PART I

(b) We initially applied IFRS 16 on January 1, 2019 and IFRS 15 and IFRS 9 on January 1, 2018. According to the adopted transition plan, the comparative data has not been restated. For a detailed description of the changes and impacts of these accounting standards, please refer to Note 3 (aa) to our financial statements included in our Form 20-F filed with the SEC on April 29, 2020.

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Risk Factors

Our business is subject to various changing competitive, economic, social, political and regulatory and other related conditions. Such changing conditions entail certain risks, which are described below.

Risks Related to Macro Economic Conditions

Our operations may be adversely affected by international and domestic economic conditions. As the oil and gas industry is sensitive to macro-economic trends, oil and gas prices tend to fluctuate along with changes in macro-economic conditions. We may experience pricing pressure on our refined products in recessionary periods, which would have an adverse effect on our profitability. Changes in macro-economic conditions can affect the demand for certain of our products. These factors may also lead to intensified competition for market share, with consequential potential adverse effects on sales volumes. Inflation may lead to increase in our operating costs. Notwithstanding the measures taken by the PRC government to control inflation, China may experience an increase in inflation in the future and our operating costs may become higher than anticipated. The financial, economic or political situation may also have a negative impact on third parties with whom we do business, and may impact their ability to perform contractual obligations to us. In addition, other factors that affect the macro economy, such as declining population growth rates, geopolitical tensions, conflicts and wars, trade and tariff policies, and major public health events, such as the COVID-19 pandemic, may have an adverse impact on oil and gas and petrochemical industries, including us. Any of these factors may adversely affect our financial condition, results of operations and liquidity.

Risks Related to Competition

The oil, gas and petrochemicals industries are highly competitive. There is strong competition, both within the oil and gas industry and with other industries, in supplying the fuel needs of commercial, industrial and residential markets. In recent years, with the intensive reform of China’s petroleum, refining and chemical, natural gas, LNG, pipelines and refined oils sales industries, we have been facing increasingly intense competition in the exploration, refinery, chemical, sales, and oil and gas service sectors from privately-owned companies, foreign-invested enterprises and other state-owned enterprises that recently entered the oil and gas industries. In addition, the rapid development of unconventional oil and gas resources, new energy sources and new products also poses competition with the conventional energy and petrochemical industries. In particular, the booming of the new energy vehicle industry confronts the oil industry with tough challenges. In October 2020, the State Council issued the New Energy Vehicle Industry Development Plan (for 2021-2035), according to which, China expects that the share of new energy vehicles out of total vehicle sales in China to rise to 20% by 2025 and pure electric vehicles to account for the majority of vehicle sales by 2035. We expect to see continued rapid development of the new energy vehicle industry, which will adversely affect the consumption of refined oil products. Competition puts pressure on product prices, affects oil products marketing and requires continuous management focus on identifying new trends, reducing unit costs and improving efficiency. The implementation of our growth strategy requires continued technological advances and innovation, including advances in exploration, production, refining, petrochemicals manufacturing technology and advances in technology related to energy usage. Our performance could be impeded if competitors developed or acquired intellectual property rights to technology that we required or if our innovation lagged the industry.

The Eastern and Southern regions of China have a higher demand for refined products and chemical products than the Western and Northern regions. Although we have strived to increase our refinery capacity in the Southern regions of China over recent years, most of our refineries and chemical plants are located in the Northeastern and Northwestern regions of China. We incur relatively higher transportation costs for delivery of our refined products and chemical products to certain areas of the Eastern and Southern regions from our refineries and chemical plants in Western and Northern China. We face strong competition from other traditional domestic oil companies, local independent refineries and other competitors. As a result, we

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expect that we will continue to encounter difficulty in increasing our sales of refined products and chemical products in these regions.

Risks Related to Outbound Investments and Trading

We are subject to various political, legal and regulatory environments in foreign countries where we operate, some of which are known to be unstable and differ in certain significant respects from those prevailing in developed countries. The main factors affecting our outbound investments include unstable political situations, unstable tax policies and unstable regulatory regimes. CNPC, our controlling shareholder, and its affiliates and subsidiaries may choose to undertake, without our involvement, overseas investments, operations and trading in the oil and gas industry, including certain exploration and production of oil and gas, refining, transportation, trading, engineering construction and technical services, operations of pipelines and liquefied natural gas, or LNG projects, or other business activities in certain countries or with certain entities that are subject to U.S. economic sanctions or are designated as State Sponsors of Terrorism, including Iran, Sudan, Cuba, Russia, Burma and Venezuela.

In 2018, the United States withdrew from the Joint Comprehensive Plan of Action (“JCPOA”) and reimposed certain sanctions against Iran, which were conditionally lifted in 2015 following entry into the JCPOA. These reimposed sanctions have implications for non-U.S. companies, including requiring foreign companies to cease participation in projects in certain sectors of Iran (including the energy sector), and prohibiting or restricting oil imports from Iran, except for eight countries and regions (including China) which were granted a Significant Reduction Exception (“SRE”) to be able to continue to import limited oil until May 2019. Pursuant to section 13(r) to the U.S. Securities Exchange Act of 1934, reporting issuers are required to disclose whether they or any of their affiliates have knowingly engaged in certain activities, transactions, or dealings related to Iran during the reporting period, including activities not prohibited by U.S. or other law. Based on CNPC’s response to our inquiries, in 2020, a subsidiary of CNPC (the “CNPC Sub”) held interests in certain oil and gas development projects in Iran, namely, (i) the MIS oilfields in which the CNPC Sub obtained a 100% interest in 2010, and (ii) the North Azadegan oilfield, in which the CNPC Sub obtained a 100% interest in 2009. From the re-imposition of U.S. sanctions, the CNPC Sub has been providing minimal support and services to the two oilfields. Since May 2019 when the SRE expired, the two oilfields have suspended lifting oil for investment recovery and did not generate any revenue for the CNPC Sub.

Since July 2014, the United States has adopted economic sanctions against certain Russian persons and entities, including various entities operating in the financial, energy and defense sectors, such as Rosneft, Gazprom, Transneft, and OAO Novatek as well as those companies in which the foregoing companies independently or jointly hold a 50% or more interest. These sanctions prohibit U.S. persons from transacting in, providing financing for or otherwise dealing in debt issuance by certain of these entities, or exporting, transferring, or providing certain technologies, equipment or services to certain oil-development projects in Russia. CNPC and our company had certain pre-existing trading and investment relationships with some of these sanctioned Russian entities, which are not subject to any such restrictions. For example, CNPC entered into a long-term agreement with each of Rosneft and Transneft to import crude oil from Russia in 2009 and a long-term agreement with Rosneft to import crude oil from Russia in June 2013. CNPC has resold, and will for the foreseeable future resell, all or a substantial portion of the imported crude oil from Rosneft and Transneft under the crude oil agreements to us. In May 2014, CNPC signed a long-term agreement with Gazprom to import natural gas from Russia, which was assigned to one of our subsidiaries in 2019. CNPC also indirectly holds 20% equity interest in OAO Yamal LNG and 10% equity interest in Arctic LNG 2, in both of which OAO Novatek holds more than 50% interest. In May 2014, we entered into a long-term LNG import agreement with a subsidiary of OAO Yamal LNG to import LNG from Russia.

In August 2017, the United States imposed economic sanctions against the Government of Venezuela and certain state-owned entities, including Petroleos de Venezuela, S.A. (“PdVSA”). These sanctions prohibit U.S. persons from transacting in, providing financing for or otherwise dealing in “new debt” issued by these

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entities on or after August 25, 2017, with certain exceptions for short-term debt. Neither CNPC nor PetroChina purchased such new debt securities issued by the Government of Venezuela or by PdVSA, nor did they provide any assistance to third parties in this regard. In 2019, the United States issued enhanced sanction measures against Venezuela, which included blocking the property of Venezuelan government and its controlled entities (including PdVSA), and introducing new restrictions on Venezuela’s oil sector. Under these programs, persons determined to be operating in the oil sector of the Venezuelan economy, or to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any person included on the list of SDNs and Blocked Persons, may also be subject to risk of being designated for blocking sanctions. CNPC has longstanding trading and investment activities in Venezuela, but has suspended purchases of oil from Venezuela since 2019. In 2008, CNPC Exploration and Development Company Limited (“CNPC E&D”), a joint venture held as to 50% by us and 50% by a wholly-owned subsidiary of CNPC, established a joint venture with PdVSA (the “JV”) to operate the Sinovensa block located in Carabobo, Monagas State, Venezuela., which block produces and sells heavy oil. CNPC E&D holds a 40% interest in the JV and PdVSA holds the remaining 60%. In 2020, CNPC E&D contributed no new investment in the JV. We also indirectly hold minority interests in a few other small projects in Venezuela. For the year ended December 31, 2020, the share of profit generated from the Sinovensa block and these other projects in aggregate accounted for approximately 0.008% of our total profit.

We closely monitor the possible impacts of U.S. sanctions against the countries and entities which have trading or investment relationships with CNPC or us. We will continue to manage our risk exposure and to endeavor that our activities do not violate any applicable economic sanctions administered by the United States. However, we cannot assure you that current or future regulations or developments related to economic sanctions will not have a material adverse impact on our business or reputation. Certain U.S. based investors may not wish to invest and have proposed or adopted divestment or similar initiatives regarding investments in companies that do business with countries and entities that are subject to U.S. sanctions. These investors may not wish for CNPC or us to make investments or conduct activities in the countries or with the entities that are the subject of U.S. sanctions and may divest their investment in us because of our relationship with CNPC and its investments and activities in those countries or with those entities that are the subject of U.S. sanctions. As a result, the trading prices of our ADSs may be adversely affected.

In July 2012, OFAC added Bank of Kunlun Co., Ltd., or Kunlun Bank, an affiliate of our company due to common control by CNPC, to its “List of Foreign Financial Institutions Subject to Part 561”, which was replaced by the list of Correspondent Account of Payable-Through Account Sanctions, pursuant to the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010. OFAC reported that Kunlun Bank provided financial services to at least six Iranian banks that were on OFAC’s sanctions list during 2012. These financial services included holding accounts, making transfers and paying letters of credit on behalf of the designated banks. In 2018, Kunlun Bank has discontinued the business activities which are subject to U.S. sanctions. In 2020, Kunlun Bank’s settlement business involving Iran has been limited to settlement of humanitarian materials and other business activities that are not subject to sanctions, and it has ceased business cooperation with the banks that are subject to secondary sanctions. Beginning in May 2019, Kunlun Bank further ceased involvement in settlement activities related to Iranian crude oil trade. Our company has no involvement in or control over such activities of Kunlun Bank or CNPC and CNPC subsidiaries and affiliates, and we have never received any revenue or profit derived from these activities.

Risks Related to Government Regulation

Although we have business operations in other countries and regions, our operations in China currently contribute the large majority of our revenue. Accordingly, our financial condition and results of operations are affected to a significant extent by economic, political and legal developments in China. The PRC government regulates industry development by implementing industrial policies. The PRC government also plays a significant role in China’s economic growth by allocating resources, imposing market-entry

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conditions, setting financial and tax policy, foreign exchange policy and monetary policy, regulating financial services and institutions, and providing preferential treatment to certain industries. Some of these measures may benefit the overall Chinese economy, but may also have an adverse effect on us.

Our operations, like those of other PRC oil and gas companies, are subject to extensive regulations and control by the PRC government. These regulations and control affect many material aspects of our operations, such as exploration and production licensing, pricing, industry-specific and product-specific taxes and fees and environmental and safety standards. As a result, we may face significant constraints on our ability to implement our business strategies, to develop or expand our business operations or to maximize our profitability.

Currently, the PRC government must approve the construction and major renovation of significant refining and petrochemical facilities as well as the construction of significant crude oil, natural gas and refined product pipelines and storage facilities. We presently have several significant projects pending approval from the relevant government authorities and will need approvals from the relevant government authorities in connection with several other significant projects. We do not have control over the timing and outcome of the final project approvals.

Because PRC laws, regulations and legal requirements dealing with economic matters continue to evolve, and because of the limited volume of published judicial interpretations and the non-binding nature of prior court decisions, the interpretation and enforcement of these laws, regulations and legal requirements involve some uncertainty. The PRC laws and regulations with respect to companies, securities and litigations are different in certain important aspects from those in the United States, Hong Kong and other common law jurisdictions, and most of our assets are located in the PRC and most of our directors and substantially all of our executive officers reside in the PRC. As a result, it may be difficult or impossible for our shareholders (including holders of our ADSs) to bring an action against us or our directors and officers in an event that they believe their rights have been infringed. Even if any shareholders are successful in an action of this kind, they may be unable to enforce a judgment against our assets or the assets of our directors and officers.

Furthermore, due to jurisdictional limitations, the ability of U.S. authorities, such as the U.S. Securities and Exchange Commission, or the SEC, and the U.S. Department of Justice, or the DOJ, to investigate and bring enforcement actions against us may be limited. PRC laws may constrain the ability of our company and our directors and officers to cooperate with such an investigation or action. For example, according to Article 177 of the newly amended PRC Securities Law, which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigations or evidence collection activities within the territory of the PRC. Without the consent of China Securities Regulatory Commission, or CSRC, and other relevant PRC authorities, no organization or individual may provide documents or materials relating to securities business activities to overseas parties. As a result of the foregoing, you may have more difficulty in protecting your interests through actions against our company, directors, officers or our majority shareholder. Shareholder protection through actions initiated by the SEC, DOJ and other U.S. authorities may also be limited.

Risks Relating Financial Reporting Differences

As a foreign private issuer, we are exempt from certain disclosure requirements under the U.S. Exchange Act, which may afford less protection to you than you would enjoy if we were a domestic U.S. company. As a foreign private issuer, we are exempt from, among other things, the rules prescribing the furnishing and content of proxy statements under the U.S. Exchange Act and the rules relating to selective disclosure of material nonpublic information under Regulation FD under the U.S. Exchange Act. In addition, our executive officers, directors and principal shareholders are exempt from the reporting and short-swing profit and recovery provisions contained in Section 16 of the U.S. Exchange Act. We are also not required under the U.S. Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as domestic U.S. companies with securities registered under the U.S. Exchange Act. For example, in addition to annual reports with audited financial statements, domestic U.S. companies are required to file

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with the SEC quarterly reports that include interim financial statements reviewed by an independent registered public accounting firm and certified by the companies’ principal executive and financial officers. By contrast, as a foreign private issuer, we are not required to file such quarterly reports with the SEC or to provide quarterly certifications by our principal executive and financial officers. Although we are required by the listing rules of Shanghai Stock Exchange with respect to our A Shares to publish quarterly and semi-annual reports and also required by listing rules of Hong Kong Stock Exchange with respect to our H Shares to publish semi-annual reports, and such reports are furnished to the SEC on Form 6-K, our financial statements included in the reports are not reviewed by our independent registered public accounting firms, and are only reviewed and signed by all our directors, president and CFO.

Risks Related to Controlling Shareholder

As of December 31, 2020, CNPC beneficially owned approximately 80.41% of our share capital. This ownership percentage enables CNPC to elect our entire board of directors without the concurrence of any of our other shareholders. Accordingly, CNPC is in a position to:

CNPC’s interests may sometimes conflict with those of some or all of our minority shareholders. We cannot assure you that CNPC, as our controlling shareholder, will always vote its shares in a way that benefits our minority shareholders.

In addition to its relationship with us as our controlling shareholder, CNPC by itself or through its affiliates also provides us with certain services and products necessary for our business activities, such as construction and technical services, production services, materials supply services, social services and financial services. The interests of CNPC and its affiliates as providers of these services and products to us may conflict with our interests.

Risks Related to Pricing and Exchange Rate

Our operations are affected by the volatility of prices for crude oil, refined products and natural gas. We set our crude oil median prices monthly based on the international trading prices for crude oil.

In recent years, international prices for crude oil have fluctuated substantially in response to changes in global and regional economy, politics and supply and demand for crude oil. We do not have, and will not have, control over factors affecting international prices for crude oil. Fluctuations and volatility in crude oil prices have a significant impact in our results of operations. A decline in crude oil prices may reduce revenues from, and may result in a loss in, our exploration and production segment. For example, during the first half of 2020, due to the outbreak of COVID-19 pandemic and some other reasons, there was a rarely seen drastic drop in oil prices with an unprecedented negative oil price reported. The decline in international crude oil prices is expected to greatly affect our upstream business profits and oil and gas import costs, and affect our downstream business profits through China’s pricing mechanism of refined oil products, thereby adversely affecting our overall sales revenue and profits. Further, if crude oil prices remain at a low level for a prolonged period, we would be required to determine and estimate whether our oil and gas assets may suffer impairment and, if so, the amount of the impairment. An increase in crude oil prices may, however, increase the production costs of refined products, reduce demand for our products and affect our operating profits.

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Under the current refined oil pricing mechanism implemented by the PRC government, when there is a change in the average crude oil price in the international market during a given time period, the PRC government can adjust refined oil prices. When international crude oil price experiences sustained increases or becomes significantly volatile, the PRC government may increase its control over the refined oil prices. As a result, the regulation on refined product prices by the PRC government may reduce our profit and cause our refining assets to suffer impairment.

We negotiate the actual settlement price with natural gas users within the price range permitted by the PRC government. When the domestic price is lower than the international natural gas price, the cost of our imported natural gas will be higher than the sales price of our natural gas, which may reduce our revenues and profit, or result in losses, cause our natural gas assets to suffer impairment.

We receive most of our revenues in Renminbi. A portion of our Renminbi revenues must be converted into other currencies to meet our foreign currency obligations. The existing foreign exchange limitations under the PRC laws and regulations could affect our ability to obtain foreign exchange through debt financing, or to obtain foreign exchange for capital expenditures. The value of Renminbi against U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in China’s political and economic conditions. The PRC government has implemented a floating exchange rate system to allow the value of the Renminbi to fluctuate within a regulated band based on market supply and demand and by reference to a basket of foreign currencies. Because a substantial part of our imports and our outbound investments are settled in foreign currencies, the exchange rates between RMB and U.S. dollars and any other relevant foreign currencies may have an effect on our purchase costs and our investment costs.

Risks Related to Environmental Protection and Safety Production

Compliance with changes in laws, regulations and obligations relating to environmental protection and safety production could result in substantial expenditures and reduced profitability from increases in operating costs. In recent years, the PRC government has implemented environmental protection and safety production laws and regulations and has gradually improved refined oil standards which have stricter requirements for our business, and led to an increase in our operating costs. In the future, the PRC government will implement more stringent environmental protection and safety production regulations and impose higher standards on refined oil products. Compliance with these new regulations and standards will increase our costs and expenses.

Our oil and gas exploration and production activities shall comply with relevant PRC environmental protection laws and regulations governing abandonment and disposal processes for oil and gas exploration and production activities. We have established standard abandonment procedures pursuant to these laws and regulations. We have included under our asset retirement obligations the costs for these abandonment activities and this asset retirement obligation is based on our best estimate of future abandonment expenditures. In addition, PRC national or local governments may enact stricter environmental protection regulations and our abandonment costs may increase as a result.

Exploring for, producing and transporting crude oil and natural gas and producing and transporting refined products and chemical products involve many hazards. These hazards may result in fires, explosions, spills, blow-outs and other unexpected or dangerous conditions causing personal injuries or death, property damage, environmental damage and interruption of operations.

Some of our oil and natural gas fields are surrounded by residential areas or located in areas where natural disasters, such as earthquakes, floods and sandstorms, tend to occur more frequently than in other areas. As with many other companies around the world that conduct similar businesses, we have experienced accidents that have caused property damage and personal injuries and death.

Significant operating hazards and natural disasters such as earthquake, tsunami and health epidemics such as the COVID-19 pandemic, may cause partial interruptions to our operations and property and environmental damage that could have an adverse impact on our financial condition.

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Risks Related to COVID-19

During the first half of 2020, affected by the COVID-19 pandemic, the global oil supply and demand were severely imbalanced, resulting in a precipitous fall in oil prices, creating heavy pressure on the oil and gas industry, which in turn posed a tough challenge to our operations. Many countries’ governments have imposed increasingly stringent restrictions to help avoid, or slow down, the spreading of COVID-19, including, for example, restrictions on international and local travel, public gatherings and participation in meetings, as well as closures of universities, schools, stores and restaurants, with some countries imposing strict curfews. In China, various forms of restrictions were imposed and certain of them continue to be in place, and there can be no assurance that these restrictions will not be extended further on one or more occasions. These measures have led to a significant decline in demand for, and prices of, our refined oil products and natural gas, and the restrictions had an adverse effect in the short to medium-term on our oil and gas business chains. Globally, these widespread restrictions in various countries across the world resulted in a decrease in demand for oil, thereby also putting pressure on global oil prices. Although some of the measures, particularly in China, have been lifted, there can be no assurance that these measures will not be reinstated.

Moving forward, the impact of the COVID-19 pandemic on our business will depend on a range of factors which we are not able to accurately predict, including the duration, severity and scope of the pandemic, including any variants or resurgence and efficacy of any vaccines, the geographies impacted, the impact of the pandemic on economic activity in China and globally, and the nature and aggressiveness of measures adopted by governments. These factors include, but are not limited to:

As of the date of this report, there is significant uncertainty relating to the severity of the long-term adverse impact of the COVID-19 pandemic on the global economy, global financial markets and the Chinese economy, and we are unable to accurately predict the long-term impact of the COVID-19 pandemic on our business. To the extent the COVID-19 pandemic will adversely affect our business and financial results, it may also have the effect of heightening many of the other risks described in this ‘‘Risk Factors’’ section, such as those relating to macro-economic conditions, pricing and our liquidity. See also “Risk Factors — Risks Related to Marco Economic Conditions”, “Risk Factors — Risks Related to Pricing and Exchange Rate.” and “Risk Factors — Risks Related to Liquidity”.

Risks Related to Climate Change

In recent years, the oil industry has faced an increasingly severe challenge imposed by global climate change. Numerous international, domestic and regional treaties and agreements that restrict carbon emissions have been executed and become effective. China and some other countries in which we operate have adopted, or are considering the adoption of, regulations to reduce carbon emissions. These include adoption of carbon emission quota and trade regimes, carbon taxes, increased efficiency standards, and

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incentives or mandates for clean energy. The Chinese government has announced that China aims to hit peak emissions before 2030 and realize carbon neutrality by 2060. These policies and measures will bring opportunities to our new energy business, but may lead to an increase in our expenditures for our conventional oil and gas business, make our oil products more expensive and reduce their demand. As a result, we have to adjust our investment plans and change our business strategies, and our results of operations may be adversely affected. See “Risk Factors — Risks Related to Environmental Protection and Safety Production”.

Risks Related to Insurance

Due to the fact that oil industry is susceptible to high and industry-specific risks in nature, the current ordinary commercial insurance cannot cover all the business areas in which we operate. We maintain insurance coverage against liability risks relating to assets that have significant operational risks, auto risks, and third-party liabilities for personal, property, and environmental risks, but not all, potential losses. We may suffer material losses resulting from uninsurable or uninsured risks or insufficient insurance coverage.

Risks Related to Oil and Gas Reserves

The crude oil and natural gas reserves data in this annual report are only estimates. The reliability of reserves estimates depends on a number of factors, assumptions and variables, such as the quality and quantity of our technical and economic data and the prevailing oil and gas prices applicable to our production, some of which are beyond our control and may prove to be incorrect over time. Results of drilling, testing and production after the date of estimates may require substantial upward or downward revisions in our reserves data. Our actual production, revenues and expenditures with respect to our reserves may differ materially from these estimates because of these revisions.

We are actively pursuing business opportunities outside China to improve our international operations. We cannot assure you, however, that we can successfully locate sufficient, if any, alternative sources of crude oil supply due to the complexity of the international political, economic and other conditions. If we fail to obtain sufficient alternative sources of crude oil supply, our results of operations and financial condition may be materially and adversely affected.

Risks Related to Liquidity

We have made best endeavors to ensure an appropriate level of liquidity and financing ability. However, as we are currently making our efforts to find high-quality large-scale reserves, strengthening capacity building in key areas, constructing new, and expanding some existing, refinery and petrochemical facilities and expanding the oil and gas terminal markets, we may have to make substantial capital expenditures and investments. We cannot assure you that the cash generated by our operations will be sufficient to fund these development plans or that our actual future capital expenditures and investments will not significantly exceed our current planned amounts. If either of these conditions arises, we may have to seek external financing to satisfy our capital needs. Our inability to obtain sufficient funding for our development plans could adversely affect our business, financial condition and results of operations.

Risks Related to Effectiveness of Internal Control over Financial Reporting

The SEC, as required by Section 404 of the Sarbanes-Oxley Act of 2002, has adopted rules requiring every public company in the United States to include a management report on such company’s internal control over financial reporting in its annual report, which contains management’s assessment of the effectiveness of our internal control over financial reporting. In addition, an independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Although our management concluded that our internal control over our financial reporting as of December 31, 2020 was

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effective, and our independent registered public accounting firm has issued an attestation report, which concluded that our internal control over financial reporting was effective in all material aspects as of December 31, 2020, we may discover other deficiencies in the course of our future evaluation of our internal control over our financial reporting and may be unable to remediate such deficiencies in a timely manner. If we fail to maintain the adequacy of our internal control over financial reporting, we may not be able to conclude that we have effective internal control over financial reporting on an ongoing basis, in accordance with the Sarbanes-Oxley Act. Moreover, effective internal control is necessary for us to produce reliable financial reports and is important to prevent fraud. As a result, our failure to maintain effective internal control over financial reporting could result in the loss of investor confidence in the reliability of our financial statements, which in turn could harm our business and negatively impact the trading prices of our shares.

Risks Related to Audit Reports Prepared by an Auditor who is not Inspected by the Public Company Accounting Oversight Board

As a company with shares registered with the SEC, and traded publicly in the United States, our independent registered public accounting firm is required under the laws of the United States to be registered with the Public Company Accounting Oversight Board, or the PCAOB, and undergo regular inspections by the PCAOB to assess its compliance with the laws of the United States and professional standards. Under PRC laws, however, the PCAOB is currently unable to inspect a registered public accounting firm’s audit work relating to a company’s operations in China without the approval of the Chinese authorities. The CSRC also stated that cross-border audit supervision should be realized through regulatory cooperation between China and the United States. Accordingly, our independent registered public accounting firm’s audit of our operations in China is not subject to PCAOB inspections. In recent years, the SEC and the PCAOB have issued a number of joint statements highlighting continued challenges faced by the U.S. regulators in their oversight of financial statement audits of U.S.-listed companies with significant operations in China. In December 2020, the Holding Foreign Companies Accountable Act, or the HFCA Act, was signed into law. Among others, the HFCA Act requires (i) the SEC to prohibit securities of an identified foreign company listed in the U.S. from being traded on any national securities exchange or over-the-counter market in the U.S., if for three consecutive years, the company’s auditor that has a branch or office located in a foreign jurisdiction, and the PCAOB is unable to inspect or investigate the auditor completely because of a position taken by an authority in the foreign jurisdiction; (ii) such identified company to satisfy certain disclosure requirements. In March 2021, the SEC issued interim final rules to implement the disclosure requirements of the HFCA Act. We will be required to comply with these disclosure rules if the SEC identifies us as a covered issuer under a process to be subsequently established by the SEC. Rules of SEC to implement the trading prohibition requirement of the HFCA Act has not yet issued. Besides, in August 2020, the United State President’s Working Group on Financial Markets, or the PWG, released the Report and Recommendations on Protecting Investors from Significant Risks from Chinese Companies, or the Report. The PWG recommended that the SEC take steps to implement the recommendations outlined in the report. In particular, to address companies from jurisdictions, such as China, that do not provide the PCAOB with sufficient access to fulfill its statutory mandate, the PWG recommended enhanced listing standards on U.S. exchanges and require, as a condition to initial and continued exchange listing, PCAOB access to work papers of the principal audit firm for the audit of the listed companies. The PWG recommended the new listing standards could provide for a transition period until January 1, 2022 for currently listed companies. Implementation of the HFCA Act, the Report or other efforts to increase U.S. regulatory access to audit information could result in a suspension of trading or even mandatory delisting of our ADSs from the NYSE. This would subject our investors and us to uncertainty and have an adverse effect on the market price of our ADSs.

The PCAOB has conducted inspections of independent registered public accounting firms outside of China and has at times identified deficiencies in the audit procedures and quality control procedures of those accounting firms. Such deficiencies may be addressed in those accounting firms’ future inspection process

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to improve their audit quality. Due to the lack of PCAOB regular inspections of audit work undertaken in China, our investors do not have the benefit of the PCAOB inspection of our independent registered public accounting firm’s audit work and audit quality control procedures.

Risks Related to SEC Litigation Against the “Big Four” PRC-based Accounting Firms

On January 22, 2014, Judge Cameron Elliot, an SEC administrative law judge, issued an initial decision suspending the Chinese member firms of the “Big Four” accounting firms, including our independent registered public accounting firm, from, among other things, practicing before the SEC for six months. In February 2014, the initial decision was appealed. While under appeal and in February 2015, the Chinese member firms of “Big Four” accounting firms reached a settlement with the SEC. As part of the settlement, each of the Chinese member firms of “Big Four” accounting firms agreed to settlement terms that include a censure, undertakings to make a payment to the SEC, procedures and undertakings as to future requests for documents by the SEC and possible additional proceedings and remedies should those undertakings not be adhered to.

Had the settlement terms not been adhered to, the Chinese member firms of “Big Four” accounting firms could have been suspended from practicing before the SEC, which could in turn delay the timely filing of our financial statements with the SEC. In addition, it could be difficult for us to timely identify and engage another registered public accounting firm to audit and issue an opinion on our financial statements and our internal control over financial reporting. A delinquency in our filing of the annual report with the SEC may result in the NYSE initiating delisting procedures, which could harm our reputation and have other material adverse effects on our overall growth and prospect.

Risks Related to Pipeline Asset Restructuring

In 2020, we sold our interests in certain branch companies, subsidiaries and associated companies, which together held our major pipeline assets to China Oil & Gas Pipeline Network Corporation (“PipeChina”) in exchange for 29.9% of the equity interests in PipeChina and a cash consideration. In 2021, our subsidiary Kunlun Energy sold its equity interests in two entities holding pipeline assets to PipeChina for a cash consideration. After completion of the transactions, PipeChina will be responsible for operating the pipeline assets and providing us with the pipeline transmission services pursuant to the arrangements under the agreements entered into between us and PipeChina, and we will enjoy the rights as a shareholder of PipeChina according to its articles of association. We cannot assure you that PipeChina can duly perform all the arrangements agreed with us and properly operate, maintain and manage its assets, serve our best interests, or that the dividends received from PipeChina are of a level comparable with that of the historical earnings made by us from our own operation of the pipeline assets. Should PipeChina fail to perform any arrangement agreed with us, or to properly operate, maintain or manage the assets, or to provide us with stable services, or to maintain its profitability, our operational and financial conditions may suffer an adverse effect. In addition, the business model of PipeChina is expected to be able to promote the competition in both the upstream supply market and the downstream sales market in China, which in turn may adversely affect our competitiveness. See “Item 4 — Information on the Company — Acquisitions and Divestments”.

Risks Related to Employee Misconduct

We may not be able to detect or prevent employee misconduct, including misconduct by senior management, and such misconduct may damage our reputation and could adversely affect the trading price of our ordinary shares and ADSs.

We have gradually reinforced and enhanced our internal control and corporate governance policies and procedures in order to strengthen our ability to detect and prevent employee misconduct. We cannot assure you, however, that we will be able to detect or prevent such misconduct in a timely fashion, or at all. If we

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fail to prevent employee misconduct, our reputation may be harmed, and the trading price of our ordinary shares and ADSs could be adversely affected.

Risks Related to Cyber Security

Our activities depend heavily on the reliability and security of our information technology (“IT”) systems. Our IT systems may suffer disruptions due to cyber-attack, computer intrusions and viruses, technical failure and disruptions, power and network outages or natural disasters. We have adopted multi-layer technological measures for prevention and detection of cybersecurity problems, and we also train our employees in order to improve their awareness and ability to detect and respond to cybersecurity situations. If our measures prove to be insufficient, the cybersecurity disruptions could damage or destroy assets, compromise business systems, result in proprietary information being altered, lost, or stolen; result in employee, customer, or third-party information or material intellectual property being compromised, cause physical harm to people or the environment, or otherwise disrupt our business operations. We could incur significant costs to remedy the effects of a major cybersecurity disruption in addition to costs in connection with resulting regulatory actions, litigation or reputational harm. As a result, we and our customers, employees, or third parties could be adversely affected, potentially having a material adverse effect on our business and financial conditions.

We were established as a joint stock company with limited liability under the Company Law of the PRC on November 5, 1999 as part of a restructuring in which CNPC transferred to us most of the assets and liabilities of CNPC relating to its exploration and production, refining and marketing, chemicals and natural gas businesses.

On April 7, 2000, we completed a global offering of H Shares and ADSs. In September 2005, we completed a follow-on offering of over 3 billion H Shares. In October 2007, we issued 4 billion A Shares. The A Shares were listed on the Shanghai Stock Exchange on November 5, 2007. As of December 31, 2020, CNPC beneficially owned 146,882,339,136 A Shares and 291,518,000 H Shares in us, representing approximately 80.41% of our share capital in aggregate. The H Shares held by CNPC were through Fairy King Investments Limited, an overseas wholly owned subsidiary of CNPC.

For a description of our principal subsidiaries, see Note 18 to our consolidated financial statements.

Our headquarters are located at 9 Dongzhimen North Street, Dongcheng District, Beijing, China, 100007, and our telephone number at this address is (86-10) 5998-2622. Our website address is www.petrochina.com.cn. The information on our website is not part of this annual report. Our annual report on form 20-F and other reports filed electronically with the SEC can be found on the SEC’s website www.sec.gov.

Our Corporate Organization Structure

The following chart illustrates our corporate organization structure as of December 31, 2020.

Acquisitions and Divestments

On July 23, 2020, we entered into a series of agreements with PipeChina, including (i) the Framework Agreement on Transaction of Oil and Gas Pipeline Related Assets, (ii) ten sub-agreements (including the Equity

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Acquisition Agreements on PetroChina Pipeline Co., Ltd., and others) and (iii) the Production and Operation Agreement. Pursuant to these agreements, we agreed to sell, and PipeChina agreed to buy, our interests in certain of our subsidiaries, branches, associated companies (“target entities”), which together held our major oil and gas pipelines, certain gas storage facilities, oil storage facilities, LNG terminals and ancillary facilities, and the initial oil and gas inventory contained therein (together, the “target assets”) in exchange for 29.9% of the equity interests in PipeChina and a cash consideration (the “transaction”). The consideration for the transaction was based on the appraised value of the target assets as of December 31, 2019. The final consideration shall be determined based on an audit taking into account such factors as the profit and loss of the target assets during the transitional period, the adjustments for subsequent events after the base date and the value of the initial oil and gas inventory at the time of delivery. PipeChina warranted that after completion of the transactions, the target assets shall remain in normal operations, and the quality of the services provided to us to be no lower than the previous level. Furthermore, PipeChina undertook that it will not take any action or allow any nonaction that may adversely affect our continuous normal use of any target assets in our production or operation.

On September 28, 2020, the transaction was approved at the general meeting of our company by 99.9963% of votes. On September 30, 2020, all the conditions precedent to the closing of the transaction were satisfied, and the ownership, obligations, responsibilities and risk of the target assets were passed from our company to PipeChina at 24:00 on September 30, 2020.

The total assets sold in the transaction amounted to RMB356,447 million and the book value of net assets attributable to the owners of the Company was RMB200,525 million. The total final consideration was RMB247,471 million, including (i) RMB149,500 million that we recognized as long-term equity investment in PipeChina corresponding to the 29.9% equity interests in PipeChina, and (ii) a cash consideration of RMB97,971 million. For this transaction, we recognized pre-tax profit of RMB46,946 million. The difference between the final adjusted amounts and the amounts that we initially annouced reflected the adjustment mainly due to (i) the changes in prices and quantity of the initial oil and gas inventory and (ii) distribution of profits by certain of the target entities in advance of closing of the transaction.

On December 22, 2020, Kunlun Energy Company Limited (“Kunlun Energy”), a subsidiary of our company, entered into an Equity Transfer Agreement with PipeChina, pursuant to which Kunlun Energy agreed to sell and PipeChina agreed to purchase 60% equity interests in PetroChina Beijing Gas Pipeline Co., Ltd. (“Beijing Pipeline”) and 75% equity interests in PetroChina Dalian LNG Co., Ltd. (“Dalian LNG”) held by Kunlun Energy at a base consideration of approximately RMB40,886 million (subject to the adjustments according to the price adjustment mechanism as set out in the agreement), which shall all be settled in cash by PipeChina. This transaction was completed at 24:00 on March 31, 2021, upon which, Kunlun Energy ceased to hold any equity interests in Beijing Pipeline and Dalian LNG.

We believe that the pipeline restructuring transaction will help us focus more on our upstream exploration and development business as well as our downstream distribution business, and can relieve our pressure on capital expenditures, and help us get greater access to the nationwide oil and gas storage and transmission facilities, so to improve our operational efficiency and value creation capabilities.

See also “Item 3 — Key Information — Risks Related to Pipeline Asset Restructuring”. For details, please refer to the English translation of the transaction agreements included as exhibits to this annual report on Form 20-F.

For information on capital expenditures, please see “Item 5 — Operating and Financial Review and Prospects — Liquidity and Capital Resources — Capital Expenditures and Investments.”

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Exploration and Production

We engage in crude oil and natural gas exploration, development and production. Substantially all of our total estimated proved crude oil and natural gas reserves are located in China, principally in Northeastern, Northern, Southwestern and Northwestern China. Meanwhile, we have enhanced our overseas cooperation and expanded our strategic presence in five major overseas oil and gas cooperation regions by conducting new project development. In 2020, the crude oil and natural gas produced by us at overseas regions accounted for 19.3%% and 5.4% of our total production of crude oil and natural gas, respectively.

We currently hold exploration and exploitation licenses for oil and gas (including coal seam gas) covering a total area of approximately 272.4 million acres, including the exploration licenses covering a total area of approximately 240.3 million acres and the production licenses covering a total area of approximately 32.1 million acres.

The following table sets forth the financial and operating data of our exploration and production segment for each of the years ended December 31, 2018, 2019 and 2020:

Reserves

As of December 31, 2020, our total estimated proved reserves of crude oil was approximately 5,206.1 million barrels and our total estimated proved reserves of natural gas was approximately 76,437.1 Bcf. As of December 31, 2020, proved developed reserves for crude oil and natural gas accounted for 89.4% and 55.0% of our total proved crude hydrocarbon reserves, respectively. Total proved hydrocarbon reserves, including our overseas crude oil reserves of 831.1 million barrels and overseas natural gas reserves of 1,642.90 Bcf, decreased by 10.1% from approximately 19,959.3 million BOE as of December 31, 2019 to approximately 17,945.6 million BOE as of December 31, 2020, primarily due to the decrease in oil and natural gas prices. Natural gas as a percentage of total proved hydrocarbon reserves increased from 63.7% as of December 31, 2019 to 71.0% as of December 31, 2020.

Approximately 33%, 54% and 54% of our estimated proved reserves as of December 31, 2018, 2019 and 2020, respectively, were assessed by our internal assessment team and audited by our independent engineering consultants. Other information regarding our estimated proved reserves was based on the reserves reports prepared by our independent engineering consultants DeGolyer and MacNaughton, Ryder Scott Company L.P., GLJ Petroleum Consultants and McDaniel & Associates Consultants Ltd. in accordance with the reserves assessment methodology generally adopted in the U.S. The reserves assessments and reports of our company were performed and prepared in compliance with SEC’s oil and gas reserves reporting rules. Our reserves estimates include only crude oil and natural gas which we believe can be reasonably produced within the current terms of our production licenses or within the terms of the licenses which we are reasonably certain to be renewed. See “Regulatory Matters — Exploration Licenses and Production Licenses” for a discussion of our production licenses. Also see “Item 3 — Key Information — Risk Factors — Risks Related to Oil and Gas Reserves” for a discussion of the uncertainty inherent in the estimation of proved reserves.

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Internal Controls Over Reserves Estimates

We have appointed a reserves assessment directing team, or the RAD Team. The leader of the RAD Team is our vice president in charge of our upstream business.

We have implemented a practicing professional certification regime to supervise our employees engaged in oil and gas reserves evaluation and auditing functions. We have set up a team of reserves auditors covering our headquarter office and regional companies to perform reserves evaluation and audits. Meanwhile, we have established a special reserves management department in our exploration and production segment. Each of the officers and employees of that department has over 20 years of experience in oil industry and many years of experience in SEC-guided reserves evaluation. All of the members of that department have been recoginized as national-level reserves experts. Each regional company has established a reserves management committee and a multi-disciplinary reserves research office. Mr. Duan Xiaowen from the Reserves Administration Division of our exploration and production branch company, is the person in charge of our reserves estimation. Mr. Duan holds a bachelor’s degree in geology and a master’s degree in business administration. He has many years of work experience in oil and gas exploration and development industry and has been engaged in reserves estimate and management for a long time. Since 2008, Mr. Duan has been involved in the supervision of reserves estimation and management in our company. In 2016, Mr. Duan became the division head primarily responsible for overseeing the preparation of the reserves estimates, estimation technology and management. The reserves research offices of the regional companies are responsible for estimating newly discovered reserves and updating the estimates of existing reserves. The results of our oil and gas reserves assessment are subject to a two-level review by both the regional companies and our exploration and production branch company, with final examination and approval of the RAD Team.

In addition, we commissioned independent assessment firms to independently reassess or audit our annually assessed proved reserves in accordance with relevant SEC rules. We disclose the reserves in accordance with the SEC requirements.

Third-Party Reserves Reports

DeGolyer and MacNaughton, an independent petroleum engineering consulting firm based in the United States, carried out an independent assessment and audit of our reserves in China and certain other countries as of December 31, 2018, 2019 and 2020. Mr. Thomas C. Pence, a senior vice president of DeGolyer and MacNaughton, was responsible for supervising the preparation of our reserves report. Mr. Pence is a Registered Professional Engineer in Texas, a member of the International Society of Petroleum Engineers, and has many years of experience in oil and gas reservoir studies and reserves evaluations.

Ryder Scott Company, L.P. (“Ryder Scott”), an independent petroleum engineering consulting firm based in the United States, carried out an independent assessment of certain of our selected petroleum assets such as in Chad, Iraq and Peru as of December 31, 2018, 2019 and 2020. Mr. Timour Baichev, a vice president of Ryder Scott, was responsible for overseeing the estimate of the reserves, future production and income as stated in the reserves report. Mr. Timour Baichev is a licensed professional engineer and has many years of experience in the petroleum reserves estimation and evaluation.

GLJ Petroleum Consultants (“GLJ”), a petroleum consulting firm based in Canada, carried out an independent assessment of our reserves for certain gas and oil properties in Canada as of December 31, 2018, 2019 and 2020. Ms. Trisha S. MacDonald was the project manager for the evaluation. She is a senior engineer and has many years of experience in oil and gas reservoir studies and reserves evaluations.

McDaniel & Associates Consultants Ltd. (“McDaniel”), a petroleum consulting firm with its headquarters in Canada, carried out an independent assessment of our reserves in Kazakhstan as of December 31, 2018, 2019 and 2020. Mr. Cam T. Boulton, McDaniel’s executive vice president, was responsible for supervising the preparation

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of our reserves report. Mr. Boulton is a member of the Association of Professional Engineers and Geoscientists of Alberta. He has many years of experience in oil and gas reservoir studies and reserves evaluations.

None of the above consulting firms or their partners, senior officers or employees has any direct or indirect financial interest in our company and the remunerations to the firms are not in any way contingent upon reported reserves estimates.

For detailed information about our net proved reserves estimates, please refer to the summary reports of reserves filed herewith as exhibits to this annual report on Form 20-F.

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The following table sets forth our estimated proved reserves (including proved developed reserves and proved undeveloped reserves), proved developed reserves and proved undeveloped reserves of crude oil and natural gas as of December 31, 2018, 2019 and 2020.

As of December 31, 2018, 2019 and 2020, our total proved developed and undeveloped reserves on consolidated basis and on equity method, were 20,778 million BOE, 20,312 million BOE, and 18,202 million BOE, including 7,962 million, 7,540 million and 5,402 million barrels of crude oil and condense, and 76,896.4 Bcf, 76,629.6 Bcf and 76,799.8 Bcf of natural gas.

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Our proved undeveloped reserves were 6,279.2 million BOE as of December 31, 2020, representing a decrease of 19.9% as compared to 2019. The main changes in our proved undeveloped reserves in 2020 included (i) an increase of 1,214.6 million BOE through extensions and discoveries; (ii) an increase of 107.7 million BOE through improved recovery; (iii) a decrease of 1,263.2 million BOE primarily due to the decrease in oil prices; (iv) the conversion of 1,631.1 million BOE of proved undeveloped reserves into proved developed reserves; and (v) purchase of 10.6 million BOE of proved undeveloped reserves. In 2020, we spent RMB127,576 million on developing proved undeveloped reserves. The overwhelming majority of our proved undeveloped reserves were situated around the oil fields that are currently producing. The majority of our proved undeveloped reserves are already scheduled for development within five years after initial booking.

Some of our proved undeveloped reserves of natural gas are being developed more than five years after their initial disclosure primarily due to the effect of long-term natural gas supply contracts. The sale of natural gas produced from our reserves located in China is subject to our long-term contractual obligations to provide a stable supply of natural gas to customers. We sell all of the natural gas under long-term supply arrangements with customers.

There are mainly two types of long-term supply arrangements. The first is multi-year supply contracts with terms ranging from 20 to 30 years that can be extended upon mutual agreement. The second type is renewable annual contracts. The majority of the natural gas produced in our gas fields in China is put into the nationwide, long-range pipeline system to be sold to customers who have entered into multi-year supply contracts with us in the areas where the long-range pipeline system covers. A small portion of the natural gas produced by our company is put into local pipeline systems to be sold to customers in the areas adjacent to our gas fields. These customers typically have formed de-facto long-term relationships with our company over the years and enter into supply contracts with us before the year end to determine the amount of gas to be purchased for the next year, with such contracts being renewed every year. In general, our supply relationships with customers under the annual contracts have existed for more than ten years.

Mainly as a result of our contractual obligations to ensure a long-term, stable supply of natural gas to customers, we must maintain a relatively large amount of proved undeveloped natural gas reserves and develop them over an extended period of time (in some cases, longer than five years).

The following tables set forth our crude oil and natural gas proved reserves and proved developed reserves by region as of December 31, 2018, 2019 and 2020.

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Exploration and Development

We are currently conducting exploration and development efforts in 12 provinces, two municipalities under the direct administration of the central government and three autonomous regions in China as well as in certain regions in other countries. We believe that we have more extensive experience in the exploration and development of crude oil and natural gas than any of our principal competitors in China.

The following table sets forth the number of wells we drilled, or in which we participated, and the results thereof, in 2018, 2019 and 2020.

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We had 363 wells in the process of being drilled and 6,459 wells with multiple completions as of December 31, 2020.

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In 2020, we supplied a substantial majority of our total crude oil sales to our own refineries. In addition, we and Sinopec supply crude oil to each other’s refineries to allow supplies to be easily obtained from nearby resources.

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The following table sets forth our average sales prices and average lifting costs of crude oil and natural gas of our company on an overall basis and those in China in 2018, 2019 and 2020.

Principal Oil and Gas Regions

Daqing Oil Region

The Daqing oil region, our largest oil and gas producing property, is located in the Songliao basin and covers an area of approximately one million acres. In 2018, 2019 and 2020, our average crude oil production volume in the Daqing oil region was 632.6 thousand barrels, 608.7 thousand barrels and 595.7 thousand barrels per day, respectively. As of December 31, 2020, we produced crude oil from 40 fields in the Daqing oil region.

As of December 31, 2020, our proved crude oil reserves in the Daqing oil region were 928.6 million barrels, representing 17.8% of our total proved crude oil reserves. As of December 31, 2018 and 2019, the proved crude oil reserves in Daqing oil region were 1,487.4 million barrels and 1,300.9 million barrels, respectively. As of December 31, 2020, the crude oil reserves-to-production ratio of the Daqing oil region was approximately 4.2 years.

Daqing’s crude oil has low sulfur and high paraffin content. As many refineries in China, particularly those in Northeastern China, are configured to refine Daqing crude oil, we have a stable market for the crude oil we produce in the Daqing oil region.

Changqing Oil and Gas Region

In the early 1990s, we discovered the Changqing oil and gas region, which covers parts of Shaanxi Province, Gansu Province, Ningxia, Inner Mongolia and Shanxi Province. In 2019, we discovered the Qingcheng oilfied in the Changqing oil and gas region. As of December 31, 2020, the proved reserves in the Qingcheng oilfied were 34.6 million barrels. As of December 31, 2020, our proved crude oil reserves in the Changqing oil region were 1,262.5 million barrels, representing 24.2% of our total proved crude oil reserves. In 2020, our crude oil production in the Changqing oil region averaged 497.7 thousand barrels per day, representing approximately 19.8% of our total daily crude oil production.

The Changqing oil and gas region had total proved natural gas reserves of 25,969.8 Bcf as of December 31, 2020, representing 34.0% of our total proved natural gas reserves. In January 2001, we discovered the Sulige gas field in the Changqing oil and gas region, which had total proved natural gas reserves of 14,215.8 Bcf as of December 31, 2020. Sulige gas field is currently the largest gas field in China. In 2020, the Changqing oil and gas region produced 1,375.3 Bcf of natural gas for sale, representing an increase of 8.2% from 1,270.7 Bcf in 2019.

As of December 31, 2020, the crude oil and gas reserves-to-production ratio at the Changqing oil region was approximately 13.6 years.

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Xinjiang Oil Region

The Xinjiang oil region is one of our four largest crude oil producing properties and is located in the Junggar basin in Northwestern China. We commenced our operations in the Xinjiang oil region in 1951. The Xinjiang oil region covers a total area of approximately 900,000 acres.

As of December 31, 2020, our proved crude oil reserves in the Xinjiang oil region were 717.2 million barrels, representing 13.8% of our total proved crude oil reserves. In 2020, our oil fields in the Xinjiang oil region produced an average of 262.2 thousand barrels of crude oil per day, representing approximately 10.4% of our total daily crude oil production. As of December 31, 2020, the crude oil reserves-to-production ratio at the Xinjiang oil region was approximately 7.5 years.

Tarim Oil and Gas Region

The Tarim oil and gas region is located in the Tarim basin in Northwestern China with a total area of approximately 590,000 acres. In 1998, we discovered the Kela 2 natural gas field in the Tarim oil and gas region. In 2019, we discovered the Bozi-Dabei gas field in the Tarim oil and gas region. As of December 31, 2020, the proved reserves in the Bozi-Dabei gas field were 4,368.2 Bcf. As of December 31, 2020, the proved natural gas reserves in the Tarim oil and gas region were 22,680.6 Bcf, representing 29.7% of our total proved natural gas reserves.

In 2020, we produced 1,005.8 Bcf of natural gas for sale in the Tarim oil and gas region. We deliver natural gas in the Tarim oil and gas region through gas pipelines to the central and eastern regions of China where there is strong demand for natural gas. As of December 31, 2020, the oil and natural gas reserves-to-production ratio in the Tarim oil and gas region was approximately 19.4 years.

Chuanyu Gas Region

We began natural gas exploration and production in the Chuanyu gas region in the 1950s. The Chuanyu gas region covers a total area of approximately 2.3 million acres. As of December 31, 2020, we had 115 natural gas fields under development in the Chuanyu gas region. In 2019, we discovered the Sichuan shale gas field in the Chuanyu gas region. As of December 31, 2020, the proved reserves in the Sichan shale gas field were 1,556.2 Bcf.

As of December 31, 2020, our proved natural gas reserves in the Chuanyu gas region were 14,933.6 Bcf, representing 19.5% of our total proved natural gas reserves and an increase of 3.6% from 14,421.5 Bcf as of December 31, 2019. In 2020, our natural gas production for sale in the Chuanyu gas region reached 1,022.5 Bcf, representing 24.2% of our total natural gas production for sale. As of December 31, 2020, the natural gas reserves-to-production ratio in the Chuanyu gas region was approximately 14.6 years.

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Refining and Chemicals

We now operate 32 enterprises located in nine provinces, four autonomous regions and three municipalities to engage in refining of crude oil and petroleum products, as well as the production and marketing of basic petrochemical products, derivative chemical products and other chemical products.

The comparative data throughout the section of “Refining and Chemical” was presented as if (i) Dalian West Pacific had been consolidated from the earliest year presented. Please refer to “Item 4 — Information on the Company — Acquisitions and Divestments” and Note 40 to our consolidated financial statements in our Form 20-F filed with the SEC on April 29, 2020; and (ii) PetroChina Fuel Oil Company Limited (“Fuel Oil Company”) and PetroChina Lubricant Company (“Lubricant Company”) were transferred from the marketing segment to the refining and chemicals segment from the earliest year presented. See Note 38 to our financial statements included in this Form 20-F. The following table sets forth the financial and operating data of our refining and chemicals segment for each of the years ended December 31, 2018, 2019 and 2020.

Our Refineries

Most of our refineries are strategically located close to our crude oil production and storage bases along the crude oil and refined product transmission pipelines and railways, which provide our refineries with secure supplies of crude oil and facilitate our distribution of refined products to the domestic markets.

In 2020, facing the excessive oil refining capacity in China, to enhance our competition and efficiency in the refining and chemical business, we scientically arranged the production in the refining and chemicals segment, continuouly optimized product mix, reasonably adjusted the diesel to gasoline ratio, actively increased the production of chemical products while striving to reduce the production of refined oil products, and maintained a high-load operation of our chemicals production facilities in response to market demand, and increased the production of high value-added products.

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In 2018, 2019 and 2020, our exploration and production operations supplied approximately 56.7%, 55.7% and 57.6%, respectively, of the crude oil processed in our refineries.

In 2020, Jilin Petrochemical, Fushun Petrochemical, Lanzhou Petrochemical, Dushanzi Petrochemical, Dalian Petrochemical, Dalian West Pacific, Guangxi Petrochemical, Sichuan Petrochemical and Yunnan Petrochemical were our principal refineries in terms of both primary distillation capacity and refining throughput. The table below sets forth the primary distillation capacity and refining throughput of our principal refineries as of December 31, 2018, 2019 and 2020.

In 2020, the production restructuring and upgrading project of Daqing Petrochemical, the ethylene production capacity recovery project at Lanzhou Petrochemical, and a series of aviation kerosene production increasing projects and low-sulfur marine fuel oil projects were completed and launched. The construction of the key projects such as the refining-chemical integrated project at Guangdong Petrochemical and the projects to produce ethylene with ethane at Tarim and Changqing progressed in an orderly manner.

The table below sets forth the major indicators of the realized productivity of our refineries in each of 2018, 2019 and 2020.

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To maintain efficient operations of our facilities and lower production costs, we have endeavored to achieve the most cost-efficient mix of various types of crude oil in our refining process. We purchase a portion of our crude oil requirements from third-party international suppliers located in different countries and regions. In 2020, we purchased crude oil sourced from Russian companies Roseneft and Transneft which are subject to U.S. economic sanctions, and Sudan which was designated as a State Sponser of Terrorism by the U.S. (the U.S. removed Sudan from the list of State Sponsors of Terriorism in December 2020), for use in our refining operations. The revenue generated from our refineries from the crude oil sourced from the Russian companies Rosneft and Transneft, and Sudan accounted for 3.16%, and 0.07% of our total revenue in 2020. See “Item 3 — Key Information — Risk Factors — Risks Related to Outbound Investments and Trading.”

Chemicals

Most of our chemical plants are close to our refineries and are connected to the refineries by pipelines, providing additional production flexibility and opportunities for cost competitiveness. The raw materials required by our chemicals operations are mainly supplied by our own refineries.

We are one of the major producers of ethylene in China. We use the bulk of the ethylene we produce as a principal feedstock for the production of many chemical products, such as polyethylene. As of December 31, 2020, our annual ethylene production capacity was 6,010 thousand tons. We produce a number of synthetic resin products, including polyethylene, polypropylene and ABS. As of December 31, 2020, our annual production capacities for polyethylene, polypropylene and ABS were 5,060 thousand tons, 4,220 thousand tons and 710 thousand tons, respectively. 

Marketing of Chemicals

Our chemical products are distributed to a number of industries including the automotive, construction, electronics, medical manufacturing, printing, electrical appliances, household products, insulation, packaging, paper, textile, paint, footwear, agriculture and furniture industries.

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The following table sets forth the sales volumes of our chemical products by principal product category for each of the years ended December 31, 2018, 2019 and 2020.