s refined products are 100 % up to standard

In 2012, the State Administration for Quality Supervision and Inspection and Quarantine, the Ministry of Environmental Protection, Ministry of Commerce and the National Energy Administration jointly issued the Guidelines for Promoting the Upgrading of Gasoline and Diesel Products Quality. Sinopec signed a pledge to commit itself to upgrading the quality of its gasoline and diesel. During a joint inspection of random samples of gasoline and diesel products conducted by the above- mentioned four ministries, 28 products from 14 Sinopec refineries were found to be 100% up to standard.

Donghai asphalt contributes to high-speed railway in China

Donghai asphalt, a Sinopec emulsified asphalt product well-received in the market for its high quality, was successfully applied in numerous high-speed railway construction projects including the Harbin-Dalian Railway, Beijing-Shanghai Railway, Shanghai-Ningbo Intercity Railway, Beij ing-Shij iazhuang Railway, Tian-Qinhuangdao Railway, Hefei-Bengbu Railway and Hangzhou-Changsha Railway. The product has also been widely used in many high-profile sports stadiums, such as the famous Olympic Bird Nest Stadium in Beijing and the access roads to the World Expo in Shanghai. With over 65% market share nationwide and high quality assurance, Sinopec was awarded second prize for technological advancement of our emulsified asphalt and mortar products by China’s Ministry of Railways.

Clothing

Chemical fiber products are widely used in the clothing industry.

Rubber-made footwear is lightweight and durable.

Fashionable eyewear is commonly made from resin materials.

Polypropylene can be used for packing materials such bottle caps and food and beverage containers.

Polypropylene (PP) can be used to make beverage caps.

Water kettles made from PP have good surface glossiness.Wool-like cushions made from chemical

fibers are as good as those made from fur.

Polyethylene-made shower curtains are water-proof and durable.

Colorful lamp shades are made from color master batch.

Materials were used for the Shenzhou 7 spaceship’s soft water tank capsule as well as vital spacesuit piping for extravehicular activities.

Synthetic resin and rubber materials are widely used in making tires and parts for the interior and exterior of vehicles.

Fuel used in various kinds of vehicles.

Advanced, high performance resin materials were applied to the seats of the Olympic Bird’s Nest Stadium in Beijing.

Packaging containers for cosmetics are made from low pressure polyethylene.

ABS resin is widely used in the production of appliance casings.

Chemical products with high value-added and high performance are widely used in every aspect of people’s lives including clothing, food, housing, transportation and use.

Food containers

Living

Transportation

Use

July 1, 2005, National II gasoline,

equals to Euro II

August 1, 2010, Guang Dong IV

gasoline and diesel, equals to Euro IV

January 1, 2008, Beijing IV gasoline

and diesel, equals to Euro IV

November 1, 2009, Shanghai IV gasoline

and diesel, equals to Euro IV

May 1, 2010, National III gasoline,

equals to Euro III

July 1, 2011,National III diesel

August 1, 2012, Beijing V gasoline

and diesel

January 1, 2014, National IV gasoline

January 1, 2015, National IV diesel

January 1, 2018, National V gasoline

and diesel

Diversified Products & Professional ServicesSinopec provides customers with a wide range of products, from crude oil and natural gas, to refined oil products including gasoline, kerosene, diesel, lubricant, liquefied gas, petroleum coke and bitumen. These products are common in our everyday lives and have wide applications in construction, transportation, pharmaceuticals, agriculture and aerospace.

Diversified Products, Professional Service, Colorful Life

Upgrading Oil Products Quality

Quality lies at the very core of our business and we strive every day to ensure the high quality and sufficient supply of our products through our advanced supply chain management techniques. Sinopec’s implementation of the “Quality Leadership” philosophy means we can continue to guarantee the first-rate quality of our products, while at the same time strengthen scientific research and making constant improvements to our systems and services. By doing this we are able to share our progress with our customers and deliver superior quality products.

●First–rate Quality, First-class BrandIn the face of degrading crude oil quality, high utilization load of refineries, acceleration of oil products quality upgrade and pressure

to meet market demand, Sinopec continues to strictly oversee the quality control process which is evident at every stage of production, and which is backed-up by the thorough training of all our staff. We understand that only by doing this can we keep delivering the highest quality products to our customers.

A l l chemica l subs id iar ies o f S inopec have passed the ISO9001:2008 quality certification test. Sinopec regulates the working procedures of all types of activities, and our current quality management system covers the R&D, procurement, production, inspection, storage and transportation, marketing and services departments. By stressing the need for quality at every level of the organization we are able to provide our customers with safe, green, and premium quality products.

Quality Leadership, Growing Together

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Case Study


Sinopec Lubricants Grow Together with Customers

Another of our values is to never compromise on quality for short term gain. Sinopec Lubricants division constantly explores ways to strengthen quality control, develop high-end patented products, and establish strategic partnerships with customers from other industries. Sinopec Great Wall Lubricants has over 40 products covering 7 major categories, and form an integral part of many major national projects, e.g. the control, navigation and re-entry module of the Shenzhou space shuttles. Sinopec Lubricants also partners with customers in other key industries in order to further develop high-end technologies and products. Our lubricant products are the preferred choice of companies including China FAW, Shanghai General Motor, SINOTRUK, Shanghai Volkswagen and Bao Steel. 90% of mainstream automobile companies in China choose Sinopec Lubricants, which for many years has won the Golden Finger Award for Automobile Service. Sinopec Lubricants also serves large shipping companies like COSCO, CSCL, China Merchants Group and SINOTRANS & CSC.

7 Years of the “High Quality Service Month” Campaign

2012’s “High Quality Service Month” mainly included improving the consumption environment, convenience facilities and value-added service by listening to customer feedback and attracting and satisfying customers with high quality services.

Sinopec asked a group of outstanding employees to form a delegation that demonstrated their working skills and standard service level to other workers. The aim was to enhance the image of service stations by means of strengthening on-the-spot standard service and sales awareness.

Sinopec has also made stricter evaluations on the service stations through conducting mystery shopper visits and in-station inspections. Beijing Oil Products Company, a subsidiary of Sinopec, scored 93.65 by secret shoppers, up by 4.48%. The number of effective customer praises received by the Customer Call Center has increased 60%.

Sinopec Easy Joy in Fenghuang City

Wangjiazhai Service Station of the Xiangxi Branch of Hunan Oil Products Company is located in the beautiful ancient city of Fenghuang. Targeting the large number of tourist visitors in the city, the station provides souvenirs featuring the ethnic minorities of Miao and Tujia in the convenience store and attracts customers from all walks of life.

Sinopec’s Customer Service Hotlines Bring Customers Closer

Sinopec has established a customer service call center in all of its provincial and municipal level subsidiaries and has opened 24 hour customer service hotlines to deal with customer inquiries and complaints. In 2012, the oil products customer service system received 7.1 million calls, among which 4.2 million were responded by operators, thus effectively conciliating conflicts between customers and producers, enhancing customer satisfaction, connecting Sinopec and its customers.

Fuel Card Service Hotline:

LubricantService Hotline:

Chemical Products Service Hotline:

9510 5888-7

400-810-9886

400-818-9100

●Leading Quality, Joint Development

Sinopec strictly adheres to a “Quality Leadership” philosophy, and in doing so actively promotes leading, state-of-the-art products that meet customers’ demand and which in turn fuel the growth in other industries.

●Customer Service Management - Creating a Superior Customer Service Proposition

Sinopec has launched various activities to motivate front-line employees, with the aim of improving the service they provide to our customers. This is also supplemented by a thorough customer service training program and appraisal scheme.

Sinopec’s chemical sales subsidiaries endeavor to deepen their understanding of clients’ needs and make the necessary changes to enhance the service level. Sales teams of regional branches actively coordinate among manufacturing enterprises, R&D institutes and with clients in order to provide an all-rounded service, and give clients a high quality, stress-free and value-added procurement experience. All of this aims to provide a more tailor-made service and create higher value.

Comprehensive System, Tailor-made ServiceThrough its nationwide network, Sinopec brings its high quality and tailor-made service to every customer. Sinopec provides oil products of the highest quality to over 20 million customers every day and chemical products to more than 6 thousand major clients every year.

2.3

●Diversified Services, Enriched Experience

While enhancing the quality of our traditional service, Sinopec has expanded and innovated in the scope of its service and built a comprehensive business platform to provide a convenient and personalized service to our customers.

The Non-fuel business is an extension of the service station’s function. To better serve its customers, Sinopec is changing the traditional fuelling stations into a one-stop-shop for fuelling, shopping, food and beverage and car care services.

Staff giving guidance to a customer at a self-service station.In order to cater to customers’ requirements of variety and convenience, Sinopec has continued to increase the number of Easy Joy convenience stores up to 20,000 in 2012.

The fuel card program is seeing constant improvements. By 2012, Sinopec had issued more than 83 million fuel cards and 26 thousand service stations have joined the fuel card network, expanding the service range of the fuel cards to 31 provinces and municipalities.

Self-service stations are growing fast. Sinopec led the industry by introducing this new type of service, giving different customers differentiated experience. By 2012, Sinopec has built 3,112 self-service or semi-self-service stations in 21 provinces and municipalities.

On January 1, 2012, Sinopec officially launched its e-commerce website, Ejoy365.com, which serves its customers with a more extensive product range and favorable pricing.

●Listening to Customers, Increasing Customer Satisfaction

Sinopec focuses on customer satisfaction and actively listens to their opinions and suggestions in order to keep pushing the service level up to new levels. In the marketing of oil products, Sinopec opened customer service hotlines and collected their suggestions for improvements. In the marketing of chemical products, staff at all levels hold meetings with customers and visit their plants in order to gain a better understanding of the customers’ needs and assist downstream manufacturers to solve their technical problems. It is now the fourth year that Sinopec has hired an independent third-party agency to carry out a customer satisfaction survey. According to the surveys, customer satisfaction and loyalty keep increasing. In 2012, the overall customer satisfaction score was 94.2, 10.5 points higher than industry benchmark; customer loyalty rate was 99.5%, 7 percentage points higher than the industry benchmark.

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Quality Products to Ensure Supply

In Bengbu, Anhui, during the harvest seasons of 2012, there were 3.5 million mu of summer grain crops and 3.5 million mu of autumn grain crops. In order to meet market demand, Sinopec implemented various favorable policies for the agriculture industry and won recognition from numerous machinery operators. Oil products used in Mr. Hu Jiazheng’s farm machine service team all came from Sinopec. Mr. Hu says that they trust Sinopec. From the color and optimum efficiency of the oil products they can tell that Sinopec’s products are of good quality. Since harvest time is seasonal, mechanical issues with agricultural equipment can have a knock-on effect throughout the year.

discount for farm machinery operators can be obtained with a valid Sinopec fuelling card, and a RMB 0.1 per liter discount will be granted on agricultural oil products in extensive agricultural areas.

Sinopec in cooperation with the Farm Machine Bureau of Anhui Province jointly issued 120 thousand special fueling cards for agricultural machinery which were delivered to the operators free of charge.

Special supply stations for agricultural machinery were operated 24 hours.

More than 100 small oil tankers were sent to remote areas which had difficulties accessing the service stations.

Established more than 800 special supply stations in extensive agricultural areas in Anhui Province.

Opened 1,276 fast tracks for delivering oil products

for agricultural machinery.

Formed small working groups that supported the delivery of oil products directly to the fields. More than 2,000 people distributed oil products to the fields through distribution vehicles and convenience tanks and provided easier access for farmers.

1%

12

24

100

800

1,276

2,000

On May 31st, the 2012 National Inauguration Ceremony of Machine Harvest in Wheat-producing Areas was launched in the Shouxihu Farm in Shou County, Anhui Province. Hui Liangyu, Vice Premier of the State Council attended the ceremony, and made inquiries about the current state of the year’s harvest and the farmers’ lives. He expressed his sincere gratitude and respect to the volunteers and workers who had been delivering products to the fields. When he learnt that with just a phone call, Sinopec would deliver oil products to the fields and give RMB0.1 discount per liter of agricultural diesel oil in extensive agricultural areas, he immediately gave a thumbs-up gesture and said “Good! Good!”

Vice Premier Hui Liangyu Praises Sinopec for Serving the Harvest Season

Numbers: Anhui Oil Products Company’s Service during Harvest Seasons

Supply for Harvest Seasons in Action

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Sinopec guarantees supply during peak agricultural production periods

As the harvest seasons come, the demand for oil products in agriculture is at its peak. In order to meet the demand for fuelling farming machines, Sinopec guarantees the supply, transportation and quality of all its oil products and provides preferential pricing options and quality service. Sinopec not only guarantees supply of oil products for agricultural use but also provides services that support agricultural production, including delivering oil products directly to the fields. The products and services provided by Sinopec have won recognition from farmers and have helped build a responsible image for Sinopec.

Control Processes in Place to Serve the Harvest Seasons

Deployment Resources Guarantee

Fuelling Network

Mobile Service

Supplementary Service

Promote social responsibility awareness, enhance the organization and leadership.Strengthen logistics and maintain inventories at reasonable levels.Actively report to local government and strengthen relationships with agricultural machinery organizations. Open hotline for complaints, welcome public supervision and strictly punish behaviors that violate regulations.

Strengthen resource planning, produce diesel and other oil products for farming machines.Ensure delivery of oil products and supply for service stations.

Extend business hours of service stations in agricultural areas.Open fast tracks for farming machines and vehicles that transport fresh agricultural products, and give priority of supply to agricultural machineries.

Set up special fuelling zones for farming machinery in key areas and key stations.Deliver oil products directly to the fields and areas where it is not convenient to refuel.

Issue special guarantee cards to provide accessible and convenient fuelling services to farming machine drivers.Provide hot water, food, first-aid kits and heatstroke prevention items for free.Provide cell phone charging, tire inflation and oil tanks services in rural areas.

Excellent Service during Harvest Seasons

Sinopec’s Xiguan Service Station in Xiguan Village, Sicheng Town, Si County is responsible for the supply of oil products over a 20 km radius. Each day during the harvest season, diesel supply is increased by 4 tons, and numbers of service is also up by 300. Because of the shortage of working staff, Gao Yanxia, head of the station, has to work overtime every night so as to better serve the farmers.

One day just before dawn, a farmer came to the station and asked whether staff in the station could deliver oil products to his land, where his machines run out of petrol. The farmer didn’t own a container large enough to transport the necessary oil back to his land. Given the circumstances, Gao Yanxia filled three 25-litre oil buckets and sent the oil to the land together with her colleagues on motorbike, which took them nearly an hour for the round trip.

When she got back to the station, she saw a motorcycle stop at the station and a farm machinery operator was selecting engine oil. Apparently the driver came to buy engine oil for his machine which was still in operation 20 km away. However, he only had enough money for one bucket of engine oil and was not sure what type of oil he needed. Gao decided to help the customer by taking a container of both 46# and 68# engine oil to the construction site, and finally helped the driver to solve the problem. It was 5 am before she got back to the station. Gao is already accustomed to the extra hours during the harvest season and takes her inspiration from the farmers in the fields who work diligently and tirelessly day in and day out. As a Sinopec employee, she feels it is her duty to provide a high level of service that goes above and beyond.


3 Safe and Reliable Operations

Safe and reliable operations are the foundation for the future development of both the company and society as a whole.

Safety is our number one priority. 100% safe and reliable operations is an ideal that we are constantly working towards. The concept of “Safety First and Life Foremost” has been deeply engrained in every Sinopec employee. Profitability, production, scheduling and costs must give way to health, safety and environmental issues. On our way to becoming a world leading energy and chemical company we are striving every day to make our company more safe for our employees.


3.1

Wearing ear protectors during equipment inspections. Safety protections before working in high places. Safe production posters.

HSE Management SystemWe implement an HSE management system throughout the company. We do whatever possible to minimize accidents, loss of life and environmental damage, and adhere to the highest HSE standards.

HSE targets HSE management system

To avoid major pollution

of the environment To avoid major fi re an

d exp

losion

To a

void

majo

r pub

licse

curit

y ac

ciden

t

To avoid accidents thatcause casualties

To avoid major blow

out

HSE sub-teams or posts within relevant corporate departments

HSE departments in subsidiariesHSE engineers in key production units

Corporate HSE Department

Corporate HSE

committee

HSE execution

Centralized HSEmanagement

Decision-maker

We have in place an HSE management system that covers the whole production process and everyone from top management to grassroots operators. The person at the post is responsible for the safe operation of their division. We organize annual HSE examinations and ad-hoc inspections to review the HSE performance of key subsidiaries.

In 2012, we developed the Regulation on Safety Management of Dangerous Processes in Refining and Chemical Production and nine other safety management regulations and technical specifications. In light of the international leading OSHA methods, we formulated the Regulation on HSE Performance Assessment to improve our assessment indicator system and enhance process control.

"Five Avoids"

3.2

72.7%

98.7% 97.8%

31 1,226

57.1%

First HSE education base put in use

In October 2012, Sinopec’s first HSE education base was inaugurated in Shengli Oilfield Company, with the aim to spread advanced safety concepts, cultivate a ‘safety culture’ and offer training sessions and analyze accidents. In this 900-square-meter base, visitors can experience the ‘safety culture’ with a comprehensive display of photos and documents in various forms including 3D animation. The content includes four sections: “Always be alert”, “Safety in the Past”, “Risk Control” and “Safety Culture First and Foremost”. In “Risk control”, people learn the major risks and prevention or control measures in 13 fields such as geophysics and drilling, which make it known that all risks are controllable and that all accidents are preventable.

Safety risk controlThe petroleum and petrochemical industries involve high risks. High temperatures, high pressure, flammable, explosive and hazardous materials, continuous operation, extensive industrial chain and wide coverage of different locations all lead to a higher probability of accidents occurring. Therefore, safe production is always our primary target and our most important priority. In 2012, there were no reports of accidents to the State Administration of Work Safety and SASAC.

Sinopec’s “Keep yourself safe” concept is deeply rooted in all employees, and encourages employees to works towards having the safest possible working environment.

In 2012, we set up a health and safety education center in Shengli Oilfield Company, which has become an industry-leading health and safety training center. We have promoted the good HSE performance practices of eight subsidiaries throughout the company.

●Safety awareness

3 accidents and 3 deaths in 2012, down by 72.7% and 57.1% compared to 2011.

Occupational health checkup rate

Occupational hazard detection rate of operation sites

HSE training sessions People trained (person times)

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18.9 659

3.3

Optimizing suppliers management

Sinopec’s Henan oilfield subsidiary looked into ways of optimizing its supplier structure by identifying opportunities for improvements to its systems. They decided to change the approval process for selecting suppliers from an individual decision making process to a panel review system, which evaluated supplier performance on a dynamic basis and categorized suppliers accordingly. More orders were placed with suppliers deemed most responsible. Currently, 80% of their purchase value is in 17% of their total suppliers.

Evaluating suppliers’ safety performance

Sinopec Yanshan Company has implemented a comprehensive suppliers’ safety performance evaluation system, which gives red, orange, yellow and green grades according to their operational procedures. Staff found not to be reporting and correcting contractors’ violations will be held responsible.

Quantitative evaluation is further strengthened to introduce contractor exit scheme, i.e. when contractors violation records reach a certain level, they will be eliminated from the contractors list and will never be called upon again. Employees of contractors are also evaluated as per the safety regulations and will be blacklisted should they fail to meet the required standard.

Strengthening logistics suppliers’ management

In 2012, Sinopec Qilu Company organized safety training for 6 dangerous chemicals transportation contractors. The training covered relevant rules and regulations on dangerous chemicals management, loading and offloading guidance, etc. Meanwhile, evaluation and record filing are conducted for transportation contractors. Since 2004, more than 6 million tonnes of dangerous chemicals were loaded and transported out of plants safely.

Onsite inspection kit for all

In Shanghai Petrochemical everyone has been used to carrying an inspection kit on an inspection mission. Inside the kit you may find a flashlight, a duster, and simple tools like a probe and a spanner. In 2012, new kits were distributed with addition of a vibration indicator , an infrared thermometer and an inflammable gas detector. These new tools, combined with personal observation and experience, can help make more reliable and accurate judgment, as well as make quicker detection and elimination of potential hazards.

Double Seven Checklist

Northwest Oilfield Company developed their “Double Seven Checklist” to facilitate the implementation of the “Seven Thinks & Seven Don'ts” scheme. Team leaders from different operation categories are responsible for observing the operation process, identifying risks and producing risk control measures. A bottom-up approach was adopted for risk identification, and a top-down approach was adopted for risk control measures. So far, the companyhas worked out 95 types of checklist for 316 operation posts.

Analysis of past incidents shows that operation malpractice and violation of labor discipline are the primary causes of incidents, and most incidents take place in the course of operation. To address these problems, we developed and put into practice "Sinopec's Ban on Improper Behaviors in Production". We strictly follow regulations stipulated in our operation license and conduct frequent safety checking, as well as implementing new safety schemes such as the “Seven Thinks & Seven Don’ts”, which aims to guard against incidents from the root cause.

We have fully implemented a contractor safety control system in our refining and chemical subsidiaries, deploying 461 safety supervisors to enhance on-site operational safety checkups.

Hazard control is one of our principal ways of lowering incident rates. We have formulated and strictly implemented the Regulations on Hazard Control, with the principle of “emphasis on key items and supervision on different levels”. We also implemented a rating and post-project assessment system on potential control projects.

In 2012, the focus of potential hazard control was placed upon offshore E&P facilities, well controlling devices, liquid hydrocarbon spheres, tank depot fire system and thermal oil pump sealing, which has led to significant safety improvements.

●Meticulous attention paid to safe production methods

●Hazard control

2012 investment in potential hazard control ( billion )

Potential hazard control projects completed

Supply chain safety managementSafety management in the supply chain can run parallel with that of the production process, which helps to further reduce accidents and guarantee the intrinsic safety of the company as a whole. Business partners along the chain are all in the same boat with us.

We set high thresholds for supplier selection with strict screening process, assessment, selection and disqualification. These systems include a qualification review process, licensed product cataloguing, dynamic and quantitative assessment, ordering system based on performance, zero tolerance of suppliers' improper behavior, penalties and continuous online optimization. We have consolidated our partnerships with our most reliable suppliers for wider access to market resources, stronger bargaining power and risk control capabilities. We promoted online purchasing to make the process transparent, controllable, on the record and forever traceable.

We are responsible for all our contractors’ HSE performance. We have a unified management, standards, and requirements system, regulating contractors’ behavior. Specific safety rules and regulations for contractors are set up to ensure accountability and enhanced supervision.

In 2012, we held the first contractors’ HSE training program for oilfield subsidiaries. About 60 oilfield service providers attended our program and got a deeper understanding of our HSE culture, process management and client supervision. We also published our contractors’ HSE rules and regulations for overseas projects.

We have a predefined set of standards and a comprehensive evaluation system for our logistics service providers, and require all major and strategic providers to formulate HSE management systems in accordance with ISO 14000 and OHSAS 18000. Safety check certificates for dangerous chemicals vehicles and vessels, and site safety check standards were put in place to ensure a safe logistics network.

●Suppliers

●Contractors

●Logistics service providers

Sinopec Qilu Petrochemicals ensures the safety of loading and transportation of hazardous chemicals.

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3.4 Emergency response system

Offshore emergency drilling

On 26 June 2012, Sinopec conducted offshore emergency drilling in Chengdao, Shengli Oilfield. Emphasis was placed on fire extinguishing and self-rescue on drilling rigs, displacement of the injured, firefighting vessel operation, recovery of spilled oil, application of offshore emergency command system as well as collaboration with the government. With the help of advanced technologies like satellite transmission, video conference systems, microwave communications and an onshore dedicated circuit, we achieved audio and video communication between the drill site, command center and corporate headquarters as well as a two-way real-time transmission of other data. Shengli Oilfield Company, Ministry of Transport, Dongying municipal government participated in the joint drill. Over 500 people took part. Twenty-two vessels and two helicopters were deployed.

Protecting the environment while constructing the GASENE pipeline in Brazil.

Emergency management and public security management

We developed a unified emergency command system that comprises three levels, namely; corporate headquarters, tier-1 subsidiaries and grassroots plants. We also built up an effective rescue system with emphasis on rescue team building, equipment and infrastructure provision, existing resource integration and leveraging overall rescue capabilities. We created a dynamic database of environmental risk sources, tightened emergency information system requirements, and upgraded emergency response IT applications so that they could be controlled remotely.

We share rescue and relief equipment and materials with domestic and international peers, and have well-coordinated actions plans with local government agencies in charge of environment, security, and maritime affairs in terms of resources, response as well as command and control.

In 2012, we amended the major incident response plan to make it more feasible and practical and upgraded the emergency response command center in our headquarters.

●Emergency management

As a large company, Sinopec has operations across the country. What we do and how we manage our production and business is highly relevant in terms of social development and public interest. We include public security management in our HSE management system, which is characterized by the synchronization of deployment, inspection and assessment.

In 2012, we developed assessment criteria for safety management of oil producing areas and pipelines. Training sessions and assessment were conducted in a timely fashion. We worked together with local government, improved the environment of oil producing areas and reduced the number of oil-related criminal cases and oil thefts by 5%.

We play an important role in preventing and controlling chemical-related accidents in China. In 2012, the national Dangerous Chemicals Registration was completed by the National Registration Centre for Dangerous Chemicals, which was set up largely with the support of Sinopec. We continue to provide counsel to chemical accident inquiries by answering 15970 phone calls, participating in emergency responses and cause rooting in the country’s major chemical accidents, and providing technical support to work safety and firefighting authorities.

In terms of our international efforts, we have set up an overseas public security expert team, dispatched domestic security professionals to overseas projects, and kept the zero death record in overseas operations for 4 straight years.

● Public management

00 General emergency

01 Blowout

02 Fire and explosion

03 Beach emergency

04 Offshore oil spill

05 Pipeline leakage

06 Hazardous chemicals

07 Radioactive incident

08 Environmental incident

09 Destructive earthquake

10 Flood

11 Meteorological disaster

12 Public health incident

13 Oil and gas supply emergency

14 Mass incident

15 Public place incident

16 Terrorist attack

17 IT system damage

18 Overseas incident

Industrial emergency

Sinopec Major Em

ergency Response System

Emergency response of tier-1 subsidiaries

Emergency response of subsidiaries that are responsible for em

ergency monitoring

Emergency response of grassroots plants

Public healthN

atural disastersPublic security

Case Study


“Sinopec delivered a refreshing social image in handling the pellet accident. Such sympathetic sentiments towards Hong Kong locals, if shared by more SOEs, would help to reduce the sense of estrangement that exists between Hong Kong and the mainland.”

“The public will be watching the government’s follow-up actions and judging companies that were involved in the accident. How they respond as corporate citizens is sure to be the focus of public opinion. Even in commercial and economic terms, they may well take a responsible attitude to protect their brand reputation. It was wise of Sinopec to prioritize the cleanup with a big cash commitment and dedication, which generated pretty good feelings among the ordinary people.”

SpecialReport

We never shy away from our social responsibilities

On 23 July 2012, a typhoon caused six containers loaded with Sinopec polypropylene pellets to fall off a ship on its way from Guangzhou to Shantou. Packages and pellets were washed up on shore of Hong Kong, scattering a nearby beach.

Sinopec, together with the logistics provider and carrier, spared no effort to retrieve the sunken containers, clean up the pellets, and responded to the public and the media quickly. A team of experts was sent. They were there to explain the properties of the pellets with authoritative test reports, so as to alleviate people’s concerns and worries. We kept a close eye on the situation and rendered timely support whenever necessary. A task force was set up. Press briefings organized. Commitment to social responsibilities made public. A special fund of HKD10 million was put aside. And a thorough investigation on the consignment process launched right away. We also urged logistics providers and carriers to pin down the cause of the accident, and discussed claim strategies with relevant stakeholders.

Although the legally responsible party has yet to be identified, we must step up and take our social responsibilities seriously. Our company will be an active and

cooperative part of the pellet cleanup efforts, with no expense spared. No matter who is held accountable for this in the end, we’ll never pass the buck when it comes to either our legal or social responsibilities.

— Fu Chengyu, Chairman of Sinopec Group

July 23PP pellets washed up on shore of Hong Kong

July 26-28On-site inspection and accident settlement arrangement

July 30-31 Communication with HKSAR government departments and environmental protection organizations

August 9Press briefing and public announcement of commitments

August 23 Chairman Fu Chengyu in cleanup operation

August 26President Wang Tianpu in cleanup operation

August 27Claim settlement meeting

August 4-8Organization of cleanup actions

August 10-22Cleanup operations on-going until pellets were removed

Devices purchased and effort deployed in cleanup by Sinopec

diesel and gasoline small power generators

20

20

20 500

40

44

44

2hand-operated pellet and sand separators

electric separators

industrial vacuum cleaners

two-way radios

first-aid kits

Renting 2 mobile toilets

Sinopec employees participated in cleanup operations: 500 person times.

Mingpao Singtao


4 Green and Low-Carbon Growth

The environment is what the human race depends on for its survival. Protecting the environment is protecting the human race. The environment is the scarcest resource; living is the most precious gift. As a responsible energy and chemicals company, we solemnly commit to:never reduce spending on environmental protection, neverdo anything in conflict with environmental protection and never gain acent at the expense of the environment. With a clean management system covering the whole process from production to consumption, we strive to be a leader in green and low-carbon growth, a promoter of eco-civilization, a builder of ‘Beautiful China,’ and to contribute to clear water, green land and blue sky.


4.1

12% 10%4.2

Beijing V Fuel Upgrade Completed by Sinopec

From May 31st to July 25th, 2012, Sinopec completed Beijing V fuel upgrade.

After the implementation of Beijing V fuel standard, NOX from light vehicles will be reduced by 25% and total pollutants emission will drop by 40%, while NOX from heavy vehicles will go down by 43%.

With this upgrade, Beijing fuel standard is equal to the highest standards in the world.

Fuel Upgrade Project of Sinopec Jinling Petrochemical Company

With a total investment of RMB 6 billion, this project was completed and put fully into operation on Oct. 9th, 2012. Due to this upgrade, the refining technical level of Jinling Company was further enhanced, with significant emission reduction. The FCC facility was equipped with both a flue gas desulfurization unit and a denitrification unit, which represented the highest level of clean production for FCC.

Revamping Project of Sinopec Shanghai Petrochemical Company

This project was completed and fully put into operation on Nov. 29, 2012. The total investment was RMB 6.3 billion, with 10% of this allocated to environmental protection. These environmental protection facilities, such as 180Ktpa C2 recovery unit and 160 Ktpa sulfur recovery unit, could recycle wastes, reduce pollutants and CO2 emissions, and bring significant economic benefits.

Fruitful achievements yesterday, greater success tomorrowOn the issues of environmental protection and fighting climate change, we believe large companies should take on significant responsibilities, state-owned companies should undertake national responsibilities, and international companies should shoulder international responsibilities. We integrate green and low-carbon growth into our corporate development strategy so as to apply these concepts to all aspects of our production and operation. We will stick to and further promote green low-carbon growth, strive to convert the traditional petroleum & petrochemical industry into an, efficient, clean and environmentally-friendly business with low energy consumption, and try to build an energy-saving and environmentally-friendly company.

●Recent Achievements in Envi ronmenta l Protection

From 2005 to 2012, Sinopec SO2 emissions declined by 44.2%, COD discharge fell 34.1%, industrial water consumption dropped by 18.2%. Cumulatively, the company has saved the energy equivalent of 18.04 million tonnes of coal, which translates to planting 400 million trees; reducing CO2 emissions by 44.38 million tonnes, or equivalent to the emission of 12.50 million cars in one year; the conserving of 223 million cubic meters of water, 16 times the volume of China’s West Lake.

●Greater accomplishments in the future

During the 2011 to 2015 period, we plan to invest 31.69 billion RMB in environmental protection, further reduce the emission of COD, SO2, NHX and NOX, foster two to three demonstration subsidiaries of green, low-carbon growth, and lift three refineries and three ethylene plants to world-class standard in terms of environmental protection indicators.

●Advocating green, low-carbon production, lifestyle and consumption

To preserve and better the environment is regarded by Sinopec as an important social responsibility and a significant way to improve production and living conditions by employees. In 2012, 530,000 Sinopec employees took part in the volunteer tree planting campaign, which resulted in the planting of 1.6 million trees.

We also fully utilize various avenues of communication to educate our employees, consumers, suppliers, contractors and other stakeholders about climate change, and promote changes in production modes , the way of life including consumption habits, and for a stronger sense of social responsibility and a keener awareness of protecting the environment.

Our materials and equipment procurement and engineering outsourcing have energy-saving and low-carbon features. In this way, we are trying to lead our suppliers and contractors on the right track of green, low-carbon growth.

COD and SO2 emissions to reduce by Ammonia and NOX emissions to decline byOver the 2011-15 period, chemical oxygen demand and sulfur dioxide emissions to reduce by

Implement whole process clean management , Reduce waste emissionsSinopec whole process clean management system

Feedstock

Three wastes

Will reduce emission of SO2, NOX, CO, hydrocarbon and particles from cars and other consumption

Use of green technology:Less or no pollutants

gas: desulfurization, denitrification and dust-removal of flue gas to reduce SO2 and NOX emission water: sewage treatment and cycling to reduce emission of COD, NHX and waste water dischargeresidue: less discharge, no harm and reusable

Cleanproduction

Clean product

Consumption

Byproduct

Comprehensive utilization

Circular economy

In 2012, through our push for clean production and comprehensive utilization of resources, we strengthened pollution treatment and further enhanced our overall environmental protection standard. According to the Ministry of Environmental Protection, emissions of COD, NHX and SO2 dropped by 2.6%, 1.9% and 3.9% respectively year-on-year. Our treatment of hazardous chemicals and ‘three wastes’ neared 100%.

●Develop Clean Production; Reduced Pollution at the Source

We continue to follow up and monitor the comprehensive environment remediation, NHx sewage treatment and project environmental protection management of key subsidiaries, and to push further forward our clean production campaign. In 2012, we conducted inspection and assessments in 13 refining and oilfield subsidiaries, Hainan Refinery and Jiangsu Oilfield officially passing its clean production inspection. By the end of 2012, 24 refining and one oilfield subsidiaries had passed Sinopec Group’s clean production inspection.

●Making Clean Products and Reducing Pollution at Consumer End

2012’s key tasks included: 1. all automobile diesel meeting National III standard 2. preparation of production and supply for Jiangsu IV gasoline from April 1st and Beijing V gasoline and diesel from August 1st. Based on preliminary estimates, these projects can reduce SO2 emissions by 60Ktpa. Sinopec cumulatively invested RMB 9.94 billion in the National IV gasoline upgrade and RMB 9.31 billion in the National III diesel upgrade. In the future, we will further speed up fuel upgrades in line with domestic requirements. By the end of 2014, the sulfur content of automobile diesel will be reduced to 50ppm (National IV); and by the end of 2017, the sulfur content of automobile diesel will be reduced to 10ppm.

Facts and Figures of Clean Production in 2012

Number of Clean Production Plans 2834

Investment Deployed RMB million 52002.819

Waste Water Reduced by Kt 170.7

COD(Cr) in Waste Water Reduced by t 156.833

Waste Gas Reduced by million m3 130488

SO2 in Waste Gas Reduced by Kt 10386.32

Industrial Residue Reduced by Kt 15.64

Sinopec staff providing JING V fuel for the customer.

Case Study

Case StudyCase Study


Qilu Petrochemical successfully helped local government to treat oily sewage in 2 days

At 4:00p.m. on May 25th 2012, Qilu Petrochemical Company got an emergency phone call from Zibo Municipal Government in Shandong Province: a local diesel pipeline had leaked due to improper construction by the water company. Qilu Company was asked to assist in the recovery and treatment of the oily sewage.

Qilu Company immediately initiated its sewage emergency plan and assigned the No. 2 purification workshop of the refinery to address this incident.

At 5:00pm, the Company called an on-site meeting to create a treatment plan. They used large storage tanks to collect sewage andtook various measurements to increase and optimize treatment capacity, so as to ensure effective sewage treatment.

From 7:00pm, the oily sewage collected at the site was sent to Qilu sewage treatment unit. The company further enhanced the whole process by monitoring on-site personnel, vehicles and the unloading of sewage, and achieved a safe and green treatment process.

With two days and nights’ hard work, by 3:00pm May 27 all 4,242 tonnes of oily sewage was well treated. According to the on-site assessment by the local Environmental Protection Department, COD and NHx content was 36 milligram/litre and 0.2 milligram/litre respectively, both better than the discharge standard of Shandong Province.

4.3

4.4

No. 4 CDU/VDU of Sinopec Maoming Petrochemical Company.

● Improving Three Wastes Treatment and Striving towards meeting Emission/Discharge StandardsKey emission reduction projects showed clear progression. We signed a Letter of Responsibility with the Ministry of Environmental Protection targeting these projects. 7 out of 36 desulfurization projects for FCC flue gas have been implemented, among which three have been put into operation. 15 out of 34 sewage treatment projects have been implemented, among which five have been put into operation.

In addition, we have almost completed the desulfurization of boiler flue gas with a total investment of RMB 4.1 billion from 2005-2012. Sinopec’s 121 operating coal- or coke- fired boilers are now equipped with desulfurization and dust-removal units, and 23 of them have denitrification units as well.

Continue to strengthen environmental impact treatment In 2012, we invested RMB 539 million for the treatment of environmental impact, focusing on treatment of oilfield wastewater and on-site peculiar odors, water conservation and emissions reduction, and vapor recovery.

Further enhance technical research on environmental protection. With the carbon vapor recovery and vapor after-treatment technologies developed by Sinopec, we had over 98% vapor recovery. In addition, the integrated technical package of FCC desulfurization, denitrif ication and dust-removal has been commercialized. We also made break-throughs in comprehensive refinery tail gas treatment and was able to provide a globally advanced solution for the whole plant.

●Actively Developing Cycling Economy

Promoting efficient and circular utilization of resources, pushing forward comprehensive use of byproducts and achieving low consumption, low emission and high efficiency.

Flare Gas Recovery in Chemicals. Through the revamping of flares and pipelines, we recovered flare gas which is sent to crackers or boilers for fuel, or adjacent petrochemical units for feedstock. Ethylene flares realized a zero emissions rate in 2012 under normal operation.

Comprehensive Utilization of Refinery Gas . We concentrated 260 Kt of FCC dry gas for ethylene feedstock, increasing olefin production by 160 Kt. We also collected 119 Kt of dilute ethylene gas from FCC dry gas to produce styrene.

Optimization of H2 Resource. We used gas to replace 297 Kt naphtha for feedstock of H2 production, and recovered 137,000 M3/h of H2 from high H2 content gas.

Recovery of LPG from Coking Unit. We completed revamping of 10 coking units, which can recover 200 Ktpa LPG.

Comprehensive Utilization of LPG. In 2012, we used 1.69 million tonnes of saturated LPG for ethylene feedstock, 528,000 tonnes of LPG for MTBE units, and 170,000 tonnes of LPG for alkylation units in Yanshan, Gaoqiao and Wuhan subsidiaries.

●More Efforts in Ecological Restoration

Oil and gas E&P and pipeline construction inevitably impacts the ecology and environment. Sinopec pays strong attention to eco-environment restoration in areas around abandoned wells and along the pipelines, and tries to keep their impact at a minimum level.

Develop Circular Economy; Construct Ecological Civilization

Harmony between egrets and oil-well.

Harvesting of both crops and energy.

Optimize Traditional Energy, Develop Low-Carbon Energy

● Industrial Restructuring

Through building new facilities and expanding and upgrading existing ones, we increased and integrated production capacities building up new facilities and expanding and upgrading existing ones. In 2012, Beihai refining revamping project, fuel upgrade projects in Jinling Petrochemical and Shanghai Petrochemical and Qingdao Petrochemical debottlenecking project all came on stream. The Wuhan 800Ktpa ethylene project went on smoothly.

At the same time, we increased average production capacities and cut down consumption by phasing out small and inefficient capacities. We also increased average production capacities and cut down on consumption by phasing out small and inefficient capacities. From 2007 to 2012, we shut down and phased out

small and less environmentally-friendly refining capacities by 18.9 mtpa, and we gradually withdrew from the polyester filament and fertilizer businesses.

Dozens of small chemical facilities and oil-fired boilers were closed. 25,000 sets of outdated electric equipment were upgraded or phased out. Optimization and volume adjustment were made to more than 500 oil tank farms.

With the above measures, average capacity of our refineries rose by 34.1% and that of our ethylene facilities grew by 13.9% from 2007 to 2012.

Case Study


Pilot inspection of GHG emission in Maoming completed

In line with the requirements of third-party inspection, an overall assessment of emission source and volume has been completed by Maoming Petrochemical, which includes 4 reports: Inspection Report on Maoming Petrochemical GHG Emission, Calculation Formula of Maoming GHG Inspection, Inspection Chart of Maoming GHG and Comprehensive Control Procedure of Maoming GHG Inspection. With all these work above, we fully prepare for the overall assessment of carbon footprint and lay down a solid foundation for our green low-carbon strategy.

Successful Implementation of Water-saving and Emission Cutting Technology

This technology has been used by four ref ining and petrochemical subsidiaries for three years, saving 30.45 million tonnes of fresh water and reducing 14.59 million tonnes of sewage discharge. Water withdrawal per ton of ethylene produced dropped from 20 to 12 tonnes, saving nearly RMB 125 million. We applied for 24 national patents in this field.2010-5.0

2011-0.2

2012-1.4

0-5.0 -4.0 -3.0 -2.0 -1.0

-2.1

-2.1

2010

2010

-4.3

-7.7

2011

2011

-0.6 2012

2012

0

0

-5.0 -4.0 -3.0 -2.0

-6.00-9.00-12.00-15.00

-13.3

-1.0

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-1.95 2011

20120.36

0-2.0 -1.0 1.0 2.0

●Saving Energy

Saving energy is the most immediate and effective way to reduce CO2 emissions at present. Giving priority to conservation, we are trying to develop into a resource-efficient enterprise.

For several years, while the production capacity has kept growing, Sinopec has achieved good results in energy conservation and consumption cuts with enhanced management, new technologies and equipment, and a special emphasis on energy saving in the production process.

In 2012, comprehensive energy consumption per unit of GDP dropped by 2.6%, equivalent to saving 2.28 million tons of coal.

In 2012, Sinopec continued to promote water conservation and emissions reduction. Major indicators were included in economics accountability assessment. While further expanding production capacity, industrial water withdrawal was kept unchanged and water withdrawal per ton of crude oil processed dropped by 2.1%

Refining Energy Intensity from 2010 to 2012 y-o-y (%)

Industrial water usage y-o-y (2010-2012, %)

Water usage per ton of crude processed y-o-y (%)

Ethylene Energy Intensity from 2010 to 2012 y-o-y (%)

●Developing Low-Carbon Energy and Optimizing Energy Structure

Sinopec is active in developing low-carbon energy and improving energy structure. A complete low-carbon energy business chain covering R&D, industrial production and marketing has taken shape. Our plan is to build up low-carbon energy capacities by 2020 that can supplement our main business operations and contribute to the long-term and sustainable development of the company.

We strive to increase natural gas production and facilitate LNG imports. In 2012, we produced 20.2 billion m3 of natural gas at home and abroad, representing 29.5% year-on-year growth; signed LNG procurement agreements totaling 9.6 million tpa, maintained the smooth construction of Shandong LNG Project – aiming to start production in September, 2014, and continued initial work for LNG projects in Guangxi, Tianjin, Lianyungang and Wenzhou.

We make great efforts in developing coal bed methane (CBM) and shale gas. CBM production of Yanchuannan project exceeded 40,000 M3/day. Our first demo shale gas project came on stream in Fuling, Chengdu.

Bioethanol consumption and sales are expanding. In 2012, we used 970,000 tons of modified fuel ethanol and sold 9.66 million tons of ethanol gasoline.

Since November 2010, we have started pilot sales of B5 biodiesel in Chengmai County and Lingao County, Hainan Province.

Geothermal energy development expanded in scale. By the end of 2012, we have realized 10 million m2 of geothermal heating area, accounting for 25% of China's total. With such a scale of geothermal usage, we can replace 140,000 tonnes of coal consumption and cut CO2 emission by 380,000 tonnes every year.

Electric vehicle service stations. We established Sinopec Shouke New Energy Technology Company, which takes part in setting standards for the infrastructure for electric vehicles and the construction of e-power station. The company also revamps Sinopec’s existing service stations into refilling and recharging stations. So far, we have built two charging stations in Beijing and Shenzhen, and six refuelling and recharging demo stations in Shanghai and Anhui.

Sinopec’s first electricity charging and oil refilling service station.

Well prepared before inspecting geothermal equipment and pipelines.

Case Study

Case Study


4.5 Strengthening R&D for greater green, low-carbon developmentWe continue to strengthen medium- and long-term green, low-carbon technology reserves, and to build our capacity for green and low-carbon development. Major research initiatives include energy-saving and efficiency-enhancing technology, renewable energy and new energy technology, clean and efficient development and utilization technology for coal, oil and natural gas, greenhouse gases (CO2, methane, etc.) emission control and utilization technology.

CCS and other demonstration projects

Sinopec is accelerating carbon capture and storage (CCS), CCS+EOR (carbon capture and storage for use in enhanced oil recovery), CCUS (carbon capture, utilization and storage) and other demonstration projects, which have laid a solid foundation and accumulated abundant experience to further reduce CO2 emission.

Sinopec Shengli Oilfield has been promoting the technology of CO2 capture, flooding and storage from flue gas in a coal-fired power plant. The 3ktpa CO2 capture and purification project has been completed. Total injection of CO2 amounted to 76.6 thousand tonnes, and incremental volume of crude oil reached 18 thousand tonnes. The dynamic storage rate is over 90%, and the oil recovery rate could be enhanced by 17.2%.

A large-scale CO2 geological storage demonstration project is also currently under construction. Meanwhile, R&D work and demonstration engineering are being pushed forward with a 1million tpa coal-fired power plant withflue gas, CO2, and 0.5 million tpa Qilu coal-to-gas CO2 capture, purification, flooding and storage projects. Once finished, this will be the world’s largest coal-fired power plant CCUS demonstration project. It will not only reduce 1.5 million tpa of CO2 emission, but also satisfy the demand of CO2-flooding in a low-permeability reservoir with a scale of 70 million tonnes. The utilization area will be expanded year by year, and the total CO2 storage volume could be 7.5 million tonnes after 10 years with a total storage rate of over 50%. The oil recovery rate will be above 10%.

Oilfield methane gas recovery technology

Sinopec is discussing with the U.S. Environmental Protection Agency and the Global Methane Initiative to join GMI and to start methane gas recovery technology pilot projects in Shengli Oilfield, Zhongyuan Oilfield and North China Oilfield.

Bio jet-fuel technology development

Sinopec has independent ly developed an SRCA-1-process for bio jet-fuel technology and finished an industrial demonstration. In order to develop the new technology, we started a 20 million tpa industrial test in Shijiazhuang Refinery. Also, we are jointly developing microalgae biodiesel technology with the Chinese Academy of Sciences. The primary work for Zhenjiang 100 ktpa biodiesel new-generation technology demonstration project is also undergoing.

Green factories at Sinopec Maoming Petrochemical Company.

SpecialReport Actively Developing Geothermal Energy

In 2012, CNSPC developed geothermal energy towards a large-scale and industrial direction in terms of resource, market, technology and management. Sinopec’s green and low-carbon strategy is well carried out and contributes to local economy, society and environment.

Expanding heating areas

At present, our heating supply covers over 10 million cubic meters, accounting for 1/4 of the conventional geothermal resources (deep layers) in China. 140 ktpa of standard coal have been replaced and 380 ktpa of CO2 emission reduced every year. Geothermal heating capacity accounts for 95% and 30% of local concentrated heating capacity in Xiong County, Hebei Province and Xianyang, Shaanxi Province, respectively. A series of new geothermal heating projects have been implemented in Shandong, Hebei, Liaoning and Henan.

Increasing business regions

Our domestic regions have increased from Shaanxi and Hebei Provinces to Liaoning, Shandong, Henan, Sichuan, and Shanxi Provinces, totaling seven provinces. We also signed a framework agreement on geothermal energy cooperation with the Government of the Republic of Djibouti in order to push forward the internationalization of geothermal business. The joint project will kick off soon.

Extending business value chain

On the basis of geothermal heating, we have expanded our business to area selection and the technology research of geothermal power generation. To date, we have done resources evaluation in the Ganzi area of Sichuan Province. Cooperating with domestic research institutes, we are focusing on key power generation technology at medium and low temperatures.

Forming comprehensive technologies

Several technologies have become more mature, including geothermal resource evaluat ion, geothermal ut i l izat ion, cogeneration of oil, power and heat, and geothermal water energy-saving utilization. Some technological breakthroughs have been achieved, including sand rock geothermal tail water reinjection technology, high boron-containing geothermal tail water processing technology and geothermal tail water boron concentrates to boric acid technology. China Geothermal Energy Development and

Utilization Research and Technology Promotion Center started operation in Sinopec. In Xiong County, Hebei Province, over 90% of geothermal water is re-injected after recovering heat.

Successful registration of CDM

Shaanxi Xianyang Geothermal Heating Project has been successfully registered as CDM (Clean Development Mechanism). It is the Company’s first registered geothermal CDM project and the world’s first geothermal heating CDM project. The methodology of geothermal heat replacing heat from coal-fired boilers to reduce CO2 emission, as developed and registered by Sinopec, was the first applicable and practically significant methodology in the world.

Qualified for energy-saving service

On January 29th, 2012, Sinopec Green Energy Geothermal Development Co., Ltd., a joint venture of China and Iceland, was approved by the NDRC to provide energy-saving service. It is the only specialized geothermal company, applying the technologies of waste-heat utilization, ground source heat pump application, frequency conversion and energy-saving, and concentrated heating of multi-wells.

Deepening China-Iceland cooperation

On April 20th 2012, witnessed by Chinese Premier Wen Jiabao and Icelandic Prime Minister Johanna Sigurdardottir, Sinopec and Orka Energy signed a framework agreement on expanding geothermal resources development cooperation. This was a milestone of bilateral cooperation in geothermal development.

Sinopec and the Djibouti government signed a framework agreement on geothermal energy cooperation.

Case Study



5Building Happy Organization

What is happiness? Happiness is what we did together yesterday. Happiness is what we are creating today. Happiness is what we look forward to tomorrow. There is a group of people, in the hundreds of thousands, determined to grow with Sinopec and jointly pursue happiness.


5.1

30.6% 3.4%

Our Festival

On the morning of October 6, 2012, a theme activity "The Color of the Earth - Children's Painting for Celebration of National Day" was held in Sinopec’s Ecuador Andes Carcelén base with participation of Chinese and foreign employees and their families. The company also organized middle management staff to participate in a two-day cultural integration program, during which Chinese and foreign employees enjoyed the essence of the Chinese culture –Peking Opera.

We abide by all kinds of international and domestic treaties, laws and regulations, respect and safeguard all internationally-accepted human rights, and oppose any acts that violate human rights. In addition, we engage our partners, suppliers and contractors to comply with the regulations.

Protecting employees’ interest, our sincere commitment

The Company maintains freedom of association of employees, respects trade union’s bargaining rights, eliminates various forms of forced and mandatory work, and prohibits the use of child labor.

T h e C o m p a n y re s p e c t s t h e pr i vacy o f employees, never disclosing employee's personal information. The Company neither shares customer information, nor discloses information of customers or potential customers.

Regarding employment, salary distribution, promotion, dismissal and retirement, the Company does not have discriminatory rules in terms of race, color, nationality, religion, physical disability, sex, union membership, or age. No discriminatory behaviors are allowed.

We strictly carry out local labor and employment laws, regulations and policies in different places. We treat all employees equally and strive to create harmonious and stable labor relations. By the end of 2012, our employees totaled 1.05 million with a staff turnover rate of less than 0.6%. We actively promote and perfect the mechanism of collective bargaining, and collective contract negotiations coverage is 100%. All subsidiaries sign written labor contracts with employees in accordance with the principles of "equality, voluntary, consensus", and the labor contract rate is 100%. Under the "five social insurance items and one housing fund" system, insurance coverage, required contribution and annuity all reach 100%. In 2012, we continued to carry out labor management, inspection and assessment and to improve further employment standardization.

●Equal employment, harmonious prosperity

We strictly adhere to the laws and regulations on the protection of women workers, and have established women employees’ committee in trade unions at all levels. We constantly improve the work environment of female employees and implement leave provisions during pregnancy and breast-feeding periods. We safeguard female and male employees’ right to equal and competitive salary and paid benefits and opportunities for career development.

Zhang Hengzhen, senior technician of the cracking unit of the chemical subsidiary in Sinopec Maoming Petrochemical Company. She is a national technician award winner and a representative to the 18th National Congress.

proportion of female employees proportion of employees of ethnic minorities

Our one million employees, working in over 67 countries and regions, have different nationalities and cultural backgrounds but coexist in the same team and pursue the same goal. We pay equal attention to both Chinese and foreign employees, respect local customs, introduce and focus on retention of foreign employees in M&A projects, and care for overseas employees' career development, business training and health & safety. We actively carry out an integrated management of human resources at home and abroad.

We actively explore the optimal democratic management of employees in accordance with the modern enterprise system so as to guarantee employees the right of information, participation and supervision. The trade union’s function in safeguarding labor’s interests has been strengthened, and our union membership rate is 100%. Through more open governance and smooth channels of communication, employees have more access to enterprise information and participate in corporate development and decision making.

In 2012, we established the trade union working committee in Sinopec Group, which developed “Guiding Principles on Establishment and Improvement of Employees' Congress System in Subsidiaries” and “Guiding Principles on Motivating Staff to Develop the Company.” We attach great importance to employees’ recommendations and have created an environment of active brainstorming for employees. We have received a total of 95,365 proposals, of which 61,279 items have been adopted, resulting in savings of RMB3.6 billion.

●Comprehensive health care

Physical and mental health is the source of employees’ career development and happy life, and maintaining their overall health is our commitment. In 2012, we continued to improve occupational safety and health management systems. We improved supplementary medical insurance, strengthened monitoring of occupational hazards in the workplace and occupational health care, and stressed individual labor protection and occupational health education and training. We pay close attention to the mental health of employees andphysical and mental harmony, and we make every effort to improve employees' health and happiness, by providing psychological counseling, implementation of employee assistance program (EAP), etc.

Front-line employees of Sinopec Anhui Oil Products Subsidiary participate in an online forum in the service station. The forum is set up to further smooth channels of communication and call for employees’ recommendations.

●Smooth communication, participation and integration

Case Study


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5.3

Li Anxi, a responsible willing ox

Someone says, he is a good SOE leader, because he is always given a mission at a critical moment. Someone says, he is good family member of the employees, because he worked wholeheartedly for his colleagues. He is Assistant General Manager of Sinopec Group, and President of Qilu Petrochemical Company. He is Li Anxi.

Working hard like a willing ox is the true reflection of him. He always says, “I work so I’m happy.” In his thinking, work is the main platform to realize personal value and to benefit the country, the company and the staff. In his daily work, he always takes the lead among his colleagues and mobilizes people’s enthusiasm through all kinds of measures. He works solidly on-site, among people, and to the grassroots level. He overcomes difficulties, making breakthroughs to promote substantial development of work. He is Li Anxi, strong enough to take responsibility.

Care for growth and happinessWe firmly hold a scientific outlook towards talent, treasure employees as our valuable asset, and improve systems of selection, appointment, cultivation and attraction of talent. We actively develop our platform for employee growth and provide employees with ongoing training opportunities so as to maximize value and creativity of all kinds of talent.

●Paving the way for growth, improving KPI evaluation

We have improved the appraisal and selection mechanism for management staff, adhering to a combination of competition and appointment, and implementing the principles of democracy, openness, competition, and selection of the best. We have broadened the growth channels for expertise and have promoted building a pool of leading scientists. We have built a platform for skilled talent to promote development and growth. The platform includes skills identification, selection and honor, high-level position selection, and skills competition.

Hired Senior Experts of Sinopec Group

Selected Persons Qualified for Special Government Allowance

Hired Skill Masters

of Sinopec Group

Annual Sun Yueqi Science and Technology Education Fund Energy Prize Winner

Youth Science and Technology Award

China Skills Award Honorary Title

National Technician Master Honorary Title

Special Award of Merit for National Technician Talent Education

●Strengthening training to assist employee growth

We focus on the common development of enterprises and employees and advocate the concept of “training as high-efficiency investment,” “training for real field application” and “continuous innovation, quality first.” Enterprise development strategy and employee career development planning are closely related.

Our investment in staff training is about 2.5% of total wages, and our network of training bases, faculty strength, facilities, and distant learning system have all been upgraded. We focus on cooperation and exchanges with renowned universit ies and research institutions, as well as international companies. Employees training channels have been broadened effectively.

1107

1002 902

892

In 2012,training for

important talent 3903 recipients

International operation staff

Skilled staff High-level specialized technical staff

Management staff

4,000

96.5

32

325

Training for staff on different key positions (person-time)

Received off-the-job training (ten thousand persons)

Registration on distant learning system (ten thousand persons)

Distant learning time (ten thousand hours)

Cultural InfluenceWe inspire employees by culture, take good care of them by our actions, and inspire them with our affection while emphasizing our core value of employee orientation.

●Culture leads, power gathers

In 2012, we further revised the “Outline of Sinopec Group Corporate Culture Construction” and “Staff Code”, launched the Sinopec Corporate Culture On-line Museum program, and started the design and creation of the Hall of Development Journey. We

promote cross-culture integration and have selected two overseas offices for overseas corporate culture construction pilot. We edited and published the book for employees New Path of Industrialization with Chinese Characteristics - Daqing Spirit, and total issuance has reached 10,000 copies.

●Realizing dream together

We share happiness and hardship. We all pursue the happy dream of Sinopec. We focus on employees’ work and life, care for their concerns, and improve their working environment and life conditions. In 2012, we continued to properly handle issues related to collective interests so that all staff can enjoy the fruit of reform and development. We continued to build assistance and aid system and help people in difficulties. We organized different kinds of recreational and sports activities to make employee’s lives more colorful.

●Respecting retirees

Retirees have rich experiences and wisdom. They have made phenomenal contributions to Sinopec and the whole petroleum industry and are regarded as treasures. We insist on serving the retirees with our whole hearts, ensuring their benefits packages, focusing on their quality of life and health, and satisfying their spiritual and cultural demands.

By the end of 2012, almost 400,000 people had retired from Sinopec. We regularly pay visits to them and organize recreational and sports activities, such as exhibition of their poetry, calligraphy, painting and photography, and billiards competition, etc.

Jogging event with Sinopec Fujian Refining and Chemical Company to celebrate Spring Festival and Anniversaries.

Welding skill contest at one of Sinopec’s subsidiaries.

Sinopec Zhenhai Refining & Chemicals was awarded the “Outstanding Award for Cultivating Skilled Labors”

Case Study


Psychological exercise for employees.

Sports games for a happy Chinese New Year.

SpecialReport Employee Assistance Program

Employee Assistance Program, shortened as EAP, is a long-term systematic assistance and welfare project for our employees. Professional guidance, training and consultancy can help employees and their families solve psychological and behavior problems. In 2012, we selected Shengli Oilfield, Zhongyuan Oilfield and another four subsidiaries as pilots for EAP. We strengthened education on optimistic moods and made full use of creative methods to promote mental health and physical and mental harmony.

The implementation of EAP helps our employees better understand our corporate culture. Through further improved care and psychological counseling, employees’ self-esteem and self-confidence, and a positive social attitude are fostered. It strengthens the psychological contract between employees and the Company and effectively promotes the harmony of employees' personal values and corporate values.

Emotional guidance: to untie the knots in one’s mind

Li Guangcai, a grassroots staff at the thermal recovery unit of Gudao Oil Producing Plant, was transferred to 401 station four years ago. At the very beginning, he was so frustrated and felt the job was impossible. Lu Zhiguo, the emotional guidance person for the 401 station, was in the same workshop with Li. Lu decided to help Li ease his depression. When there was a chance, he chatted with Li Guangcai.

“You’ve done excellent work when you were in the thermal recovery unit, right, Master Li?”

“I’ve got the Oilfield Second Prize.”

“My father has also won prizes in competitions. But now, he has been transferred to a new job. Everything for him is new, and he has to start again from zero. During the early period, he was also in depression…”

After this talk, Li Guangcai made a big shift in his mind. While working, he always rushes to the front, and his daily expression has been replaced by “Let me do it!” Half a year later, he was elected head of his team. And at the beginning of this year, he was appointed deputy head of the 401 station.

It is very popular at Shengli Oilfield to guide the employees to face difficulties and setbacks and approach them in a proper and right way. Recently, Shengli Oilfield started “Shengli Heart Irrigation Project” and established a psychology application project office. In addition, the first EAP base in Shandong Province with Sinopec has been founded. There, 14 psychological health aid agencies and three happiness stations, such as The Heart Irrigation work room and Fangzhou work room, are ready to serve employees.

Filing health records

The No. 3 Oil Production Plant in Tahe of Sinopec Northwest Oilfield Company, with its very remote location, has always suffered from bad environmental conditions which will have a negative impact on the life and work of young staff with mental stress.

In order to know the health condition of the staff through EAP, the plant distributes a special health form to everyone to file. In addition, a psychological consultant is invited to give lectures on psychological health and to carry out psychological training as well as to do individual psychological analysis. In this way, the psychological health condition of the staff will be discovered in a timely manner. Therefore, psychological aid would be offered in time.

Since 2012, the plant has analyzed nine different kinds of psychological states and made five suggestions to adjust the psychological state of people who were not in good health. This has successfully helped the staff relieve their mental stress.

Our “happy service station”

“It’s a surprise for us that such a good recreation center has been built for the employees. My whole family has benefited from this.”

Far away from headquarters, Zhongyuan No. 4 Oil Production Plant is in a Yangtze beach area that is dotted with large and small villages. The plant has introduced EAP since 2010, and the psychology care center has been further equipped with a sand play room, chairs with relaxing music, and a painting room. Moreover, the network platform of heart oxygen bar and the care hotline have started to operate for the staff so as to lead them to live, work and study in a light mood. A lot of the employees find happiness in this care center, and they are trying to pass on their happiness to the workplace. They affectionately call the care center “happy service station.”


6 Rewarding the Society

Take in a proper way and return with kindness; hold your hands and share honor with you. We share the same homeland and keep moving forward hand in hand in cities or towns, old or young, wearing smiles or tears. As a responsible corporate citizen, Sinopec fulfills its social responsibilities by actively engaging in community building, poverty alleviation and voluntary service. In 2012, Sinopec donated RMB 180 million to society, which promoted the harmonious development of both the company and the society.


Community buildingAdhering to the philosophy of “localization, development upon surrounding advantages, and win-win cooperation”, Sinopec is building the community to be an important promoter of a harmonious society. The company is devoted to establishing a long-term and stable mechanism to link local government, subsidiaries, community organizations, and residents together under one united management.

The quality of community service, as well as citizens’ living conditions, have improved with the help of community service organizations, social security and assistance network and

6.1

6.2

Building a warm family

Jianghan Oil f ield Company is trying to create a healthy and environmentally-friendly atmosphere for work, a comfortable condition for life, a clean and neat environment for the mining area, as well as a positive and upward cultural atmosphere.

With voluntary tree-planting for many years, the green coverage ratio in mining area reaches 37.9%, with parks in urban areas, forests in suburburban areas, trees and plants by the sides of roads, and gardens in courtyards”.

Ten-year financial aid to Tibet, love delivery through time and space

10 years, 12 poverty relief members, 85 projects, RMB 208 million. These real and vivid figures closely link Sinopec with Ban’ge. Since Sinopec sent its first aid to Tibet in 2002, a number of Sinopec teams spread their passion on this snowy plateau. 10 years later, Ban’ge now has wider roads, brighter lights, greener meadows. The Ban’ge people are happy with the changes.

“Tibetans and Han people are daughters of the same mother whose name is China…” Siqiu Zhuoma, a woman of Tibet ethnic from Xinji, Ban’ge, loves to sing this song to express her thankfulness to Sinopec’s aiding team that helped cure her tumor.

“Thanks to Sinopec’s aid to Tibet, the drinking-water problem of the farmers and herdsmen has been solved. Ban’ge saw the improvement of housing conditions, health care and education standards. Working conditions also become better…” said by Ciren Duoji, secretary of the Nima Village communist party committee.

1.37

60

254 50,797

8,983

2,527

Completion of Sinopec’s first Qinghai-aid project.

Maoming company holding community activities.

convenience service for the public. With themes of civilization, harmony and family, the community is enriched by the ethic virtues of advancement, work and solidarity through a series of activities such as fun games, neighborhood parties .

In 2012, our community work staff totaled 67,000 and our services covered 2.1 million community residents. Sinopec actively provided job opportunities to the local people. Shengli Oilfield Company, Yuehua community management center of Baling Company and three units of the second Oil Production Plant of Henan Oilfield Company were awarded for job creation.

Aiding those in need, helping those in difficultySinopec is lighting up hope and brightening the future of poverty-stricken families by providing them financial support and other necessary help . The year 2012 marks the 10th anniversary of Sinopec’s providing poverty alleviation to government-designated areas. During those 10 years, Sinopec provided assistance to Tibet and Qinghai Province and led poverty relief efforts for the central government’s key target counties in Anhui and Hunan Province. The accumulative investment of pairing-assistance and fixed-point poverty alleviation reached RMB 360 million. Sinopec plays an important role and takes the principal responsibility to aid disaster-stricken areas, including helping earthquake survivors or helping people fight against cold and drought.

●Aid and provide education to people in poverty-stricken areas

Yingshang and Yuexi counties of Anhui, Luxi and Fenghuang counties of Hunan are the fixed aid points for Sinopec. Since the aiding work started, Sinopec places emphasis on infrastructure construction, industry development and the exportation and training of the labor force. Increased efforts have been made to remove obstacles facing impoverished areas, promote scientific development in rural areas and help farmers increase their income.

●Aiding Tibet and Qinghai, bringing warmth to the people

Ban’ge County, one of the poorest counties with the highest location in Naqu, is located on the highland of 4745 meters high, and is called “the world roof’s roof”. Sinopec carried out a housing project equipping the town with a lighting system for the farmers and herdsmen. 512 university and technical school students from poor families would get the scholarship or stipend from “Sinopec Education Funds” for Ban’ge students in poverty. Trainings on health care, education, and trainings for cadres benefit more than 500 medical workers, 230 educators and 310 herdsmen.

Sinopec offers support to the construction of a general market on Wenhua Road, Huatugou Town located at Mang Ai Xing Wei of Qinghai. The project is 3000 meters above sea level in Huatugou Town with a total coverage area of 7586 square meters, and costs RMB 18 million. This project will promote local economic growth and improve the living standard of the local people.

From 2002 to 2012, investment in the four counties includes:

Poverty alleviation fund (100million RMB):

Projects sponsored

Schools built Students in poverty supported

Training classes People received training

Case Study

Case Study


Master Yang, a household appliance-repairing expert with a devoting heart

Yangshi, an ordinary operator with the second refining operation department of Sinopec Jinling Petrochemical Company and the person in charge of ‘Master Yang’s voluntary service team’, has been offering services in more than 100 voluntary events during the past 30 years. Long queues are lined up for ‘Master Yang’s voluntary service team’ during the annual activities of ‘learning from Lei Feng’ every year. ‘Master Yang’s free maintenance for our household appliances really helped us solve big problems in our daily life!’ said people from the service spot.

Jiangxi Oil Products Company revisited Hope School.

●Aiding Disaster-stricken Areas, Willingness to volunteerWhen trouble occurs in one area, help comes from all quarters and love is shared with the whole society. Sinopec’s responsibilities as a corporate citizen are fully represented in its fast response to natural disasters, effective organizations and activeness to help rebuild the disaster-hit areas. In 2012, Sinopec tried its best to overcome the region’s difficulties, fight against the disasters and fulfill its commitment to energy supply despite disasters such as rain storms, blizzards, drought, and earthquakes etc. Sinopec has been through the thick and thin together with the people of disaster-hit areas.

We provided aid to earthquake-hit area in Yunnan province. Sinopec actively took part in the earthquake relief work, providing help to clear roadblocks, organizing the search-and-rescue, eliminating dangers, donating supplies and medicines, clearing up property and providing psychological counseling for people. Meanwhile, Sinopec has spared no effort to fulfill its commitment to supply gasoline and diesel and increase its product launch via effective organization of its resources while supporting earthquake relief work. On top of that, Sinopec has also allocated daily supplies, including water and food etc., for both relief workers and people of disaster-hit areas.

We aided Guizhou Province during the blizzard disaster. Sinopec activated its emergency plan, and held a special meeting on fighting the freezing weather, which emphasized the allocation of gasoline and diesel supplies, and emergency food and water reserves inthe service stations.Sinopec paid great attention to resource allocation, and pipeline transportation and rail delivery so as to ensure the timely delivery of gasoline and diesel.

Fighting against drought in Yunnan province, Sinopec set up its leading group to fight against drought and support spring farming by safeguarding the gasoline and diesel supplies. Sinopec proactively strengthened communications with local government, the agricultural department, and the meteorological department in order to stay updated on gasoline and diesel needs in the area.

The special vehicle for earthquake-relief leaving a Sinopec gas station of Weining County, Bijie in Guizhou.

Police officers from Puguang emergency center of Zhongyuan Oilfield Company rush to earthquake-hit area in Yunnan to help.

Assisting schools and students ●Funding educational programs, raising hopes

Education is the cradle of hopes; hopes bring dreams. We fullyunderstand that education is the power for the material development and spiritual wealth. Education promotes individual development and social progress. Sinopec helped children return to schools and pursue their dreams by funding various activities and promoting educational programs in impoverished areas.

Since 2007, Sinopec has helped build 169 schools, of which . 143 have been completed, and 6 are near completion. In 2012, Sinopec’s Huanghua Hope Primary School in Feixi County was inaugurated. Sinopec donated RMB 600,000 to the school, making it the 149th “Hope School” built by Sinopec in Anhui province. So far, Sinopec Anhui Oil Products Company has donated RMB 100 million, and received sincere appreciations and respect from students, parents and different sectors of the community.

6.3

Sinopec sponsored Hope School of Ban’ge, Tibet.

●Love delivery through voluntary service

Our gratitude turns into a huge power of giving back, which pulls love all together and can make tiny l itt le things into great possibilities. Devotion, friendliness, mutual support and advancement are valued by our volunteers. With our smiles and acts of kindness, we wish to strike a chord in the people’s hearts. We now have a total of 25,000 Sinopec volunteers. In 2012, the company was able to implement various activities aimed at the elderly, left-behind children, those affected by natural disasters, young staff and the retirees. More than 500,000 volunteer sessions were conducted including distributing care packages, donating to impoverished students, protecting the environment, donating blood, providing traffic services, aiding the poor door-to-door, enterprise-school collaboration, and mental counseling.

Young volunteers from Sinopec Yangtze Petrochemical Company are promoting environmental protection to the public.

Case Study


Sinopec Lifeline Express for Brightness.

Lifeline Express beneficiary, Kashgar teenager Yizizijiang Kelimu.

Li Baiqing, a patient from Ningxia, regained his sight after the surgery.

A surgery training center at Urumqi, Xinjiang.

A cured patient wrote a poem to express his gratitude

SpecialReport

“Lifeline Express”, Bringing More Brightness to the World

Keep peace in heart and do good deeds. “Lifeline Express” is a hospital train initiated and donated by Hong Kong compatriots in 1997 when Hong Kong returned to China. The train serves cataract patients for free. Since 2004, Sinopec has continuously sponsored the “Lifeline Express”, and participated in public welfare undertakings to promote the harmonious development of the company and society.

In 2007, in order to bring light to impoverished cataract patients, Sinopec donated RMB 30 million to build Sinopec Lifeline Express for Brightness, which became the first hospital train donated by a domestic corporation, equipped with the most advanced medical equipment for ophthalmologic surgeries. With an total investment of over RMB 100 million, this “Lifeline Express” has travelled to 19 regions in 12 provinces and cured 24,637 cataract patients.

In May, 2011, a 16-year-old boy from Kashgar, Xinjiang Uygur Autonomous Region named Kelimu came to Beijing and sent Sinopec a silk banner with the line “Thanks to Sinopec that brings light to us”. His voice is not high and his Mandarin not very good, but the gratitude in his eyes touches everyone.

Sailimuhan Simayi, a peasant of Uyghur nationality from Kashgar, XinJiang received the ophthalmologic surgery on Sinopec’s “Lifeline Express” without any charge eight years after she developed cataracts. To express her gratefulness, she wrote a small poem, “When spring returns, everything looks fresh and new. Carrying the warmth from Sinopec, the “Lifeline Express” comes to the ancient city. We want to say ‘Rehemaiti (Thank you)’ to you and keep your kindness in our mind.” Image caption: Sailimuhan Simayi’s poem to express his gratitude.

Sinopec’s “Lifeline Express” traveled to Yinchuan, the Ningxia Hui Autonomous Region in July 2012. Li Baiqing, a farmer of 64 years old, lives in Xiaoba Town, Qingtongxia City of Ningxia. His vision blurred three years ago, bringing a lot of difficulties to his life. However, when he heard about the “Lifeline Express”, he felt he could be cured. The surgery was successful. The old man said with excitement: “My eyes are cured without any cost, so I want to thank Sinopec from my deep heart.” Image caption: Li Baiqing, a patient from Ningxia, regained his sight after the surgery.

In 2012, when the “Sinopec Lifeline Express” traveled to Guangxi Zhuang Autonomous Region for the third time, we met Su Fujiao, a third grade student in the middle school in Yangshuo, Guilin. Her right eye had a congenital cataract. On Oct. 19, 2010, she received ophthalmologic treatment and finally regained her vision. This unlucky abandoned girl, surrounded by people’s kindness and care, finally found happiness.

In May 2008, Sinopec helped build a training center for ophthalmic microsurgery to solve the shortage of medical equipment and treat the frequent occurrence of cataract patients in Xinjiang region. The experts on the “Lifeline Express” offered training to the local ophthalmologists. In addition, the “Lifeline Express” provided advanced ophthalmic surgery equipment to the local hospital so that it is capable to continue to cure the cataract patients after the “Lifeline Express” leaves.

“Lifeline Express” can help less-developed areas to escape poverty for it will help a person step out of darkness and even change the future of a family. For many years, every corner the Express reached, Sinopec has achieved high praise and compliments from the local government and public. Therefore, we deeply believe that the full development of a corporation will not be achieved without a successful society and vice versa. The company can only develop harmoniously with society when it is socially responsible.


Overseas CSR Reports

A big company shall bear big responsibility. A state-owned company shall bear national responsibi l i ty. A mult inat ional company shall bear international responsibility. As a responsible, international energy and chemical company, we understand the importance of developing overseas resources in a way that benefits the economy, environment and society.


607

91%

1,177

82%

Awarded for sourcing local talent

Training local staff I’m Granny

ZJ50D, key equipment used on projects in Sinopec Argentina, was manufactured in China. The local staff had no experience in using rigs made in China. In order to enable local staff to operate the rig, we trained the staff two months before the start of the project and sent Chinese staff to give instructions during the drilling of the first well. Through relentless efforts, local staff were able to operate on their own.

The local employment has become a key indicator for clients to select and evaluate its contractors. Despite the difficulties in employing local staff, our company managed to overcome those difficulties by abiding by policy rules and project owner’s strict requirements.For example, we employ and manage Saudi employees, and handle work disputes as a whole by making monthly performance assessments that fall in line with local indicators. Our company has always been enlisted as the best regional “Green” company, and in May 2012, we were accredited by the Saudi Labor authorities due to our sound performance in local employment and work relationships.

I’m Cristina Miranda, a Brazilian working for Sinopec Brazil, and I am responsible for administrative management. I love my work very much and have worked here for 6 years. My Chinese colleagues call me “Granny” which makes me feel at home.

I like the company’s culture, how much the company trusts me. I’m very optimistic about the future and look forward to continuing to work for Sinopec in the upcoming years.

In line with the principle of “Integrity, Standardization, Cooperation and Win-Win”, Sinopec has joined hands with other countries for common progress. With our E&P operations across major oil and gas production areas, we managed to strengthen our partnership with host countries for win-win cooperation and mutual benefits.

Driving local developmentIn Sinopec’s big family, we have employees from 67 countries and regions with different nationalities, languages, religious beliefs, cultural backgrounds and ways of thinking. Yet they share the consensus of “One team, One goal”, with ever-prosperous international operation, Sinopec has been actively engaged in the building of local community, focusing on people’s livelihood and public welfare. By proactively fulfilling its social responsibility, Sinopec has created a harmonious atmosphere of “distant friends being like close neighbors” while winning recognition and respect from local governments, residents, media and partners.

●Local Talent Sourcing

Given its global operations, except for a small number of dispatched Chinese employees, Sinopec heavily employs local talent and attaches great attention to the training of local employees. Sinopec’s Kazakhstan company was set up in 2004 with only 196 local staff. As the business developed, its total number of local staff has increased to 607, representing 91% of all total staff.

Our Ecuador subsidiary has one local vice general manager and three local heads of functions. All site staff from senior team leader to workers in our drilling and workover teams are local. The local staff ratio on drilling teams is over 80% with some even above 90%. Of its total 1,177 staff, international and local staff represents 82.24%. In addition, the company hired 28 local staff who are physically challenged.

Our Columbia subsidiary is currently undertaking six drilling service contracts with staff on three drilling rigs that are 100% local. Only three Chinese professional engineers are employed on the other three rigs. On the rigs, total foreign staff employment rate reaches 97%. Additionally, we actively improve the overseas staff management system, and safeguard the legal rights and benefits of local staff.

Kazakhstan

Ecuador

Staff number

Staff number

Kazakhstani staff ratio

Foreign staff ratio

One team, one song.

●Training local talents for local development

While we cooperate in energy development worldwide, Sinopec also provides opportunities for employee’s growth. Sinopec subsidiaries organize technical trainings of various kinds for their employees, laying sound foundation for the growth of individual talents. Sinopec also helps train large number of employees in petroleum E&P, geophysical exploration, drilling and workover as well as field construction in host countries, which puts petroleum industries of those countries on a sustainable development track.

Case Study



SIPC Ecuador Company makes friends with local tribes. Sinopec helped local people have clean drinking water in Gabon.

●Care about local youth

“NUESTRO LUGAR”, meaning Our Place, is Sinopec Argentina’s proprietary CSR initiative. In areas surrounding Sinopec Argentina’s oilfields, we are confronted with many youth problems including violence and drug use, etc. In response to these issues, Sinopec Argentina initiated OUR PLACE program which aims to provide healthy social activities to local youth in fixed activity places and help them gain more knowledge about the country’s natural resources and culture. IT service, skills training, and psychological support programs were also provided to encourage teenagers to solve problems through dialogue and counseling.

From 2009 to 2012, over 5,400 young people participated in activities through “OUR PLACE” initiative with 70 young people on average attending 16 diversified activities including tech forums, music plays, art performances, film & television showings, dancing, singing, writing, drawing, picture animation, digital editing, etc. We also have our own website with an average of 105 daily visits. Used as a supplement to local communities and schools, teachers and students are invited to take part in communication workshops and dialogues. Local residents and young people think highly of the initiative.

“The place I like most is Our Place. There, I can use computer and play games.”

——Gerónimo ernández

“In Our Place, I can do many things. I like, for instance, playing music. I can name the instruments by listening to the music played. This is my favorite activity.”

——Cristián Rosales

“I like going to Our Place because I can sing, play musical instruments, perform arts, dance, etc. These activities help us learn things, and we enjoy the time with our classmates and teachers.”

——Fernando Actis

My favorite thing in Our Place is project study, like short films and games. I like it because I learned a lot there. I want to be a teacher there when I grow up.

——Roxana Boll

●Focusing on local poverty relief

Sinopec Canada established a unique “food bank”, co-funded by the company and employee volunteers. Employee volunteers donate money to the company fund, and buy food for the food bank to support the local poor. Besides employing aboriginals, the company also invested in libraries, gymnasium and education facilities used for local education and economic growth. According to statistics, Sinopec’s venture, Syncrude, donated 6 million Canadian dollars (about RMB 38 million) in 2012 to the community for the betterment of education, medical care and aboriginals' quality of life in the community. The program was praised and recognized by the local government and residents.

● Improving local medical care

Accounting for the long distance between the oilfield, community housing and the downtown, and the relatively poor medical care facilities, Sinopec Columbia helped build local medical care centers and equip hinterland communities with mobile medical facilities.Given the rainforest surroundings and frequent thermal disease breakout, the company actively liaises with local health and medical departments to periodically offer free medical service and medicine to local residents. In 2012, the company offered 11 free treatment sessions and free medical equipment and medicine worth over $180,000.

Enhancing drinking water safety

Under the “4-party committee” comprised of the local government, Gabon Petroleum Bureau, Sinopec Gabon Company and villager representatives, Sinopec Gabon Company designates a liaison who holds meetings with the local community on a regular basis for to record the community’s opinions and demands. In 2012, Sinopec Gabon Company learned that villagers in GONGOUWE and INEGANJA did not have access to clean drinking water due to limited rain and small creeks in the woods. After a thorough geological study, the company decided to drill two water wells for the villagers. It signed a contract with a local water well drilling company to drill two separate wells for the two villages in April. In October, after receiving the authorized quality report, the company delivered the two wells to the local governments and villagers. Drinking clean and healthy water, the villagers said, “Sinopec good, China-Gabon, good brother!”. Their words demonstrated sound friendship between China and Gabon and Sinopec’s high sense of responsibility.


A drilling platform in the Amazon jungles.

Protecting ecological environment‘People first, Safety foremost, Environmental protection and quality are a priority’. No matter where we operate, in tropical rain forest or boundless sea or desert, Sinopec always views safety and sustainable development as important as economic performance. Creating harmonious and healthy work and living environments for employees and local peoples, we are a ‘green giant’.

●Safeguarding Amazon

The Amazon tropical rain forest, known as the lung of the Earth, is the ideal habitat for many rare animals and plants. The operation areas of the Sinopec Andes company in Ecuador are located in the center of the National Nature Conservation Park and interact with nearly 100 local communities, including many aboriginal tribes. Our Andes company prioritized environmental protection in the operation areas to protect native species. It built a modern waste treatment plant in the operation areas, and deals with polluted soil with advanced bio-degradation technology for zero damage to the environment. Before and during any operation, we use satellite cloud image and surface 3D image technologies to protect the environment, and restore plants after our operations. The company built check points against oil leaks along the outbound crude pipeline to better handle oil spills. Other check points were also built to prevent the cutting of trees that protect the rain forest, in the operation areas. The company also extended the culture of safety and sustainable development to the family of each employees, conveying the message of “it is every family member’s responsibility to ensure safety as it assures work and life value.” The company handed out brochures about work safety, children safety and environmental protection to employees,advocating childhood safety education. In the meantime, the company actively invites government officials and the media to site visits for their comments, recommendations, and supervision. Its relentless effort was recognized by many NGOs, local governments, residents and the media. The Ecuadorian government and the Ministry of Petroleum and Mineral Resources awarded Sinopec Andes with the EHS-the Best Foreign Company in Community Work Award and the World’s Best oil company in HSE and Sustainable Development, awarded by the World Oil magazine.

●Ocean Heaven

Sinopec Sakhalin Company’s North Venin-3 well was drilled in the Sakhalin continental shelf that contained a large population of rare ocean creatures. In line with Russia’s ecological protection laws, companies operating in the area must achieve zero emission and zero pollution. As a result, the company inspected standards of drilling platforms and various equipment, and initiated strict HSE training to operating staff before the startup of the project. During operations, “the Far East Blowout Prevention Force” and local environment protection officials are staged on a platform with one ship on duty conducting all-weather monitoring of the environment. Drilling cuttings and waste slurry are all loaded into cuttings boxes and delivered back onshore for treatment,therefore meeting the legal requirement of environment protection.

●Environment Priority

Sinopec Sudan (South Sudan) Company operates in an environment-friendly way, in line with HSE systematic management. By building new waste water treatment facilities, and using new microbiological waste water treatment technology, the company protects the environment. The company ran a record of GHG emission for Block 3/7, and won the environmental quality certificate for Block 3/7. In January 2012, due to conflicts between the two neighboring countries, South Sudan shut down all of its oilfields. DPOC, the joint operating company of Block 3/7, set forth an emergency shut-down scheme, and strictly adhered to work procedures. The company cleaned the pipeline manifold and trunk lines on the ground, cleared crude in all pipelines for maintenance, and protected all equipment in order to protect the environment.

SpecialReport Sinopec Addax Petroleum Foundation

In 2009, Sinopec acquired Switzerland-based Addax Petroleum, a multinational oil & gas company with assets in West Africa and the Middle East. Addax operates with high sense of corporate social responsibility and is a forerunner among all Sinopec’s overseas subsidiaries.

Addax Foundation focuses on health, education and environmental protection in poor areas of Africa and the Middle East. It sponsors programs in many countries, regardless of its operation locations. In 2012, the Foundation launched 15 public interest projects in Cameroon, Zambia, Uganda, Morocco, Togo, Iraq and Nigeria, etc.

The Foundation is managed under an international model. Addax donates to the Foundation to assist with sustainable development. By teaming up with international non-government organizations, the Foundation is highly transparent,, guaranteeing the effectiveness of projects. The Foundation promotes friendship between countries.

In Gabon, Addax sponsored the famous international bicycle racing event-Amissa Bongo Bicycle Race, providing the Gabon national team with equipment and training, which was widely reported and praised by the public. Gabon lacks medical and healthcare systems, infrastructure, qualified medical staff and efficient medicine purchasing. In 2012, Addax helped Gabon build water infrastructure in seven villages, and built one medical study center. It also helped the country promote AIDS prevention, handed out mosquito curtains and medicine to protect people from malaria in the local community, and improved disease prevention through early diagnosis and treatment.

In Nigeria, Addax set up a comprehensive plan and management process to fulfill social responsibilities.. Over the past three years, the company built five skill training schools, sponsored skill training in many industries including electric appliances, computer, mechanics and apparel, and funded numerous infrastructure projects including the Ugbele project.The company established a good relationship with local communities, and gained recognition and respect from the public and the government.

In Cameroon, Addax focused on supporting professional training

schools and providing poor children with more opportunities for education. In 2012, the company renovated the Du’alaa engineering institute, and plans to provide faculty and students in other institutes with more opportunities for learning. Addax hopes to meet the education needs for 600 students in three years.

In its headquarters in Geneva, Addax set up a sports sponsor campaign in the hope of increasing team work spirit and instilling sense of CSR among its employees, despite culture and language barriers. The company encourages employees to take part in both sports and public events. In 2012, nine employees took part in a sports event held in Ramon Lake and raised funds for an orphan institute sponsored by Addax in Ghana.


2013 Outlook2013 is our 30th anniversary. We will revisit our unusual development path and draw valuable experiences in order to reach our goal of being a world leading energy and chemical company. Our past provides a driving force for us to work for the betterment of future social and economic development.

Energy security, climate change, and environmental problems hinder human progress, China’s sustainable development, and the growth of the petroleum and petrochemical industry. We shall blaze a new path of growth, shifting away from the traditional growth pattern, and instead focus on quality and efficiency. We shall pursue a path of sustainable development driven by technology innovation, improvement of the quality of people and management innovation.

Securing Energy SupplyIn 2013, we will continue to implement the Resource Strategy, a build diversified structure of energy supply, and strengthen our capability to ensure an energy supply. We will focus on major programs to boost our domestic reserve and production, increase natural gas scale and map out unconventional resources plan. Outside China, we will strengthen operations of existing projects and materialize new opportunities, increasing our engagement in global energy supply.

Providing Premium ServicesIn 2013, we will stick to our commitment to ‘integrity, service, cooperation’, implement our ‘quality leads’ strategy, deliver our customer satisfaction target and innovate our business model. We seek to grow together with our downstream users and clients by providing more diversified products and specialized services.

Safe and Reliable OperationsIn 2013, we will further embed the concept of safety first, life foremost, stress risk control and accountability tracking, eliminate weak links and potential threats, prevent risks from the beginning and build an intrinsically safe enterprise.

Green and Low-carbon Growth In 2013, we will uphold the concept of green and low carbon development, which is the company’s dr iv ing force for transformational growth. We will also constantly restructure our energy mix and business portfolio, stressing green development, circular economy, and low carbon growth, therefore contributing to the biological progress of China.

Building Happy OrganizationIn 2013, we will put employee development at the centre of our work. We will continue to reform our compensation mechanism, build our talent pool, safeguard employees’ interests, address employees’ expectations, invigorate our staff and lift their sense of satisfaction and happiness.

Rewarding the SocietyIn 2013, we will continue to promote economic and social development of the communities where we operate. We will sponsor social welfare programs, improve the living standards of poverty-stricken areas, provide aid to people in need, support education and offer volunteer services to achieve harmonious development within the company and in society.


Public Recognition 2012 CSR ChroniclesJanuary

• Chairman Fu Chengyu was named one of the twelve executives to watch in 2012 by the Wall Street Journal

• Sinopec was named the Most Socially Responsible Company at the Health China Forum 2011 in Beijing .

• Wang Wenqing, manager of Sinopec Jiangdu Zhengyi service station in Yangzhou City, Jiangsu Province, won a special award for outstanding contribution at the sixth People’s Social Responsibility award organized by China’s People’s Daily Online.

February

• Sinopec was awarded China's Best Managed Company •by Euro Money’s first issue in 2012.

• Sinopec named as 2011 Most Responsible Company at the seventh CSR International Forum organized by China News Agency.

March • Sinopec ranked among the top 100 Corporate Social Responsibil ity companies, No. 1 in Chinese oil and gas companies by Fortune China.

May

• One subsidiary, 12 employees and 15 grassroot units of Sinopec won national labour awards at the All China Federation of Trade Unions ceremony.

June

• Ten subsidiaries of Sinopec won the ‘Safe and Happy Enterprise’ award at the 2012 Safe Development Summit organized by the national work safety committee and Xinhua News Agency.

July

• Chairman Fu Chengyu was awarded Best Leader in Golden Bull Prize among the top 100 listed companies at the 14th Listed Companies’ Summit in Tianjin.

• Sinopec ranked 5th in the Fortune’s 500 Companies.

• Three subsidiaries of Sinopec won a national employer’s award presented by the State Council.

August

• Chairman Fu Chengyu, along with nine others, was awarded China Overseas Investor of the Year at the second China Overseas Investment Summit.

September

• Sinopec won first place for the eighth consecutive year on China’s Top 500 Companies List published by China Enterprise Confederation and China Enterprise Directors Association.

October

• State-owned Assets Supervis ion and Administrat ion Commission (SASAC) sent Sinopec an appreciation letter for its relief work during the 21st July natural disaster in Beijing.

November

• Power of love—the 15th Anniversary of China Lifeline Express was celebrated in Beijing. Sinopec was awarded the extraordinary contribution prize by the Lifeline Express Foundation.

• Chairman Fu Chengyu was awarded Petroleum Executive of Year by Energy Intelligence Group, becoming the first Chinese national to win this title in the award’s 15-year history.

• The Blue Paper on Corporate Social Responsibility 2012 by the Chinese Academy of Social Sciences, was issued in Beijing, Sinopec was ranked 1st in the petroleum and petrochemical sector.

• The Annual Meeting of the UN Global Compact Network China was held in Beijing. Sinopec’s Integrated of Six-Dimensionalmodel of Improving CSR Management and Promoting Compliance with Information Technology case studies won Best China practice.

December

• Sinopec was awarded the China IP pioneer at the 6th Global Intellectual Property Business Forum.

• Sinopec was awarded the Golden Bee 2012 Best CSR Report Leader at the 5th International Seminar on Chinese Enterprises’ CSR Report organized by China Business Council on Sustainable Development.

• Sinopec ranked on China’s Top 10 in Global Competitiveness by the U.S. International Data Group, and Most Socially Responsible Brand.

January

• Some 20,000 retail stations and 19,000 Easy Joy convenience stores were open 24 hours a day during the Chinese Spring Festival. Customers fuelled and shopped at our stations even on the eve of the Chinese New Year.

April

• “Sinopec Lifeline Express for Brightness arrived in Yulin, Guangxi to offer free cataract operation to more than 1,000 poor patients.

May• Sinopec established the group’s board of directors, under which strategy, nomination, remuneration and performance assessment, audit ing and r isk management, CSR committees were established. A community relations management department was also set up.

• Sinopec launched the Jing V fuel at the Tianli Gas Station in Beijing. Jing V specs are equivalent to Euro V.

• The launch ceremony of the 2012 wheat harvest season was held in Shou County, Anhui Province. During peak summer consumption, Sinopec provided premium-quality products and ensured delivery, quantity and supply.

June

• Sinopec Lifeline Express for brightness in Yinchuan, Ningxia and cured more than 1000 poor cataract patients.

July

• Sinopec was invited to the first China charity and public welfare initiative event.

August

• Sinopec properly handled the polypropylene spill incident in Hong Kong’s coastal area, shouldering the corporate social

responsibility.

September

• The Sinopec Engineering Group was inaugurated at the headquarters in Beijing, signifying a breakthrough in corporate restructuring.

• The 149th Hope School sponsored by Sinopec in Anhui, named Feixi County Sinopec Huanghua Primary School was inaugurated.

• Almost 100 members from various auto clubs in Beijing visited Sinpoec operations and gained a deeper understanding of energy.

• Sinopec offered support via emergence response, oil products supply and fund donation to help disaster relief when earthquakes hit Zhaotong of Yunnan and Bijie in Guizhou.

• Sinopec Great Wall Energy and Chemical Co., Ltd. was inaugurated in Beijing, marking the beginning of a new phase in Sinopec’s coal chemical business.

• Sinopec Lifeline Express for Brightness arrived in Longyan, Fujian and offered free operations to more than 1000 poor cataract patients.

October • The Company issued a notice for a special training and promotion program on green and low carbon development, and environmental protection.

• Sinopec’s first Qinghai aid project, a local market place construction and related infrastructure, was completed and improved local l iving standards and promoted economic development.

November

• Sinopec issued the Environmental Protection Report 2012 in Beijing.

December

• Sinopec’s gas supply in winter increased by 20%, and every effort was made to meet the demand.

• Sinopec Oilfield Service Co., Ltd. was inaugurated, a milestone in business restructuring.


Headline CASS-CSR 2.0 PIECA/API GRI Page

Company Profile 　 P4.2-P4.4, M2.7-M2.10 SOC-1 2.1-2.9 Inside front cover

Chairman's Address 　 P2.1-P2.2, G1.1-G1.3, S1.5, S1.6 　 1.1, 1.2, 4.16 P2-3

Key Figures 　 P5.2, M1.2-M1.4 　　 P4

Corporate Governance P4.5, P4.6, S1.1-S1.4, M3.5-M3.7 P5

CSR Management 　 P3.1, P5.1, G1.1, G1.2, G2.1-G2.4, G3.1, G3.2, G5.1-G5.5, G6.1-G6.3,

SOC-2 4.9, 4.12 P6-9

Securing Energy Supply Strengthening Oil and Gas Resource Basis M1.2-M1.4 　 2.5 P10-12

A More Diversified Energy Mix M1.2-M1.4 ENV-A8 EN6 P13

Integrated Value Chain System M3.2 ENV-A8, ENV-3 　 P14

Stronger Scientific and Technological Support M2.6 P15-17

Providing Premium Services

Diversified Products & Professional Services 　 SOC-8 4.16, 2.2 P18-20

Quality Leadership, Growing Together M2.1, M2.2 　 4.12 P21-22

Comprehensive System, Tailor-made Service M2.3-M2.5 　 4.16 P22-25

Safe and Reliable Operations

HSE Management System S3.1 H&S-1, H&S-2, H&S-4, ENV-6 　 P26-28

Risk Control S3.8-S3.10, OGS3.11, S3.12, S3.13, OGS3.2 ENV-1, ENV-A8, SOC-9 LA7, LA9 P29-30

Supply chain safety management G3.3, M3.1, M3.3, M3.4, OGS3.7 　　 P31

Emergency management and public security management

S3.6, OGS3.3-OGS3.5, OGS3.11, OGE1.12, OGE1.17, OGE3.12, OGE3.15, E1.2

　 P32-35

Green and Low-carbon Growth

Fruitful achievements yesterday, greater success tomorrow

E1.5, E1.6, E1.13, E2.13 P36-38

Implement whole process clean management, Reduce waste emissions

E1.1, E1.7-E1.9, E2.11, E2,12, E3.1, E3.17, E3.18, OGE1.14, OEG2.9, OGE3.2, OGE3.9

ENV-2, ENV-A1, ENV-A2, ENV-A3, ENV-A4, ENV-A5, ENV-4, ENV-A6, ENV-A9

EN1, EN2, EN10, EN11, EN12, EN13, EN20, EN22, EN23, EN26, EN30

P38-40

Develop Circular Economy; Construct Ecological Civilization

E1.15, OGE1.16, OGE3.19 P41

Optimize Traditional Energy, Develop Low-Carbon Energy

E1.7, OGE2.6, OGE2.10, E3.16 P41-43

Strengthening R&D for greater green, low-carbon development

E2.1-E2.4, E2.27 ENV-3，ENV-5，ENV-A8 EN3, 3N4, EN5-EN7, EN1, EN18

P44-45

Building Happy Organization

Protecting employees’ interest, our sincere commitment

S1.8, S2.1-S2.8, S2.12-S2.14, S2.16, S2.17, S2.19, S2.24, S2.25

SOC-1, SOC-7, H&S-2, H&S-3 　 P46-49

Care for growth and happiness S2.10, S2.21-S2.24, E1.3 SOC-4, SOC-5, SOC-A3 LA10, LA11 P50

Cultural Influence S2.26 ECO-A2 　 P51-53

Rewarding the Society Community Building S4.1, S4.2, S4.7, S4.9 SOC-8, SOC-A4, SOC-A5, SOC-A6, SOC-A7

EC1 P54-56

Aiding those in need, helping those in difficulty 　 SOC-8, SOC-A4 EC1 P56-58

Assisting Schools and Students 　 SOC-8, SOC-A4 EC1 P58-61

Overseas CSR Report Driving Local Development S4.3-S4.6, S4.12 　　 P62-67

Protecting Ecological Environment 　　 P68

Special Report S4.8 　　 P69

2013 Outlook 　 A1 　　 P70-71

Public Recognition 　 P5.3 　　 P72

2012 CSR Chronicles 　　　　 P73

Third-party Review 　 A2 　 2.10 P74

Reporting Guidance Indicators

　 A3 　 3.12 P75

About this Report 　 P1.1-P1.8, P4.1, A4 　 3.1-3.8 Inside back

Rating Report on Sinopec Group CSR Report 2012

Upon the request of China Petrochemical Corporation (hereinafter "Sinopec Group"), CSR Research Center of Economics Division of Chinese Academy of Social Sciences invited experts from Chinese Expert Committee on CSR Report Rating to form Sinopec Group CSR Report 2012 Rating Team. The rating team rated Sinopec Group CSR Report 2012 (“report”) as follows.

1. Rating Criteria

Guidelines on Corporate Social Responsibility Reporting for Chinese Enterprises (CASS-CSR 2.0) published jointly by the aforesaid Center, China Enterprise Confederation, China Petroleum and Chemical Industry Association, China Light Industry Federation, the Sino-German Corporate Social Responsibility Project, China WTO Tribune and China Committee of Corporate Citizenship, and Standards of China Corporate Social Responsibility Report rating 2013.

2. Rating Results

Completeness（★★★★☆）

The Report discloses information on corporate responsibility practices for Oil & Gas Exploration Industry in terms of “Securing Energy Supply”, “Providing Premium Services”, “Safe and Reliable Operations”, “Green and Low-carbon Growth”, “Building Happy Organization”, “Rewarding the Society” and so on. With 84.56% of Key Performance indicators being disclosed, the report has a very excellent completeness.

Materiality（★★★★★）

The Report discloses nearly all the material issues for Oil & Gas Exploration Industry including responsibility management, product quality, professional health, circular economy, sustainable energy resource, climate change issue etc. With an enough narrative, the report has an excellent materiality.

Balance（★★★★★）

This report discloses negative information on “Number of reported accidents”, “Accident mortality rate per 1,000 employees”, “Fatality”, “Cases of occupational disease” etc. Adding special reports about process and handling measures on “Qilu Company oily sewage accident” and “PP pellets washed up accident”. The report has a good balance.

Comparability（★★★★☆）

This Report discloses data on 37 key performance indicators of

more than three consecutive years which make the report with a good lengthways comparability.

Readability（★★★★★）

This report has appropriate length , fluent expression and logical structure with an express way of data sheets, flow chats and featured cases. The report also adds an expression on the specialized word. All of which makes this report very readable.

Creativity（★★★★★）

This report sets a special part of case in every section which fulls the contents of the report and enhances the readers’ fell. At the same time, it reports the negative information using special cases which is a precedent for the negative reports of China corporate. The report has a good creativity.

Overall rating（★★★★★）

Through evaluation and deliberations, the rating team agreed to rate Sinopec Group CSR Report 2012 as extraordinary by giving a five-star rating to it.

3. Suggested improvements

1. Add the comparability data in the industry to enhance the crosswise comparability of the report.

2. Add more expand indicator of the industry to increase the completeness of the report.

4. Rating team

Team leader: Zhong Hongwu, Director of the Center

Team members:

Chen Yuanqiao: Secretary general in the special working group about ISO26000

Wei Xiuli: Associate Professor in North China University of Technology

Peng Huagang

Vice president of the rating committee

Vice president of executive council of the Center

Zhong Hongwu

Monitor of the rating team

Director of the Center

Third-party Review Appendix Reporting Guidance Indicators


Technical Terms ●Occupational Disease

Disease caused by being exposed to factors affecting health during working.

●Occupational Health Monitor

Occupational health monitor is a series of health checking measures to prevent occupational disease and improve workers’ health. It mainly includes health examination and keeping record of health information.

●Occupational Health Examination

Health examination for staff exposed to occupational health risks. The items to be checked and the length of examination cycle should be decided according to the health risks, and should include examination of before, during and after taking the specific job, as well as emergence examination.

●Occupational Health Examination Coverage

The ratio of the number of staff receiving occupational health examination to the number of total staff entitled to occupational health examination in a year.

●Work site checking rate

The ratio of total number of work sites with occupational health risks checked to total number of the work site with occupational health risks.

● Accident

Incident that causes casualties, injuries or property loss.

●Million Work Hours

One million work hours approximate total working time of 500 persons in one year. Total working time includes training and over-time, but excludes vacation, illness and other leave.

●Environment

The sum total of all living substances non-living substances and their interactional relationship.

●Environmental Impact Assessment

Assessment made on potential environmental impact before a project is implemented.

●Chemical Oxygen Demand (COD)

The amount of oxidant consumed in treating water sample under certain condition. It measures emission and pollutant in the water and potential environment impact. The higher the value of COD, the more serious the pollution.

About This Report

The following documents and the indicators and system indicated in the documents are referred to during the compilation of this report:

- Global Report Initiative (GRI)’s Guide on Sustainable Report (Version 3.0)

- PIECA and API’s Guide on Sustainability Report of the Oil and Gas Industry

- Guide on Delivering CSR by SOEs- issued by State-owned Assets Supervision and Administration Commission

- Guide on Compiling CSR Report by Chinese Enterprises issued by the Chinese Academy of Social Sciences

- Recommended Standards and Implementation Cases on Chinese Enterprises’ CSR by China Business Council on Sustainable Development

Reporting period: 1st January 2012—— 31st December 2012, with some contents not in this period

Reporting coverage: Sinopec Group and all its affiliates

Reporting cycle: this report is issued annually in Chinese and English

Previous reports: issued in June 2008, May 2009, April 2010, April 2011 and March 2012, respectively. This report reflects true and objective information about Sinopec in performing its economic, environmental and social responsibilities, and gives detailed performance indicators in the Appendix. For the ease of reading, China Petrochemical Corporation is also referred to as Sinopec Group, the Group, the Company, we, etc.

We highly appreciate the time you allocate in reading this report, and look forward to your valuable feedback, which would help us improve reporting in the future. You may also have access to or download this report from our website. For more information, please visit us at www.sinopec.com.

Address: 22 North, Chaoyangmen, Chaoyang District, Beijing, China

Post code: 100728

Tel: +86 (0)10 5996 0114 or +86 (0)10 5282 6114;

Fax: +86 (0)10 5976 0111

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China Petrochemical Corporation76

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Documents

2012Annual report