In China, we conduct oil and gas exploration and development primarily through independent operations and cooperation projects.

Independent operations. We have been increasing our reserves and production mainly through independent exploration and development. As of the end of 2022, approximately 84.4% of our net proved reserves and approximately 85.0% of our net production in China were obtained from the oil and gas fields 100% owned and operated by CNOOC Limited.

Cooperation projects. We cooperate with partners through product sharing contracts (“PSCs”) in oil resources (including crude oil and gas) exploitations. China National Offshore Oil Corporation (“CNOOC Group”), our controlling shareholder, has the exclusive right to enter into PSCs with foreign contractors to cooperate in the exploration, development and production of oil and gas resources in offshore China where acreage are open to foreign cooperation. CNOOC Group has transferred to the Company all its rights and obligations under the existing and future PSCs (except those rights and obligations related to the management and supervision that should be implemented by a State Corporation).

Bohai

Bohai is the most important crude oil producing area for the Company. The crude oil produced in this region is mainly heavy oil. The operational area in Bohai is mainly shallow water with a depth of approximately 10 to 30 meters. As of the end of 2022, the reserves and production in Bohai reached 1,721.1 million BOE and 557,734 BOE/ day, respectively, representing approximately 27.6% of the Company’s total reserves and approximately 32.6% of its production.

With rich oil and gas resources, Bohai is one of the Company’s core areas for exploration and development. In 2022, the Company successfully made 4 discoveries in Bohai, namely Bozhong 26-6, Bozhong 19-2, Jinzhou 25-1 North and Jinzhou 14-6. In addition, the Company successfully appraised 14 oil and gas bearing structures, including Luda 16-3, Luda 6-2 South, Bozhong 19-2,Bozhong 19-4, Bozhong 26-3, Bozhong 27-2, Bozhong29-1, Bozhong 36-1, Qinhuangdao 27-3, Caofeidian 1-2,Caofeidian 11-3 East, Jinzhou 25-1 North, Longkou 7-6 and Jinxian 1-1.

In 2022, the Company made new breakthroughs in the exploration of inside-buried hills. The newly proved in- place oil volume in Bozhong 26-6 exceeded 100 million tons, which is the largest integrated metamorphic buried hill oilfield in China. In addition, large scale lithology exploration was made in Bozhong 19-2, with proved in- place oil volume exceeding 60 million tons. The exploration of Paleogene lithologic oil and gas reservoirs in Bohai has obtained Jinzhou 14-6, a 10-million-ton in-place-volume lightweight and high-yield oil and gas fields, showing a good exploration prospect.

In terms of development and production, Kenli 6-1 oilfield 10-1 North block development project, Kenli 6-1 oilfield 5-1, 5-2, 6-1 block development project and the Jinzhou 31-1 gas field development project have all commenced production. In particular, Kenli 6-1 oilfield 5-1, 5-2, 6-1 block development project is the Company’s first large- scale application of standardized unmanned platform in Bohai Sea, which has become a good practice for the Company to promote the intelligent, standardized and unmanned offshore oilfield. In addition, China’s largest offshore oil fields onshore power application project – Bozhong-Kenli onshore power application engineering project has been successfully put into operation during the year.

In 2023, Bozhong 19-6 condensate gas field phase I development project and Bozhong 28-2 south oilfield secondary adjustment project in Bohai will commence production.

Western South China Sea

Western South China Sea is one of the Company’s important crude oil and natural gas production areas. The typical operating water depth in the region ranges from 40 to 1,500 metres. The crude oil produced here is mostly light or medium. As of the end of 2022, the reserves and production in Western South China Sea reached 903.1 million BOE and 210,739 BOE/day, respectively, representing approximately 14.5% of the Company’s total reserves and approximately 12.3% of its production.

In 2022, the Company made 3 new discoveries in Western South China Sea, namely Wenchang 19-3, Weizhou 12-8 East and Yacheng 13-10. The Company successfully appraised 10 structures bearing oil and gas, namely Baodao 21-1, Wushi 1-6, Wushi 22-9, Wenchang 8-3 North, Wenchang 14-3, Wenchang 13-1 East, Wenchang 16-2, Wenchang 19-3, Weizhou 11-6 and Weizhou 12-2. In particular, Baodao 21-1 is the first large deep- water integrated gas field with proven in-place volume of over 50 billion cubic meters of natural gas, a historic breakthrough in deep-water and deep-layer exploration in the South China Sea, and will lay a solid foundation for the construction of a trillion-cubic-meter gas area in the South China Sea. Testing production of Yacheng 13-10 obtained high-yield gas flow and realized reserves replacement for the producing gas field.

In addition, the Weiye-1 well, the first offshore shale oil well, conducted fracturing test successfully, achieving a major breakthrough in offshore shale oil exploration and strengthening the Company’s confidence in the offshore unconventional oil and gas exploration.

Weizhou 12-8 Oilfield East development project, Dongfang 1-1 Gas field Southeast and Ledong 22-1 gas field South development project have successfully commenced production during the year. Weizhou 5-7 oilfield development project is expected to start production in 2023.

Eastern South China Sea

Eastern South China Sea is another important crude oil and natural gas producing area of the Company. The typical operating water depth in the region ranges from 100 to 1,500 metres. The crude oil produced here is mostly light or medium. As of the end of 2022, the reserves and production in Eastern South China Sea reached 681.7 million BOE and 355,669 BOE/day, respectively, representing approximately 10.9% of the Company’s total reserves and approximately 20.8% of its production.

In 2022, the Company made a new discovery in Eastern South China Sea, namely Liuhua 28-2 West. In addition, 4 oil and gas bearing structure were successfully appraised, namely Enping 20-5, Huizhou 25-14, Liuhua 28-1 and Xijiang 24-7. Based on the hydrocarbon rich sag, the Company established the innovative accumulation model, achieving an important breakthrough in Huizhou deep Paleogene.

In 2022, Asia’s first deep-water jacket “Haiji-1”, independently designed and built by the Company, was successfully installed, indicating that CNOOC Limited has mastered complete sets of key technologies for manufacturing and installation of deepwater ultra-large jacket platform. Enping 15-1/10-2/15-2/20-4 oilfields joint development project has been brought on stream. The project is China’s first offshore CCS demonstration project, which will realize the re-injection and sequestration of carbon dioxide produced by the oilfields. The Enping 18-6 oilfield development project and Lufeng 12-3 oilfield development project are expected to start production in 2023.

East China Sea

In China, we conduct oil and gas exploration and development primarily through independent operations and cooperation projects.

Independent operations. We have been increasing our reserves and production mainly through independent exploration and development. As of the end of 2022, approximately 84.4% of our net proved reserves and approximately 85.0% of our net production in China were obtained from the oil and gas fields 100% owned and operated by CNOOC Limited.

Cooperation projects. We cooperate with partners through product sharing contracts (“PSCs”) in oil resources (including crude oil and gas) exploitations. China National Offshore Oil Corporation (“CNOOC Group”), our controlling shareholder, has the exclusive right to enter into PSCs with foreign contractors to cooperate in the exploration, development and production of oil and gas resources in offshore China where acreage are open to foreign cooperation. CNOOC Group has transferred to the Company all its rights and obligations under the existing and future PSCs (except those rights and obligations related to the management and supervision that should be implemented by a State Corporation).

Western South China Sea

Western South China Sea is one of the Company’s important crude oil and natural gas production areas. The typical operating water depth in the region ranges from 40 to 1,500 metres. The crude oil produced here is mostly light or medium. As of the end of 2022, the reserves and production in Western South China Sea reached 903.1 million BOE and 210,739 BOE/day, respectively, representing approximately 14.5% of the Company’s total reserves and approximately 12.3% of its production.

In 2022, the Company made 3 new discoveries in Western South China Sea, namely Wenchang 19-3, Weizhou 12-8 East and Yacheng 13-10. The Company successfully appraised 10 structures bearing oil and gas, namely Baodao 21-1, Wushi 1-6, Wushi 22-9, Wenchang 8-3 North, Wenchang 14-3, Wenchang 13-1 East, Wenchang 16-2, Wenchang 19-3, Weizhou 11-6 and Weizhou 12-2. In particular, Baodao 21-1 is the first large deep- water integrated gas field with proven in-place volume of over 50 billion cubic meters of natural gas, a historic breakthrough in deep-water and deep-layer exploration in the South China Sea, and will lay a solid foundation for the construction of a trillion-cubic-meter gas area in the South China Sea. Testing production of Yacheng 13-10 obtained high-yield gas flow and realized reserves replacement for the producing gas field.

In addition, the Weiye-1 well, the first offshore shale oil well, conducted fracturing test successfully, achieving a major breakthrough in offshore shale oil exploration and strengthening the Company’s confidence in the offshore unconventional oil and gas exploration.

Weizhou 12-8 Oilfield East development project, Dongfang 1-1 Gas field Southeast and Ledong 22-1 gas field South development project have successfully commenced production during the year. Weizhou 5-7 oilfield development project is expected to start production in 2023.

Eastern South China Sea

Eastern South China Sea is another important crude oil and natural gas producing area of the Company. The typical operating water depth in the region ranges from 100 to 1,500 metres. The crude oil produced here is mostly light or medium. As of the end of 2022, the reserves and production in Eastern South China Sea reached 681.7 million BOE and 355,669 BOE/day, respectively, representing approximately 10.9% of the Company’s total reserves and approximately 20.8% of its production.

In 2022, the Company made a new discovery in Eastern South China Sea, namely Liuhua 28-2 West. In addition, 4 oil and gas bearing structure were successfully appraised, namely Enping 20-5, Huizhou 25-14, Liuhua 28-1 and Xijiang 24-7. Based on the hydrocarbon rich sag, the Company established the innovative accumulation model, achieving an important breakthrough in Huizhou deep Paleogene.

In 2022, Asia’s first deep-water jacket “Haiji-1”, independently designed and built by the Company, was successfully installed, indicating that CNOOC Limited has mastered complete sets of key technologies for manufacturing and installation of deepwater ultra-large jacket platform. Enping 15-1/10-2/15-2/20-4 oilfields joint development project has been brought on stream. The project is China’s first offshore CCS demonstration project, which will realize the re-injection and sequestration of carbon dioxide produced by the oilfields. The Enping 18-6 oilfield development project and Lufeng 12-3 oilfield development project are expected to start production in 2023.

East China Sea

The typical operating water depth in the East China Sea region is approximately 90 metres. As of the end of 2022, the reserves and production in the region represented approximately 3.1% and approximately 1.2% of the Company’s total reserves and production, respectively.

In 2022, the Company continued to optimize the adjust well deployment in the East China Sea to promote sustainable and stable production of producing oil fields. At the same time, it has promoted the transformation of offshore platforms into unmanned and semi-unmanned platforms, which has significantly reduced operating costs.

Onshore

We mainly engaged in the exploration, development and production of unconventional natural gas resources in onshore China. We have established two major production bases in the Qinshui Basin and the eastern edge of the Erdos Basin, namely Shenfu and Linxing. As of the end of 2022, the reserves and production in onshore China represented approximately 1.6% and approximately 2.4% of the Company’s total reserves and production, respectively.

In 2022, major breakthroughs were made in the exploration of new areas of onshore deep coalbed methane. The large-scale fracturing of the first deep coalbed methane well has been completed, pushing onshore exploration to coal seam with a depth of 2,000 meters.

The Company has achieved rapid growth in onshore natural gas production for several consecutive years, which will lead to a further increase in the proportion of natural gas production. China’s longest coal bed methane pipeline – Shen’an Pipeline has been completed, which will provide stable and efficient clean energy for North China in the future. In 2023, the integrated tight gas exploration and development project in the Mugua area of Shenfu Block is expected to begin production. In the future, we will actively promote the construction of another onshore unconventional gas area of 100 billion cubic meters in- place volume, to provide strong support for the increase of proportion of natural gas production.