| Traditional Chinese | Chinese simplified

Natural Gas Business

(1)   Decrease in sales volume of natural gas as compared with 2015

During the reporting period, the Group recorded a decrease in the growth of its sales volume of natural gas under the continuous pressure of the decline of the macro-economic and the stagnant low prices of coal and petroleum, and realized a sales volume of 1,111 million cubic meters for the year, representing a decrease of 1.4% as compared with 2015, of which the wholesales volume amounted to 786 million cubic meters, representing a decrease of 0.1% as compared with 2015 and accounting for 70.75% of total sales volume; the retail sales volume amounted to 254 million cubic meters, representing a decrease of 7.0% as compared with 2015 and accounting for 22.87% of total sales volume; the sales volume of CNG amounted to 71 million cubic meters, representing an increase of 6.0% as compared with 2015 and accounting for 6.38% of total sales volume.

(2)   Actively promoting the construction of infrastructural projects

The Group increased 210.3 kilometers of natural gas pipeline in 2016. As of 31 December 2016, the Group operated a total of 2,183.7 kilometers of pipeline, including 745.3 kilometers of long-distance transmission pipeline and 1,438.4 kilometers of city gas pipeline; and operated a total of 14 distribution stations and 8 gate stations.

During the reporting period, the pipework for ten counties in middle Hebei Province (PhaseII) was basically completed. Anping primary compressed station was completed. The mainconstruction of the Shahe North Gate Station Integrated Control Center was completed. Shanxi Licheng-Hebei Shahe coalbed methane pipeline network project has completed pipeline welding of 130 kilometers, and the Licheng station was completed. Shexian station, Wu’an station, Yongnian station were basically completed.

(3)   Continuous exploration of downstream markets of natural gas

During the reporting period, the Group actively explored the natural gas market. In particular, new non-residential users increased by 488 (including 228 small business users) to a total of 2,014 users (including 1,321 small business users). New residential users increased by 56,537 (including 38,725 new cards users) to a total of 172,949 users (including 125,880 existing cards users).

During the reporting period, the Group steadily developed the city gas projects, setting up branches in Suning, Hebei; successfully won the bid of PPP project in Fengning Manzhu Autonomous county; Shijiazhuang Jiran Pipeline Engineering Co., Ltd., a subsidiary of the Group, has expanded its natural gas business on the basis of the original corridor business and started to supply gas to the users. As of 31 December 2016, the Group has accumulatively established its market presence in 29 city gas markets in the province.

(4)   Developing CNG and LNG businesses in an orderly and prudent manner

During the reporting period, the Group continued to steadily develop its CNG and LNG businesses. In 2016, the Group has developed a total of 8 CNG and LNG projects. Of these, Ningjin CNG primary filling station was completed and put into operation; Anping CNG primary filling station, Zhaoxian Anda L-CNG refilling station, Qinghe CNG primary and secondary filling station, Huang Liang Meng Langtuo L-CNG refilling stations, Luanping standard refilling station, Yuan’s CNG secondary gas station, Neiqiu 107 Guodao LNG refilling station obtained the completion acceptance. As of 31 December 2016, the Group operated a total of 6 CNG primary filling stations, 7 CNG secondary filling stations and 1 LNG refilling station.

By the end of 2016, construction of Shahe LNG liquefaction plant was completed and the relevant operation procedures was in progress.

(5)   Proactively constructing multi gas resources supply system

After Chengde natural gas utilization project (Phase I) was connected to the coal-made gas source of Datang and the pipework for ten counties in middle Hebei Province (Phase I) was successfully connected to the gas source of Sinopec, during the reporting period, the Group introduced the Sinopec Urumqi line resources into the Beijing Handan pipeline, at the same time, the Group utilized its liquefaction plant and city network connection of Hebei Natural Gas Shahe Branch to replenish LNG resources.

(6)   Safe operation safeguarded by advanced technology

During the reporting period, Hebei Natural Gas, a subsidiary of the Group, took a proactive approach to solve the technical problems and was granted three utility model patents, namely the natural gas pipeline production supervision system, the natural gas pipeline network equipment regulatory system and the natural gas pipeline partition inspection system, by the State Intellectual Property Office. Meanwhile, Hebei Natural Gas optimized the wedges gripping tool and obtained the invention patent.