Chairman's Statement

As the pandemic drags on, the world's economic recovery remains sluggish. The geopolitical conflict has cast a shadow on the global value chain and energy supply. In China, the economy faces multiple challenges from supply chain disruptions caused by regional pandemic outbreaks and increasing complexities and uncertainties in the international environment. In this context, China continues the strategy of shifting to clean, low-carbon, safe, and efficient energy and works towards the carbon peak and neutrality goals. These policies have accelerated energy mix upgrading, market-oriented reforms, and the transition to the supply and consumption of efficient, clean, and low carbon energy, which has brought numerous opportunities to the natural gas industry and the new energy sector.

As one of China's primary energy sources, natural gas is significant for meeting the country's energy needs, improving people's living standards, and developing the economy. It is also the only premium and clean energy among primary energy sources that can balance energy security, economic development, and the need to respond to climate change. In the future, it will play a central role in fulfilling increased energy demand under the energy structure reform. In addition, it will be vital for improving the country's energy consumption habits, achieving complementarity among different energy sources, and reaching the carbon peak and neutrality goals. Over the past few years, China has announced many policies and plans to support the natural gas industry. Notably, on 26 October 2021, the State Council published the Notice on the Action Plan for Carbon Peaking before 2030, proposing to accelerate large-scale exploitation of unconventional oil and gas and encourage the use of natural gas. It also calls for optimizing the structure of natural gas consumption, prioritizing gas supply for daily life, and integrating natural gas with other energy. Furthermore, it encourages harnessing local environmental conditions to build natural gas peak shaving plants, using natural gas for industrial operations and as a chemical raw material, and fueling vehicles and vessels with LNG. It is foreseeable that China's natural gas industry will usher in a golden decade of development.

As the Group's 20th anniversary, this fiscal year was an extraordinary year marked with an innovative reform as a milestone for all members of the Group. This year, we tackled various internal and external challenges by remedying shortcomings, raising efficiency, and strengthening safety management. Despite the COVID outbreaks and floods, we acted in solidarity to maintain stable gas supplies for the people and fulfill corporate social responsibilities. Furthermore, we adapted our development model, reformed the Group innovatively to pursue high quality development, and pressed ahead against all odds.

In the coming year, the Group will continue to enhance safety control for gas transmission and distribution systems, adopt 'agile management' to better satisfy clients' needs, improve main business operational models, and prioritize gas price management and receivable collections to achieve high-quality development. Furthermore, the Group will increase the accountability of regional operation and management centres and first-line companies, optimize performance assessment and incentive schemes, provide strategic guidance and empowerment through headquarters, and take effective measures to motivate first-line workers. Moreover, it will implement economic value added (EVA) assessments across the segments and projects, strengthen customer services, and enhance our safety control and capital management skills. Following the headquarters’ strategic guidance and empowerment, the Group will cultivate businesses for carbon peak and neutrality goals, new energy, and new retail, pursue business innovations, and charter new territories.

The Group will press ahead in solidarity, embrace market changes, and continue fulfilling social responsibilities in the face of new challenges and opportunities. With greater resolve, more effective measures, and a more pragmatic and rigorous attitude, we will continue striving for breakthroughs, contribute a green force to China’s energy reform and economic growth, and create greater value for shareholders, society, and employees. Lastly, on behalf of all directors of the Board, I wish to thank the Management and staff of the Group for your passion and hard work this year.

Mr. LIU Ming Hui

Chairman, Managing Director and President