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 2023, approximately 85.7% of our net proved reserves and approximately 86.2% of our net production in China were from our self-operated oil and gas fields.

Cooperation projects: We cooperate with partners through product sharing contracts (“PSCs”) in oil and gas resources (including crude oil and natural 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 is 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 largest crude oil production site in China and also 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 2023, the reserves and production in Bohai reached 1,968.4 million BOE and 599,847 BOE/ day, respectively, representing approximately 29.0% of the Company’s total reserves and approximately 32.3% of its production.

With rich oil and gas resources, Bohai is one of the Company’s core areas for exploration and development. In 2023, the Company successfully made two discoveries in Bohai, namely Qinhuangdao 27-3 and Bozhong 26-2 North. In addition, the Company also successfully appraised 9 oil and gas bearing structures, including Qinhuangdao 27-3, Bozhong 26-6, Bozhong 19-2, Bozhong 34-1 West, Luda 16-3 South, Jinzhou 14-6, Longkou 25-1, Caofeidian 28-1 and Caofeidian 23-6.

In 2023, we successfully re-appraised Bozhong 26-6, adding over 40 million cubic meters of oil and gas proved in-place volume, with a total proved in-place volume exceeding 200 million cubic meters, and confirmed it the largest metamorphic buried hill oilfield in the world. Significant discoveries continued to be made in shallow strata exploration in Bohai, with Qinhuangdao 27-3 contributing new proved in-place volume of over 100 million tons.

Bohai is also an important source of growth for the Company’s natural gas reserves and production. Currently, Bohai has over 500 billion cubic meters of proved in-place volume of natural gas. In the future, we will focus on shallow water deep/ultra-deep play exploration and solidly push forward the exploration project for the trillion-cubic- meter gas area in Bohai.

In terms of development and production, Bozhong 28-2 South oilfield secondary adjustment development project, Bozhong 19-6 condensate gas field phase I development project and Penglai 19-3 oilfield 5/10 zone development project have all been put into production in 2023. Among them, Bozhong 19-6 condensate gas field phase I development project is the first 100 billion-cubic- meter condensate gas field in Bohai Bay to be put into production relying on the Bozhong-Kenli oilfields onshore power project, which will provide Beijing-Tianjin-Hebei and Bohai Rim regions with a more stable and reliable supply of clean energy and strongly promote the green and low- carbon development of the Company.

In 2023, the Company completed the construction of onshore power project for Bohai oilfields to promote the green and low-carbon development of oil and gas fields in Bohai. This is the world’s largest onshore power application base for offshore oilfield with the highest voltage of AC power transmission, with a total capacity of 980 megawatts, covering 75% of the existing Bohai facilities, and expected to reduce carbon emission by 1 million tons per year.

In the future, Bohai will still be one of the main sources of production growth for the Company. In 2024, Bozhong 19-6 Gas Field 13-2 Block 5 Well Site Development Project, Suizhong 36-2 Oilfied 36-2 Block Development Project and Bozhong 19-2 Oilfield Development Project will be put into 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 meters. The crude oil produced here is mostly light or medium. As of the end of 2023, the reserves and production in Western South China Sea reached 861.9 million BOE and 221,573 BOE/day, respectively, representing approximately 12.7% of the Company’s total reserves and approximately 11.9% of its production.

The Company made a new discovery in Western South China Sea, namely Wenchang 15-1 North, in 2023. 8 oil and gas bearing structures were successfully appraised, namely Wushi 16-5, Weizhou 6-3, Weizhou 11-6, Weizhou 11-10, Wenchang 19-3, Dongfang 11-2, Ledong 16-2 and Yacheng 13-10. The Company made breakthroughs in mid deep-play exploration in Songnan-baodao Sag, opening a new exploration frontier in this area.

Currently, proved in-place volume of natural gas of Western South China Sea has reached nearly one trillion cubic meters. In the future, the Company will focus on deep-water deep-play and deep-water ultra-shallow-play exploration, and solidly push forward the construction of the trillion-cubic-meter gas area in the South China Sea.

In 2024, Shenhai-1 Phase II Natural Gas Development Project and Wushi 23-5 Oilfields Development Project are expected to come on stream.

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 meters. The crude oil produced here is mostly light or medium. As of the end of 2023, the reserves and production in Eastern South China Sea reached 892.6 million BOE and 375,232 BOE/day, respectively, representing approximately 13.2% of the Company’s total reserves and approximately 20.2% of its production.

In 2023, the Company made four new discoveries in Eastern South China Sea, namely Huizhou 26-6 North, Panyu 10-6, Kaiping 18-1 and Xijiang 24-2. In addition, four oil and gas bearing structures were successfully appraised, namely Huizhou 26-6 North, Panyu 10-6, Kaiping 18-1 and Huizhou 25-11. We continued to conduct deep-water and deep-play exploration in the Eastern South China Sea, and Kaiping 18-1 made Kaiping South formation the first deep-water and deep-play 100-million-ton grade oilfield discovery in the South China Sea. In addition, mid-to- large sized oil and gas fields discoveries were made in the deeper layers of Huizhou Sag and Panyu Sag, namely Huizhou 26-6 North and Panyu 10-6, respectively.

In 2023, Enping 18-6 oilfield development project, Lufeng 12-3 oilfield development project and Lufeng oilfields phase II development project had all been put into production. In 2024, Enping 21-4 Oilfield Development Project, Liuhua 11-1/4-1 Oilfield Secondary Development Project and Huizhou 26-6 Oilfield Development Project are expected to come on stream.

East China Sea

The typical operating water depth in the East China Sea region is approximately 90 meters. As of the end of 2023, the reserves and production in the region represented approximately 2.9% of the Company’s total reserves and approximately 1.7% of its production.

In 2023, the Company optimized the adjustment well deployment in the East China Sea, and implemented equipment and facility upgrade and renovation. Meanwhile, the construction of offshore smart oil and gas fields made positive progress.

Onshore China

We mainly engaged in the exploration, development and production of unconventional natural gas resources onshore China. We have established three major production bases, namely Shenfu, Linxing and Panhe in the Qinshui Basin and the eastern edge of the Ordos Basin. As of the end of 2023, the reserves and production onshore China represented approximately 2.0% of the Company’s total reserves and approximately 2.7% of its production.

In 2023, the Company made China’s first major discovery of 100-billion-cubic-meter deep coalbed methane gas field in the Shenfu area of the Ordos Basin and successfully appraised the gas field, demonstrating promising exploration prospects for deep coalbed methane in the eastern edge of this basin. We have accelerated the strategic resource layout, successfully expanded our coalbed methane business to Xinjiang, and obtained new onshore unconventional oil and gas resources.

Currently, proved in-place volume of natural gas has exceeded 400 billion cubic meters onshore China. In the future, we will actively promote the exploration of tight gas and deep coalbed methane in order to effectively push forward the exploration and construction of the onshore trillion-cubic-meter gas areas.

In 2023, the Company carried out technological research around internal tapping of gas reservoirs, fracturing of low-permeability gas reservoir, etc., implemented refined management and multiple measures mainly based on dewatering gas recovery and extraction and depressurizing exploitation, to increase unconventional natural gas production. Onshore China has become one of the important sources of natural gas production growth for the company.

In 2024, demonstration projects of Linxing deep-play coalbed methane exploration and development, as well as Shenfu deep-play coalbed methane exploration and development, are expected to be put into production.