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Hi, this is PetroChina. May I have your name, please?
Yes. Tiffany Cruze from S&P Global.
S&P Tiffany, right?
Yes.
Your last name, do you know how it's spelled for me?
Cruze, C-R-U-Z.
Okay. From which location?
New York.
Philippines?
New York.
New York. Okay. And your company again is? Yes.
S&P Global.
Thank you. Please have a thank you.
Okay.
Yeah, we're just trying to finish. I'm sorry for being late. It's not for my bad health. It's because the team of media is very big. Before the announcement, I would like to introduce the board and the management members present today. Chairman, Mr. Wang Yilin; Executive Director, newly appointed President, Mr. Hou Qijun; our old friend, CFO, Mr. Chai Shouping; VP, Mr. Ling Xiao. Thank you all. Today's last briefing includes four parts. First, Chairman's welcome remarks; and second, the 2018 financial results review and analysis; and then, President Hou Qijun will give you the 2018 operating results and 2019 outlook, a last Q&A session. Now, let's welcome Chairman Wang Yilin to give his remarks. Ladies and gentlemen, dear friends, good afternoon. Time stops for no one, and the seasons keep changing. It's time for PetroChina's annual results presentation again, and I'm delighted to meet all of you.
First, on behalf of PetroChina board and management members, I'd like to extend a warm welcome to you all to participate in today's briefing. And my sincere thanks go to all friends, all investors, and analysts for your long-standing attention and support for PetroChina. The year 2018 is both a heroic, challenging, and rewarding. We have done a lot of work with concrete results. Focusing on building a top-class international energy company, we actively responded to complex and changing operating environments, upheld new development concepts and proven development guidelines, seeking progress and responding to changes. In the meantime, our business performance exceeds expectations. We now have a stronger foundation and more flexibility toward changes and better growth drivers. High-quality development is taking shape. In 2018, the turnover of PetroChina was CNY 3.35 trillion, operating profit CNY 120.997 billion, up 16.8% and 78.7%, respectively. The net profit was CNY 52.591 billion, up 130.7%.
Our business growth outperformed the average international peers. In 2018, PetroChina focused on value promotion and realizing improved quality and profits. Domestically, reserves and production saw steady growth. In particular, exciting breakthroughs were made in risk explorations. Our group kept stable production, while natural gas hit another new record high. We set about the transformation and upgrading of the refining and petrochemical business. Key projects were advanced. National VI upgrading of refined products was completed, and the production of profitable products like aviation fuel saw substantial growth. Marketing of refined oil continued to improve. Sales increased steadily and with better structure. The terminal network now further improved. Natural gas and pipeline business realized growth in both volume and profits. Gas fields kept double-digit growth, with high-end markets taking a larger share. Key projects, including 24 pipeline interconnectivity projects, came on stream.
Over 16 years we found, and we accelerated international cooperation, and now we have diversified gas imports. In 2018, we deepened reform and innovation so as to stimulate growth. In KRS, reforms were steadily advanced. We carried out internal mining rights circulation, improved the management of gas marketing, UGS, and other businesses, enhanced internal market-based mechanism, and integrated a critical system for refining, marketing, and trading, effectively mobilizing the initiative at every level. Technological and management innovation made new progress. R&D brought many landmark results and national-level awards. Patents were also obtained in IT development. Our campaign for cutting costs and increasing profits was fully implemented. As a result, major cost indicators were well controlled, while management efficiency and profits were further enhanced. In the past year, we emphasized HSE and risk management, laying a solid foundation for quality development.
We steadily advanced safe production and great development, thoroughly carried out HSE system auditing, tightened safety supervision in KRS, and controlled for greenhouse gases. The safety development situation is now stable and under control. We strengthened risk management measures and accountability system, strictly controlled the risks of investment. Debt-to-capital, the average return on invested capital, significantly increased. Now, the debt-to-asset ratio and gain ratio were kept in an appropriate range. Free cash flow remains abundant, and the financial condition remains sound. Ladies and gentlemen, dear friends, this year marks the 70th anniversary of the founding of PRC, and it is also a critical year for PetroChina to promote quality developments and meet the targets of the 13th Five-Year Plan. In general, PetroChina is still embracing strategic opportunities. However, there are also changes, concerns, and growing uncertainties.
We need to leverage various favorable conditions and, in the meantime, fully understand the risks and challenges. We need to adhere to the principle of proven development and focus more on our core business, focusing on opening up our cooperation, reform, and innovation development foundations so as to break new ground for world-class international energy company. To prioritize core business, we'll enhance our E&P efforts, increase investment in settings and institutional guarantee, ensure good production growth, and gas production ramp-up. We'll continue to accelerate the transformation and upgrading of refining and petrochemical business, optimize the structure of resources, layouts, products, and equipment, enhancing competitiveness and profitability. We'll develop oil and gas in a coordinated and effective fashion, improve network marketing, and solve weak spots, continuously enhance the oil and gas value chains.
In regard to opening up and partnership, we'll emphasize both bringing in and going global, promote the efficient allocation of resources home and abroad, and also the synergy of two markets. We'll focus on the effective and quality development of overseas business. We'll strengthen fully cooperation in China, continue to improve our bilateral international operation, and optimize allocation of resources globally so as to open a new chapter for our opening up. For reform and innovation, we'll focus on key areas and difficult problems, deepen targeted reform, further promote technological innovation, and also master key technologies of strategic and revolutionary significance. We'll carry out management innovation to better carry out management innovation, strengthen compliance management to enhance vitality and drive for organic growth. In terms of development foundations, we'll continue to improve HSE, steadily beef up the brand value, and also beef up the corporate image.
We'll fulfill our CSR, actively engage in social welfare endeavors, support local economic and social development, and contribute to the creation of a harmonious environment. Ladies and gentlemen, dear friends. Postplanned safe prologue. We'll set off from a new starting point. With the spirit of risking at this time, bringing out quality development with concrete actions. It is my sincere hope that all investors and analysts will continue your long-standing attention and support to PetroChina. Let's work together to fight for a better future. And next, my colleague, Mr. Chai, will brief you on PetroChina's financial performance in 2018. Thank you all.
Thank you, Mr. Chairman. Now, I will review and analyze PetroChina's financial performance in 2018. In 2018, PetroChina had a turnover of CNY 2.35 trillion, up 16.8%. Operating profits totaled CNY 120.997 billion, up 78.7%. Net profit attributable to shareholder of parent company is CNY 52.91 billion, so 130.7%.
Business EPS reached CNY0.29, up 0.17%. In light of the global crude crisis and also our opening condition, PetroChina continued to optimize our investment structure. In 2018, CapEx reached CNY255.974 billion, up 18.4%. The overall scale of which is reasonable and controllable. As a cornerstone of PetroChina's development, exploration and production remain a priority, which receives CNY196.109 billion, or 76.61% of the total. PetroChina sticks to low-cost development, strives to cut costs and increase profits. Major costs continue to be effectively controlled. In 2018, lifting costs was CNY12.31 per barrel, up 6.8%, adjusted for exchange rate, up 4.6%. Cash processing fee of crude refining was CNY169.38 per ton, flat from same time last year. Marketing cost of oil was CNY319.61 per ton, up 4.6%. The company has made reasonable investment arrangements, strived to cut debt and rates, optimize the debt structure.
The financial performance came generally sound by the end of 2018. Total assets of PetroChina was CNY 2.43 trillion, up 1.2%. Interest-bearing debt is CNY 407.16 billion, down 12.5%. Dow Jones asset ratio was 42%, down 0.6 percentage points. Gain ratio was 72.4%, down 2.8 percentage points. PetroChina attaches good importance to cash flow, which remains abundant. Operating cash flow is CNY 351.565 billion, down 4.1%. Free cash flow is CNY 84.345 billion, remained positive for five consecutive years. In 2018, operating profit for E&P is CNY 73.519 billion, up 58.044. Oil and gas prices changes added CNY 116.183 billion. Realized prices of crude averaged $68.28 per barrel, up 34.8%. More oil and gas sales increased CNY 29.826 billion, among which more crude sales added CNY 23.84 billion, natural gas CNY 3.7 billion. More OpEx and other expenditure cut the past profit by CNY 87.965 billion, purchase accounted for CNY 66.655 billion.
Taxes except for income tax accounted for CNY 12.053 billion, including CNY 4.75 billion caused by more windfall profit tax and CNY 6.339 billion by resource tax. In 2018, operating profit for refining and petrochemical segment was CNY 42.756 billion, up 7%. Refining's operating profit was CNY 44.933 billion, up 7.2%. Decreased gross profit margin cut the profit by CNY 8.349 billion. Increased processing volume contributed CNY 8 billion. The operating profit for PetroChina was CNY 7.823 billion, up CNY 435 million, or 5.9%. Price changes for chemical added CNY 15.624 billion. Sales changes helped gain CNY 4.563 billion. More OpEx cut the profit by CNY 19.752 billion, including CNY 26.817 billion from purchasing, service, and others. Loss in terminal loss provision added CNY 7.186 billion. In 2018, marketing segment suffered a loss of CNY 6.45 billion, down CNY 14.729 billion. Domestic marketing business suffered a loss of CNY 11.776 billion, down CNY 14.79 billion. Declines in gross profit margin cut the profit by CNY 11.301 billion.
Increased sales added CNY 495 million. International business operating profit was CNY 5.326 billion, up CNY 61 million.
In 2018, natural gas and pipeline segment operating profit was CNY 25.515 billion, up 62.6%. Natural gas marketing business suffered a loss of CNY 8.783 billion, most reduced by CNY 4.196 billion. City gas prices averaged CNY 7.46 per MTF, up 9.5%. Domestic gas earned CNY 16.125 billion, up CNY 5.156 billion. Imported gas and LNG suffered a net loss of CNY 24.907 billion, up CNY 960 million. Pipeline business gained CNY 76.321 billion, down CNY 1.736 billion. City gas earned CNY 8.505 billion, up CNY 1.373 billion. OpEx declined with CNY 5.994 billion, mainly due to net impairment loss provision. PetroChina always values return to shareholders and maintained a stable dividend policy since it went public. Since 2016, in the low oil price context, based on the 45% payout ratio, PetroChina also issued additional special dividends and brought good returns to shareholders.
To better reward shareholders, the board suggested a final dividend of CNY 0.09 per share in a 64.6% payout ratio, in which dividends attributable to the parent company's net profit in H2 account for CNY 0.06271. Special dividend account for CNY 0.02729. EPS in 2018 reached CNY 0.1788 per share, while total dividend is CNY 32.724 billion, with a payout ratio of 62.2%. Now, our Executive Director and President, Mr. Hou Qijun, will talk about the operational performance of 2018 and our outlook for 2019. Thank you all. Thank you, Mr. Chai Shouping. Ladies and gentlemen, good afternoon. Now, I'll brief you on the operational performance of 2018 and our outlook for 2019.
In 2018, faced with fluctuations in international oil prices, intensifying competition in refined markets, and the widening gap between peak and off-season in gas demand, PetroChina adhered to prudent development, enhanced coordination, responded actively to market changes, optimized production operations, continued to cut costs and add profits, and saw growing production indicators and major improvements in business performance. In 2018, our operation performance was better than expected. Domestic E&P focused on economic reserves and profitable production to better achieve quality development. Overseas segment promoted new projects to add reserve and production. Refining and chemical segment went through restructuring, transformation, and upgrading. Marketing improved volume and networking, with steady increase in refined oil sales and global trade. Natural gas and pipeline worked on production, supply, storage, and sales, increasing volume and profits. Domestic E&P focused on economic reserves and profitable production to better achieve quality development.
In 2018, risk explorations achieved fruitful results further consolidating resource base. Zhongqiu 1 in Tarim Basin saw gas flow, showing there's a new gas bearing structure. Shaitan Wangwang in Junggar Basin made major discovery, which may become another growth point for reserves like Mahu. Yongtan 1 in Sichuan Basin saw gas flow, proving the existence of a new volcanic gas bearing formation. Many testing wells in Bayan found a highly productive oil and gas flow. Newly found Xilantang oil field became a good example of our internal mining rights circulation. According to SEC standard, our RRR for oil and gas equivalent is 1.06. That of domestic is 1.13. In 2018, we worked on quality development, enhanced optimized development, launched integrated development projects like Mahu and Jinsha, completed key capacity building programs in Guangjiang, Xinbian. Total output reached CNY 100 million.
We sped up the development of new gas fields, completed large fields like Longwangmiao and Keshen. Boosted shale production in Sichuan, and output hit a new record high. Overseas added new projects to add reserve and production. PetroChina has been highly active in international cooperation. We completed the transaction of Abu Dhabi offshore project and made marked progress in contract renewal in Kazakhstan. PetroChina focused on large, high-quality reservoirs with immediate access. Fully reveal the potential of overseas projects to determine development strategies based on overall deployment, oil price, and contract type. We developed major projects efficiently. Projects like Iraqi Halfaya Phase III began production, and we continued to cut costs and add income overseas. In 2018, PetroChina produced 890 million barrels of crude, up 0.4%. Marketed natural gas totaling 3.6 TCF, up 5.4%.
Oil and gas totaled 1.49 billion BOE, up 2.3%, including 200 million BOE of overseas production, accounting for 13.7% of the overall total. Refining and chemical went through restructuring, transformation, and upgrading. We continue to strengthen benchmarking, production optimization, and focus on process control. Major technical economic indicators are rising, signifying better operation performance. We put profits first, ameliorated resource allocation, and improved utilization of profitable factories like integrated ones and those meeting market demand. In 2018, we processed 1.12 billion of crude, up 1.4%. We produced refined oil totaling 105 million, up 13.6%. Gasoline, kerosene, and diesel grew by 16.3%, 38.8%, and 7.8% respectively. We adjusted product mix. Diesel gasoline ratio was down to 1.2. Chemical commodity totaled 23.75 million, down 1%. Gasoline totaled 5.569 million, except for maintenance. Most plants maintained production at full capacity. Upgrading and transformation were well underway.
The upgrade into National VI standard was completed. Liaoyang and Huabei Petrochemical Plants completed renovation and began production. Guangdong project started construction. Marketing increased both volume and networking, with growing oil product sales and global trade. PetroChina focused on precision marketing to increase sales and profits. They sold CNY 177 million of refined oil, up 4.7%. Gasoline and kerosene went up 8.9% and 15.5%. Diesel roughly fell from last year. Refined oil sold domestically totaled CNY 115 million, up 1.8%. Gasoline, kerosene, and diesel went up 1.2%, 20.2%, and 0.1% respectively. PetroChina now operates 21,783 gas stations, up 384. In terms of trade, we carried out well organization of import and export, explored high-end and lucrative markets. We exported refined oil totaling CNY 12.273 million, up 21.6%. Total trade volume CNY 330 million, up 3.8%. Natural gas and pipeline worked on production, supply, storage, and sales, built a more integrated system.
We focused on execution of sales contracts and pushed for market-based pricing. In 2018, we sold CNY 216.754 billion of gas, up 8.9%. Gas sold domestically CNY 159.553 billion, up 19.6%. Key projects are making progress, promoting interconnectivity. North part of Chinese section in Power of Siberia has sped up construction. New branch lines in Fujian, Guangdong started construction. Tangshan, Rudong, Shenzhen LNG terminals are well underway. Jingzhou, Nanning, Liuzhou line, Fushun, Jinxi line, and Yunnan refined oil branch line in Kunming were completed and put to use. PetroChina valued safety accountability HSE management for good results. Throughout 2018, there were no major industrial accidents. COD, ammonia, nitrogen, SO2, and NOx emissions were down 8.9%, 7.2%, 5.6%, and 6.8%. Energy and water conservation, we exceeded our initial targets by 28.6% and 31.2% respectively.
In 2019, PetroChina will continue to develop prudently and work on the following aspects: enhance domestic E&P to seek steady and increasing crude production and fast-growing natural gas. We will strengthen risk exploration, prioritize central and western regions, and hydrocarbon-rich areas for large economic reserves. We will put profits first and focus on efficient capacity building to boost production and profits. We will further promote quality development and improve operations overseas, strengthen strategic partnerships with IOCs, advance new projects, search for E&P opportunities, focus on key explorations, and optimize development, add reserves, and boost production abroad. We will push forward the transformation and upgrading of refining and chemicals to improve profitability. We will fully consider profit, resource, market, and capacity to arrange workload, optimize processing routes, add product mix, enhance benchmarking, cut costs, and add profits.
We will continue to explore markets, improve retail, and enhance profitability while maintaining market share. PetroChina will maximize business chains, employ flexible regional competition, optimize distribution, boost aviation fuel, and high-grade gasoline sales, improve volume and profits while maintaining market share. We will work on risk management, improve quality and scale of trade, build global operation centers, and enhance allocation of global resources. We will focus on resource optimization and end-user marketing, improve gas and pipeline value chains. We will work on coordination of resources internationally, increase output domestically, import LNG based on demand, improve supply through pipeline interconnectivity and sharing of facilities. We will optimize distribution and further explore high-end markets with exchange centers. Shale gas and imported LNG can be sold with passing on prices and incremental resources through online auctions.
We will advance the construction of Power of Siberia, Shenzhen LNG terminal, and phase III of LNG terminal in Tangshan and Rudong. We will strengthen technical innovation and IT development, improve mechanisms and management. PetroChina will focus on key technologies, enhance promotion and application of homegrown tech, and improve the utilization of S&T resources. We will continue to work on market mechanisms, focus on value enhancement, cut costs, and add profits, strengthen benchmarking and compliance. This table shows our 2019 yearly targets. Ladies and gentlemen, in 2019, we will continue to deepen reforms and innovation, strive to make new progress and new contributions, move towards top-class energy companies in a high-quality manner, and bring more benefits for our shareholders. Thank you all. Thank you, President. Now we'll have a Q&A session. Each please raise no more than two questions, and before the questions, please inform which institution you are from.
Now the floor is open for questions.
谢谢各位领导。 好，谢谢各位领导。我是周明国，BOCI的分析师。有两个关于天然气方面的问题。第一个就是市场有些说法就是因为去年是暖冬，所以国内的天然气销售不是特别理想。有个别的上游公司可能因为进口太多，导致一些亏损。那我就想问一下我们公司的情况是怎样。另外一个就是有些相关的问题就是说，市场有一些说法就是好像是我们准备在淡季的天然气的对下游的销售价格会有一些调整，或是在气价上面有一些提升。那我想了解一下到底具体的是怎么一个情况。
With BOCI, I've got two questions concerning natural gas. The first one, it is said that last winter was a quite warm winter, which has led to unpromising performance of the company's natural gas marketing business. Some subsidiaries even suffered natural gas marketing losses. Is that the real case? And the second question, that it is said that the company may have price hikes in the low season in the summer for natural gas sales, higher than the city gate price. Is that true?
谢谢你的提问。这个事我来回答一下。2017到2018这个供暖季确实是中间发生过几次大的寒流。到2018到2019年这个供暖季中间也有一些寒流，但相对于2017到2018，就是寒流的次数和强度是要少一些。这就是大家您谈到的可能是个暖冬，可能这个说法是从现象上得来的。
It is true that the winter from the end of 2017 to the early of 2018 have seen many different rounds of cold winds, which is a cold winter. The winter from the end of 2018 to early 2019 didn't see such strong cold winds or less frequent winds, and it's a comparatively warmer winter.
那因为暖冬会出现，您刚才谈到的可能是一些下游的用户出现了销售的亏损，是这个意思吧？下游的天然气的用户出现了销售亏损，大概是这个意思吗？ I guess this warmer winter has led to natural gas sales losses for the end users. 当然这个供暖季因为我们进口的资源增量是比较大，随着油价的提升，因为价格攻势的原因，进口的天然气的成本也在不断地提高。总的2018年的全年，我们进口天然气的成本比2017年是增加了211亿。
We have seen bigger incremental volume for imported natural gas, and due to the increasing price of crude, we have seen larger costs for imported natural gas, and the annual number is 21.1 billion RMB.
进口的成本增加了以后，我们还是采取有利的措施来维护我们的股东的利益，就是采取回价的措施。不管是在2018年的夏季，传统认为是销售淡季，但是因为市场供求关系的看来，实际上夏季也并不是个淡季，也是有利于价格的往上的推升。那么冬天我们采取了更加有力的回价的措施，把价格上浮了，大概叫门站价格平均上浮到了19.7%, 19.7%, 没有超出国家规定的上浮20%的上限。那这两个是完全不同的概念了。我给大家讲一个概念，就是上浮的比例是19.7%, 确实是比2017到2018年这个冬天上浮的比例是高一些。
We have seen increasing imported natural gas costs, but we have taken several measures to better protect the interests of our shareholders, that is to hike the sales price for natural gas. In the summer of last year, which was estimated to be an off-season, but actually the demand is still comparatively strong, and the summer is not an off-season, we've seen better sales prices of gas. In the last winter, we also hiked the natural gas price by 19.7% above the city gate price, but still no more than the 20% government ceiling, and these are the efforts we've done to hike the prices.
我们比上一个冬天提高了上浮的比例，主要基于两个原因。第一个是进口气的成本确实是在大幅的增加。第二个是市场的供求关系，下游的天然气发展商还能够接受这样的一个价格。另外，我们提升价格的所有的政策都符合国家发改委的相关价格政策。
The prices in the last winter were better than the winter previously, and it's mainly due to the increasing import costs and better affordability in the market. All these price changes are in line with government relevant policies.
那即便这样，我们去年的整个进口天然气的亏损还是因为进口的量比前年多增加了157亿方，进口气的量多增加了157亿方。所以进口气的亏损额比前年上一个年度的239亿就多出了9.6亿亏损额，进口气的亏损。
Last year, we've seen more incremental volume of imported gas, and the incremental volume was 15.7 BCM; therefore, we've seen increasing losses by 960 million RMB.
我可以说进口气在销售这个环节确实是亏了，但是我整个产业链减亏的幅度应该是大的，比前年的话减亏应该是有所减亏的，这是这么一个意思。但是您所讲的就是说在这种情况下，有些买我们的气的企业，如果说它产生了因为暖冬的原因产生亏损，这个现象我还不了解。但是我可以给你介绍我们自己的企业，因为我们自己有个昆仑能源是我们的终端应用和零售的企业。那么它去年一个冬天在销售了咱们中国石油的10%的天然气，但是这个价格政策是跟在同一个区域和其他的用户是同样的价格政策。那么我们的昆仑能源去年一年的天然气的盈利应该讲比前一个年度大幅上涨，大幅上涨。所以您说的有些企业产生了亏损，不知道它的气源是不是来自于中国石油，第二个不知道它的经营结果本身有什么问题。但是在我们看来，第一，我们又得到这样的信息，第二，我们身边的例子，我们推升的价格在终端设置进去后不会出现亏损，而且还有很好的盈利。
If you take a look at the natural gas marketing business alone, the imported natural gas suffered increasing losses, but if you look at it from a whole value chain, the imported gas has seen decreasing losses, and I'm not very sure about your statement of some companies suffered losses due to the warmer winter, and maybe those companies are our clients. We have a subsidiary called Kunlun Energy who sold about 10% of the total of PetroChina's natural gas, and it used the same price policies as other companies who bought our natural gas. So we've seen very good improving economics and profitability of Kunlun Energy in the past year. I'm not very sure about the losses of other companies, whether their gas was from PetroChina or what caused their loss, but for our companies, we don't see very big adverse impacts on our marketing companies.
您说的第二个问题就是看我们今年在供暖季结束之后会不会继续进行价格的上下浮动。我想这个是上下的浮动是肯定的。浮动的原则，浮动这个原则一定要遵守国家的发改委的价格政策，这是第一个原则。第二个，浮动不浮动，往上浮动还是往下浮动，主要看市场的供求关系。如果市场上天然气仍然是供不应求的，那么往上浮动价格的几率就大一些。
After this winter, whether we will see fluctuations in natural gas prices, I think the answer is positive, but the fluctuations need to follow the NDRC pricing policies, and whether it will go up or go down is based on the market supply and demand balance. And if there's a tight market, we are more probably will see a higher natural gas price.
具体的操作办法就是我们根据国家发改委的价格政策，结合我们的资源构成的情况。因为国家发改委对不同的资源有不同的价格政策，有些资源它是管制价格的，有限价，有天花板。有些资源它放开价格，完全按照市场规定去办，市场能够接受什么价格，你就可以卖到什么价格。这是第一个。第二个，国家发改委的政策还有一个根据用户类别，有些用户类别你比如说居民用气，它是不允许超出基准门站价格去卖。那么一定的上浮，上浮比例不能超过20%。但是有些用户类别它完全可以用市场的方式去卖，你比如说LNG，包括职工用户等等，这些都有。我们的所有制定的价格政策都必须要符合国家发改委的这个政策。那么在这个政策基础上，我们来统一来对全国来制定我们的销售的策略。我们提出来的销售的价格的制定的策略要跟当地的价监部门和能源的监管部门去备案，通过备案以后再跟用户去协商，跟用户达成一致之后再双方再进行合作.
And the NDRC policies for natural gas pricing have different categories according to different sources of natural gas. Some gas has a regulated price, which should be contained under a ceiling price, and some gas have a deregulated price, which we can push it forward to be a more market-oriented price. And also, there are different users of natural gas.
For instance, residential gas should be no more than the benchmark city gate price, and after this June, the 10th, residential gas can have a price hike of 20%, no more than 20% ceiling. And as for LNG, the price can be a more market-oriented price. So there are different categories. And within these government policy frameworks, we will prepare our different marketing strategies, and our prices will be registered with the local authorities and negotiated between China and our clients.
这个整个的操作过程我们是完全是要守法合规的。当然您可能谈到的这些现象我们也有所耳闻。最后我们的相关的省的天然气销售机构去了解了下游客户以后，这些客户都表示不知情。这个相关的情况到底是什么原因，我们还需要进一步的去了解和核实。
So our total strategies and policies need to comply with government policy frameworks. And as for the issue you mentioned, we have talked with our provincial subsidiaries, and they have communicated with their downstream clients and users. And their clients and users said they also got no idea about it, so we are not quite sure about the reasons.
谢谢。
Thank you very much, Neil Beveridge from Sanford C. Bernstein. Two questions. The first question is, I think the question on everyone's mind, pipeline reform. What are the potential outcomes here? Will this company include oil and gas pipelines? What will the role of PetroChina be? What will the timing of reform be? And should this be a good or a bad thing for shareholders? The second question is around the company's returns. So returns have improved substantially year on year, but they remain very low relative to global peers. This year we're going to see another 20% increase in CapEx. My question is, is the company prioritizing growth over returns again? And can management maybe clarify what return on capital the company is targeting over the medium term? Thank you.
来自桑福德 C. 伯恩斯坦香港有限公司，我有两个问题。第一个问题就是大家都非常关注的国家管道资产改革的问题。那管道资产的改革，国家管道公司的成立是只会包括天然气的管道还是原油管道也包括进来？中石油在此改革过程中会发挥什么样的作用？管道改革的时间表如何？对于公司的股东来说，管道改革是利好还是利空？第二个问题是关于公司的回报。公司回报率在近几年都非常有大幅度的提升，但是总体来说回报率的绝对数还是非常的小，尤其是和国际上的其他的同行公司相比。公司去年计划增加资本性支出20%，那么我们是不是今后会更加关注这方面的投资，而不是关注投资的回报呢？另外我们如何进一步的优化我们目标的选择？这个问题我想我给您回答一下。我想表达的一个意思就是，一直以来我们中国石油都是非常积极地支持和配合国家油气体制的改革。
PetroChina has always supported the natural gas and oil pipeline reform initiated by the Chinese government.
这个国家油气的改革是国家主导的，中国石油只是积极地支持和予以配合。
The oil and gas system reform was initiated by the government, and PetroChina's role is to be more supportive.
这个2016年我们公司就对天然气的天然气业务进行了业务分离的改革。你比如成立了天然气销售分公司和中石油管道有限公司。
In the year 2016, we have separated our natural gas marketing business and pipeline business. We set up PetroChina Natural Gas Marketing Company and PetroChina Pipeline Company.
所以目前我们的天然气的管输和销售的业务已经实现了分开运行独立核算。
These two business segments have already been separated.
这也为下一步国家油气管网的组建创造了很良好的条件。
We have already set a stage for reforming our national pipeline company.
刚刚过去的前一天，3月19号，咱们中共中央的习近平总书记主持召开了中央全面深化改革委员会的第七次会议，审议通过了石油天然气管网运营机制的改革实施意见。
On March 19, General Secretary Xi Jinping held the seventh meeting of the Committee on Comprehensively Deepening Reform, and they issued opinions in the meeting on how to reform the oil and gas pipeline operation mechanisms.
这个会议强调推动石油天然气管网运营机制改革，要坚持深化市场化改革，扩大高水平开放。
In the meeting, it was emphasized that to promote and deepen the reform of oil and gas pipeline network and its operating mechanisms, we need to have a market-oriented approach and expand high-level openness.
按上述原则来组建国有资本控股的投资主体多元化的石油天然气管网公司.
And based on these principles, we will establish an oil and gas pipeline company which has the state-owned capital as the controlling shareholder and has diversified investing entities.
以此来推动形成上游油气资源多主体多渠道的供应，中间管网高效集输，下游销售市场充分竞争的油气市场体系.
The aim is to establish an oil and gas market system with multi-player, multi-channel supply of upstream resources, efficient and concentrated pipeline transmission in the midstream, and full competition in the downstream market.
最高优先度要控制效率，保障油气的安全稳定供应.
In this way, we may enhance the efficiency of oil and gas resource allocation and guarantee the safe and stable supply of resources.
这段话实际上讲了这么三层意思，也就是说油气天然气管网运营机制的改革讲了它的原则，讲了它的方式，讲了它的改革的目的. 也就是说它的改革的原则就是要坚持深化市场化改革和扩大高水平开放. 那么这个运营机制改革的方式就是要组建国有资本控股的投资主体多元化的石油天然气管网公司. 那么这个改革的目的就是要推动提升上下游资源多元，主体多渠道供应，中间管网高效集输，下游销售市场充分竞争的油气市场的体系，最后为保障油气资源的配置效率和保障国家油气安全和稳定的供应.
So this is mainly about the principles, the approaches, and objectives of such a reform. The principle is to deepen market-oriented reform and expanding the high-level openness. The approach is to establish a pipeline company with state-owned capital as controlling shareholder and the participation of diversified investment entities.
The objective is to ensure the establishment of an oil and gas market system with multi-entity, multi-channel supply of upstream resources, efficient and concentrated pipeline transmission in the midstream, and full competition in the downstream markets. All this is for better efficiency in resource allocation, safe and stable supply of oil and gas in the Chinese markets.
从这段话能够得出两个结论。第一个是改革，这个环节是市场化改革，所以公司的股东不会吃亏。
We can conclude that this reform will be a market-oriented reform. Our shareholders will not suffer losses.
第二个就是通过这样的改革会有利于油气行业的发展。
Second, the reform shall be conducive for the development of oil and gas industry.
这个我刚才已经讲了，这个过程当中中石油的作用就是配合和支持。另外对于这个改革的时间表，这个会议的发表的公告没有给出时间表，我们自己也无从得知。
The role for PetroChina is to coordinate with and support government initiatives. As for the timeline of such a reform, it's not stated in this meeting, and we don't have a clear idea about the specific time.
为了适应这样的改革，我想我们公司未来会集中力量来加大油气勘探的开发力度，夯实上游的资源基础，加快国产油气的生产步伐，同时积极推动进口资源的多元化，努力降低进口成本，大力开拓市场，提升终端销售的畅销能力。
In order to better adjust ourselves to these reform initiatives, we will put more focus on our E&P segment to consolidate our resource base, especially to enhance domestic production. And we will also seek diversification of import resources to reduce import costs, and we will develop markets to enhance the profitability of our end marketing business.
那么中国的天然气行业发展，我们认为仍然是处于早期阶段，有着广阔的发展空间。我们会继续优化油气两条业务链，积极参与国家油气行业的改革发展。随着国内天然气行业的良性快速发展，我们公司的天然气业务也必将成为未来盈利的重要增长点。
We believe China's natural gas industry is still at a very early development stage. We have great room for further growth, and PetroChina will continue to optimize our oil and gas business chain to actively participate in government reforms. Along with the sound and accelerated natural gas development in China, we believe our natural gas business will be a major and important contributor to the company's economics.
从这个意义上讲，我也有两点结论。第一个，改革的过程不会损害股东的利益。第二个，我们能够抓住机遇，顺应这个改革，我们会取得天然气业务的良好发展。
We can conclude that the reform will not be a negative to the interests of our shareholders.
And on the other hand, if we see this very good opportunity, we can see very robust development of our natural gas business.
这个最后我想强调一下，因为国家提出的这个改革以市场化为原则，所以说在这个过程当中，我们会既要全力支持和配合好国家的改革，又要切实维护好股东的利益。
I want to reiterate that since this reform is a market-oriented reform, on the one hand, we will fully support the government initiatives. On the other, we will try our very best to safeguard the interests of our shareholders.
我来回答这个三个主要的问题，就是投资资本回报率和信心支出的问题。虽然近几年公司坚持稳健发展，我们的投资资本回报率还是在逐年上升，特别到2018年，我们接近了5%。
I'd like to answer your second question concerning the returns and CapEx. Last year, our return on invested capital reached 5%.
这个数字还是偏低，主要原因我们的公司除了受低油价影响以外，还受国家政策影响，比如说天然气价格的调整，近期的亏损对我们影响比较大。
This number is still very low in absolute terms, but we have different reasons for that. First is impacted by the low crude prices, and second, we are also impacted by government policies, including the natural gas pricing, and we also suffer import gas losses.
同时近几年我们也加大了低效无效资产的处置力度，每年其资产减值也是比较大的。
And also in recent years, we have put more focus on the disposal of low efficiency assets. We have booked quite considerable impairments.
但是这些处理都是非常必要的，为公司的后续发展和持续发展奠定了非常好的基础。
These measures are quite necessary. It will underpin our sustainability and future development.
近两年公司资本用支出有所增加，增加的幅度还是比较大的。
In recent two years, the company's CapEx increased quite substantially.
这些增加一部分原因是一个恢复性的增长，因为过去几年是低油价，另一部分也是在做一些结构性调整。
These incremental CapEx may have two reasons. The first is recovering. CapEx in the low oil price environment was very low, and in the recent two years it's recovering. The second reason is we are restructuring.
那么我们对这个不是说主要还是聚焦在我们上游勘探开发这个业务上，但是增加这些资本支出，我们还是坚持效益标准，坚持投资资本回报率要达到公司的标准要求，这些。
These incremental investments are mainly for our E&P business, and the use of these parts of investments will be based on the principle of improving the economics. The return of invested capital shall within the standards of the company.
好，谢谢王景诚。我是来自瑞银的 Alex Xu。这边的话我有一个小问题，是关于中俄东线的一个进展，想请教一下这边的话就是媒体报道也是 12 月 20 号，今年中俄东线通了以后，这个气量要几年去达到一个预期的一个量，然后想请问一下在它的进口气亏损方面，它的利润是不是可以有一些稀释的作用，谢谢。
With United Bank of Switzerland, my question is around the progress of the Power of Siberia.
It is reported that Russia is going to supply natural gas through this pipeline to China starting from this December 20th, and I'm wondering how many years does it take for this pipeline to achieve its full capacity, and will this dilute your import loss?
我来回答一下这个问题。这个应该是 2014 年的 5 月 21 号，我们中国石油天然气有限公司和俄企公司签署了中俄东线天然气的购销协议，15 年的 5 月 13 号协议正式生效。那么 17 年的 7 月 4 号，集团公司和俄企又签署了中俄东线天然气购销协议的补充协议，明确了是俄方不晚于 2019 年 12 月 20 日开始向中国供气。
Our parent company's E&P to sign the natural gas sales and purchase agreement with Gazprom on May 21, 2014, and in May 2015 these contracts took effect. In July 2017, we signed a supplementary agreement to this contract. It was stated that Russia shall be no later than December 20, 2019, to supply gas to China.
按照这个购销协议和补充协议的约定，2020 年供气量是 50 亿立方米每年，供气量逐年增长，到 2025 年会达到 380 亿立方米的约定值。
According to these two documents, in 2020 the supply volume will be 5 BCM, and it will increase year by year. Until 2025, it will supply 38 BCM to China.
这个中俄东线我们中国境内这一段是 2014 年 9 月份开始开展的前期工作，到现在为止一切工程建设的任务都是进展顺利，我们预计今年的 12 月 20 号俄企那方和我们这方都能够达到这个前期条件。
For the construction of the Chinese section of Power of Siberia, we started preliminary work from September 2014, and currently the construction process is right on track, and we think we can meet the target of supply of gas by December 20th.
这个俄罗斯天然气的进口价格从现在看起来和我们国内现行的门槛基本门槛价格相比还是有一定幅度的倒挂。 Currently speaking, the Russian gas prices are higher than the benchmark city gate price in China. 但是因为它属于 2014 年以后引进的管道企资源，在国家的价格政策上它是属于市场化的资源，也就是说你完全可以按照市场能够接受的价格来进行销售。
But the details of gas, according to government policies, can have a market-oriented price.
那么按照现在咱们中国的经济社会发展的水平看来，我们要接受这样一个价格，要把它顺价出去，确实还是也有一定的难度，但是我们会想方设法采取多种措施，把这一部分的资源通过顺价的方式销售出去，不使它对公司产生新的亏损。
Given the current Chinese economic development, we think if we want to pass through the costs of the Russian gas, the task is not easy, but we will try our very best and take several measures to achieve this target, and hopefully no incremental loss will happen to the company.
谢谢。 各位领导，我是摩根士丹利的分析师孟宇。有两个问题，第一个问题是关于中美的贸易谈判，市场现在有一个预期就是如果中美达成协议的话，中方会大量进口美国的油气化工产品。假设这个预期是正确的，我们中石油在新的进口来源是不是会成为中方的进口主体？如果大量的进口发生了以后，会对我们中石油的油气和化工板块产生什么样的影响？这是第一个问题。第二个问题是关于我们的销售板块，我们看到 2018 年的经营情况，它有一个比较大的利润的下滑，想了解一下主要原因是什么。刚才领导在介绍的时候也谈到我们下游市场的竞争在加剧，所以在 2019 年或者更长期来看，对于我们整个销售成品油的业务，我们是怎么展望的？谢谢。
With Morgan Stanley, I've got two questions. The first is around the trade relations between China and the US. It was estimated that if China and the US achieve some agreement on this issue, China is going to enhance its import volume of crude oil, natural gas, and chemicals from the US, and if that is true, will PetroChina be the main body of import sources, and how will this impact your crude oil, natural gas, and chemicals segments? And the second question is around the marketing business.
Last year, marketing business of refined oil suffered decreasing earnings. Why is that? And since you've mentioned there will be increasing competition in the downstream, how do you look at your marketing business in the year 2019 and beyond?
好，我先来回答美国第一个问题。大家知道，美国近十年来由于页岩油气的革命，产量大幅提升，大概用了十年的时间，是原油产量翻了一倍，达到了它 1970 年高峰值。它的对外依存度也由 67% 降到了 11.8%。天然气也成为特别页岩气的发展，成为全球第一大产气国。成为天然气净出口国，根据很多专家预测，到 2025 年，美国可能成为 LNG 的最大出口国。
For answer to your first question, it took the U.S. 10 years to achieve the success of the shale gas revolution, and the crude oil production of the U.S. has increased by two times and reached the peak volume in the year 1970. And the resource import reliance ratio of the U.S. has decreased from 67% to the current 11.8%. On the natural gas side, the U.S. is also the number one gas-producing country in the world. It is a net exporter of gas. It was estimated that by 2025, the U.S. will also become the number one LNG exporter.
这个中国 2017 年成为全球最大的石油进口国，2018 年又成为全球天然气最大的进口国。因此说中国是全球油气进口需求最大的国家，并且在未来可以预计很长时间对天然气的需求将呈现一个刚性的增长。因为从这个角度说，大的油气生产国和大的油气需求国在资源配置上，在互补性上具有非常好的合作前景。
In 2017, China became the number one crude importer. In 2018, it became the number one gas importer. Our oil gas demand is very big, and looking into the foreseeable future, we will still continue to see incremental growth of natural gas consumption in the Chinese market. I see strong complementarity between a resource producer and a resource consumer.
随着中美贸易摩擦谈判取得积极进展，如果能够创造出好的贸易条件和投资条件，我觉得增加美国油气进口可以改善贸易结构，减少贸易摩擦，同时实现中国油气进口多元化应该是一种合理的选择。
If the trade negotiations between the two countries make significant progress, with favorable conditions that have already been in place in trading relations and investment, we think the incremental and increasing import of oil and gas resources from the U.S. to China will be good for us to optimize our trading structure, to reduce trade friction, and achieve a diversified resource of oil and gas in the Chinese market.
我们已经和美国的一个公司谈一些油气进口的项目，有的已经签了长贸天然气进口的合同，也已经开始实施一些现货。未来应该说天然气的合作前景还是广阔的。同时我们在研究进口新品、化工品。在油气贸易这方面前景看好，同时更进一步我们来加强油气技术的合作，在非常规油气领域，在高端化工技术领域。同时我们也在相互投资有了很好的基础，未来也是看好的。在美国一些公司在中国从事非常规油气的产品开发，我们也在寻找合适的项目进入美国油气市场。同时我们在装备技术进出口方面也有很好的合作前景。但是现在目前说大量的进口可能还为时过早。一个天然气的出口，美国主要在建设和设施，现货量很小，长贸量还要需要若干年之后才能实施。另外一个就是原油的进口，对中石油来讲，美国出口大量是轻质的，我们的炼厂不完全适用，或者需求轻质原油数量是有限的。所以这个从长远看，包括我们要改善我们炼厂的资源的轻质化的问题，燃料进行相化工进行转型的问题，从长远看合作前景还是非常好的。但当去看马上进口大量的也不是现实。
We are talking with U.S. partners in seeking trading opportunities.
We've already signed some long-term LNG trading contracts with our U.S. partners, and we also bought cargo from them. And our partnership in the natural gas trading business enjoys quite a bright future in our view. And in the future, we will continue to explore opportunities in the following areas. First is expanding our trading relations in light hydrocarbons and chemicals. And second, to explore opportunities of technological collaboration, especially in unconventional resource exploration development and in high-end chemicals. And third, we explore opportunities of joint investment. We've already had a very good foundation, and we are optimistic about our future in these areas since the U.S. companies have already participated in some unconventional resource development in domestic China, and PetroChina is also looking for opportunities to invest in the unconventional resources in the U.S. And last, we see great prospects in trading relations in oil field-related equipment as well.
But frankly speaking, currently we will not see very significant increase of trading relations between us. It's because that the US LNG facilities are still in the construction stage, the throughput volume is still small, and the long-term volume needs to be implemented years later. And for the crude oil produced in the US, that's mainly light oil, and for the Chinese refiners, our demand for light oil is limited. So looking forward, we will promote the refinery structure reform to refine more light oil and to shift our focus from fuel to chemicals.
在我们今年冬天进口的美国LNG，价格上还是很有竞争优势的，对公司的效益是有正面拉动的。 Like last year, the LNG imports from the US had very competitive prices, which is conducive to our economics. 2018年公司销售板块亏损了64.5亿元，主要有两个原因，一个就是中国成品油市场过剩，竞争加剧，汽油柴油的价格到位率很低。第二个原因就是去年10月份以来，油气价格，特别是成品油价格，五连跌，累计汽油跌了1920元每升，柴油跌了1850元每升，这样库存大幅减少，主要是这样两个原因。
Last year, our marketing business segment suffered a loss of 6.45 billion yuan. There's mainly two reasons. First is the refined oil in the Chinese market is abundant.
We have seen increasing competition in the downstream segment and very low price-in-place ratio for both gasoline and diesel, and second, starting from last November, we've seen five continuous drops in the prices of refined oil in China. The gasoline price dropped by CNY 1,920 per ton, and diesel CNY 1,850 per ton. It has led to our inventory loss.
2019年这种形势有所改善，尽管竞争还是很激烈的，但是我们销售业务整个的利润是在向好，而且是逐月向好。
In 2019, the situation will improve. Although the competition is still fierce, our marketing team's performance will improve gradually.
谢谢。
This is Jessie from Macquarie. Two questions. On gas production, should we expect 5%-6% type of production growth this year, next year, year after, or can gas production surprise to the upside? The second question is on your gas import loss. How should we think about this in view of a tight market again in 2019? Can we expect further price increases and perhaps even a reduction in that loss? Thank you.
来自麦格理两个问题。第一个是关于中国的中石油的天然气的产量，中石油的天然气产量是否在今年、明年以及接下来的时间中仍然维持在5%到6%的增长水平，还是说这样一个增速会进一步的提高？第二个问题是关于进口气的亏损。如果2019年中国的天然气市场仍然是一个供需紧张的状态，那么如何看待进口气的亏损以及中石油在提价方面的潜力？ 好，我来回答一下第一个问题。天然气业务作为中石油一个成长性的、战略性的、价值性的工程，近些年来加大天然气的勘探、开发力度，天然气产量实现了快速的增长。
I'll answer your first question. The natural gas business is a strategic business segment for us, is a pillar of growth. In the recent years, we have put more emphasis and focus on the natural gas exploration and production. We've seen considerable increase in the output.
特别是随着技术的进步，在深井、在致密气、在页岩气方面还有相当大的勘探潜力。
Especially alongside the increasing technology advancement, we see great exploration potential in deep wells in tight gas and shale gas.
去年实现了5.4%的增长，未来我们是利用到2025年一个加快发展的一个规划。到2020年，我们要实现1200亿以上的天然气产量，到2025年要实现1500亿的天然气产量。
Last year, natural gas production for us increased by 5.4%, and we have prepared an accelerated natural gas development strategy for our company by 2025, and our natural gas production target by 2020 is 120 BCM, by 2025, 150 BCM.
未来基本保持在5%、6%这样的一个增长水平。今年就要增长国内产量增长6%，明年可能要增长接近7%，达到1250亿左右。
In the following years, the growth rate will be maintained about 5%-6%.
This year, it's maybe 6%, and in 2020, it's estimated to be 7%, and the total natural gas production will reach 125 BCM.
非常规天然气目前还在一个探索阶段，如果未来能够有大的突破，很可能形成一个新的产量和效益的增长体。
Unconventional natural gas development is still at a very early stage. If breakthroughs happen in the future, the unconventional natural gas may become a very important contributor to the natural gas production and also a contributor to the earnings of natural gas business for us.
好，谢谢。刚才说的进口气亏损的问题，如何能够减少所有市场的需求增加，然后进口气量的增加亏损的这个事，由我来回答一下。
I'll answer your question concerning imported gas losses.
咱们去年累计销售的进口气量是728.93亿方，其中中亚气是483.98亿方，缅气是32.94亿方，LNG是212亿方，同比是增加了比2017年增销进口气157.49亿方。
In 2018, PetroChina sold imported natural gas in total of 72.89 BCM, among which Central Asian gas was 48.398 BCM, Myanmar gas 3.294 BCM, LNG 21.2 BCM. The incremental volume compared with 2017 was 15.749 BCM.
由于进口气的价格都是以油价挂钩，由于这个原因，咱们2018年进口的728.93亿方的资源，同比2017年增加了成本是210亿。
Since the imported gas prices are linked with crude prices, the total volume of imported natural gas 72.89 BCM saw increasing loss of 21 billion RMB year on year.
股东一直担心的就是进口气越新越亏这个问题。实际我们运营下来，2018年通过半年时间，我们采取交叉化的策略，就把进口气按照国家政策允许采取市场化价格来销售的这一部分，想方设法用市场化的手段去进行顺价销售。
I understand. Our shareholders are concerned about seeing increasing losses with increasing imported volume, but starting from the second half of last year, we have taken several measures to hike the prices. We utilize the government pricing policies to achieve more market-based prices for some type of imported gas.
通过这样一些措施，实际上我们2018年的进口气亏损只有200， 也不少，249亿，但是比2017年那个量还比现在还少157亿方的情况下，我们亏损那个时候是239亿，实际上同比确实是双亏了9.6亿元。
And although we have seen a considerable increase of imported volume by 15.749 BCM, but the total loss of imported gas last year was CNY 24.907 billion. The increase was only CNY 960 million.
这里边我们主要采取了几个方面的措施来控制亏损。第一个就是充分利用天然气价格政策，进行标签化的销售，使得能够推价的资源完全能够想办法顺价出去。
We've taken several countermeasures to contain the losses. First is we fully utilize the government pricing mechanisms to achieve differentiated sales price for different sources of imported gas to try our best to pass through the cost.
第二个方式就是优化资源的流向，也就是把我们的资源更多地去流向高端市场，然后减少或者控制中低端市场的销量。
Second, we optimize the flow of resources to more high-end markets and to control the volume in mid and low-end markets.
第三个方法就是提高上限的交易量，凡是在两个天然气交易中心去交易的资源，这个都可以按照市场化来确定价格。
And the third measure is to enhance the trading volume on the exchanges. And for all these resources that can be traded on the two existing exchanges in China, the prices will be market-based.
第四个措施就是加大液态的销售能量，因为市场现在它对液态销售的价格还能够接受，它不管多高，它能够接受这个价格，但是对短到期来讲，它接受起来难度大一些，那我们就多卖一部分LNG的液态能量。
And fourth, we enhance the sales volume of gas in liquid form, that is LNG, because the market has better affordability to LNG price hikes than piped gas price hikes.
当然从采取的这些措施在从结果上来看，确实还是增亏了，单从销售环节，这一个批发这个一个环节来看，还是增亏了9.6个亿。但是实际上如果把进口气的资源整个作为一个产业来看，我们亏损是应该是大幅度的减少。
If you take a look at our wholesale marketing business alone, the imported gas has seen increasing loss of RMB 960 million yuan, but if you look at it from the whole value chain, the imported gas loss has actually decreased.
如果说管道输送环节，进口的管路上去通过管道输送的盈利率，这块不算。那么我光是算液态LNG销售，因为我们增加了气化量和双车的量，在LNG接入站的环节的盈利就多出了19.3亿元。其中能够分配中石油的部分就是9.7亿元。
If we deduct the pipeline earnings we get from this imported volume in pipeline tariffs, if we only take a look at the liquid form in LNG terminals, due to this imported volume, the earnings improved by CNY 1.93 billion, and CNY 970 million are attributable to PetroChina.
仅这一点就弥补了我们多亏的9.6亿元。那么我们还在加大了中端市场的开发的力度，在中端市场零售环节上，我们也为母公司通过昆仑能源的零售增加了零售的利润，为母公司也多增加了一块利益。
So this CNY 970 million improved earnings in LNG terminals has already offset the incremental import loss of CNY 960 million. And we also work on the mid-end markets. They've seen better earnings in their retail business. It also contributed to the overall imported gas performance of PetroChina.
事实上我们也是从销售整个国产气的盈利和进口气的亏损，整个在销售环节上，我们是比去年同比2017年有了大幅度的减亏。
So if we take a combined look at the profitability of domestically produced gas and the loss of imported gas, the marketing business for the company has seen improved earnings in 2018 versus 2017.
所以从这个用量来讲，需求越旺，进口气越多，会越来越增加亏损，这件事是不成立的。
So with increasing demand and increasing import volume, we will not see increasing losses.
2019年我们会采取一系列的措施来解决这个问题。第一个，我们一定是保证国产气优先生产优先销售，因为国产气有利有盈利。第二个就是保证我们的已经签署了的长贸协议，按照take or pay规定量来引进，来控制亏损。第三个，市场上如果能够接受现货的LNG资源，能够顺价销售，我们再来进口。如果不能接受，我们就不进口这部分的资源，因为也不是我们的义务。
So in 2019, first we will sell all the domestically produced gas, which is a profitable business, and second, according to the long-term LNG trading contract, the take or pay contract, we will abide by these contracts to import long-term LNG. And third, for spot LNG, if the market can take the price, we will import this volume. If not, we will not import it because it's not our obligation as well.
这是在量上控制亏损的一些方法。另外还有几个方法，一个是与相关的进口方协商，开展价格谈判来降低采购成本，要不就是优化资源的结构，按照资源属性和用气属性去实现差异化的定价。第三个，还是通过两个交易平台来发现市场的价值。第四个，再优化长贸的资源的中低热值的供给比例。通过这一系列措施，我们相信进口气的亏损的问题会得到有效的缓解。
These are what we do on the volume side to contain the losses, and we also have many other measures. For instance, we will renegotiate the price for imported gas with our partners. And second, we will optimize the structures to achieve differentiated sales price for different types of natural gas.
And third, we will fully utilize the role of the petroleum exchanges. And fourth, we will better optimize the different percentages of imported gas for the summer and winter season.
从长远来看，我们中国集团还要大力发展天然气终端业务，来享受终端环节，把终端作为一个天然气产业链的加值链的重要组成部分，重要环节，然后发展终端，来享受终端环节的增值，为天然气的业务实现战略性、生产性、价值性的工程做出贡献。
Looking to the longer future, we will put more emphasis on the end market business of natural gas to make it more important in the whole value chain of natural gas to enhance the earnings and contribute to PetroChina's natural gas business as a strategic business and a pole of growth.
谢谢你。那就这样，最后分享一下这些想法，对大家关注的一些焦点问题。
I invite the Chairman to say a few remarks.
在结束今天问答环节以前，我刚才跟主持人说了，对我们中石油这两场发布会，大家比较集中关注的两个问题，我还想再强调一点意见。
Before the ending of today's results announcement, I would like to further touch upon two very important issues I've both mentioned in our two sessions of results release.
第一个问题就是关于如何发展好天然气业务的问题，大家比较关注。这几年我们中国石油对发展天然气业务投入了很大的精力，而且我认为中国石油发展好中国的天然气业务是具备条件的，潜力是巨大的。我们中国石油也很有信心发展好天然气业务.
First is on how to develop natural gas business.
This issue has attracted a lot of attention from the society, and also in recent years, our company has put increasing focus on natural gas business segment. We believe PetroChina has relevant conditions ready to develop natural gas business. We enjoy great prospects and potential in these segments. We are bullish on our future of natural gas business.
我们一直把天然气业务作为我们中国石油的近期发展的经济增长点来培育，跟大家相信会有效果的，我们坚定信心。
We take natural gas business as an important pole of growth for the company. Please believe that our natural gas business will see much success and good results. We have full confidence.
第二个问题就是大家比较关注要组建国家石油天然气管网公司的问题，我想谈一点我的看法。
Second, I want to share with you my views on the National Pipeline Company.
大家都知道中国是石油工业体系比较完善的国家之一，中国石油在中国石油天然气工业体系中占了重要的组成部分。
China is one of the countries that has the most comprehensive oil and gas systems, and PetroChina is a very important player in China's oil and gas system.
那么进行石油天然气体制的改革是为了进一步的完善中国的石油天然气体系，石油工业体系。
To promote the oil and gas system reform, we need to further optimize the oil and gas industries in China.
组建石油天然气管网公司也是石油天然气体制改革的重点内容。
Formation of a National Pipeline Company is an important component in the oil and gas system reform.
虽然近期还没有对社会公布具体的组建的内容和方式，没有具体的时间表，但是大家给予高度的关注也是完全正常的。
Although after the strategic shape and timeline of this National Pipeline Company, relevant information has not been unveiled yet, but we fully understand the tremendous interest paid in such a company.
这标志着中国的石油天然气工业有向着市场化的方向，向着专业化管理的方式前进了一步。
The formation of such a National Pipeline Company represents a further step towards a more market-oriented oil and gas system and industry in China and towards a more specialized management system of this industry.
我认为组建石油天然气管网公司是一个非常复杂的改革措施。
I do believe such a company is a very complex reform process.
I still remember that last year in our results announcement, the pipeline reform issue also attracted a lot of attention from our investors and analysts, but we didn't have in-depth communication on this issue. But please rest assured that PetroChina has never stopped our studies on reform initiatives. PetroChina has been a listed company for the past two decades. We are a responsible big company. We respect the interests of our shareholders, and especially minority shareholders. As the Chairman of PetroChina, I still have full confidence in this reform. I hope that the reform will be conducted in line with the realities of China's petroleum industry and will safeguard the interests of shareholders. I am full of confidence in this. Thank you everyone. Thank you, Chairman. There are two facts that prove I am not a good host. First, this Chairman stayed for too little time. Second, I made everyone very hungry. Thank you everyone. Thank you.