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2016 Corporate Social Responsibility Report

Oil and Gas Engineering Co.,Ltd of CNNC Geo-Mining Shaanxi (CNOG)

About the Report

This is Oil and Gas Engineering Co.,Ltd of CNNC Geo-Mining Shaanxi (CNOG) Corporation’s Second annual Corporate Social Responsibility Report since 2015. This report accurately represents what we did in 2016 to honor our commitments to the economy, the environment and society. It is important that we provide the following information:

Reporting company: Oil and Gas Engineering Co.,Ltd of CNNC Geo-Mining Shaanxi (CNOG)

Alternative reference: Oil and Gas Engineering Co.,Ltd of CNNC Geo-Mining Shaanxi (CNOG) is also referred to in this report as“CNOG”, “the Company”, “we” and “us”.

Timeframe: January 1 to December 31, 2016. Given the continuity and comparability of the disclosed information, part of the information may be taken forward or backward as necessary.

Report cycle: This is an annual report.

Reporting principles: Objective, standardized, honest and transparent

Report content: What we do to honor our economic, environmental and social responsibilities.

Information sources: The Company’s official documents, statistical reports and statistics related to the Company’s units and enterprises. All the information has been reviewed by the Company’s management and its subsidiaries.

Report improvements: In order to showcase our social responsibility performance in an objective, comprehensive and prioritized manner, the 2016 report added some contents such as “Actively Responding to Smog” , “Community Communication” and “Development of the Industrial Chain”. While compiling this report, we carried out on-site investigations on the CSR performance of our affiliated companies, verified the authenticity of case studies, extensively solicited opinions and actively responded to the concerns of all stakeholders.

References: The Guideline on Fulfilling Social Responsibility by Central Enterprises and Guidance on Central Enterprises’ Harmonious Development Implementation in the 12th Five-Year Plan Period issued by the State-owned Assets Supervision and Administration Commission. We also referred to the Sustainability Reporting Guideline (G4.0) published by Global Reporting Initiative, Oil and Gas Industry Guidance on Voluntary Sustainability Reporting (2010) co-published by the International Petroleum Industry Environmental Conservation Association and the American Petroleum Institute, ISO26000 Guidance on Social Responsibility, and China CSR Reporting Guide (CASS-CSR2.0).

About us

Oil and Gas Engineering Co.,Ltd of CNNC Geo-Mining Shaanxi (CNOG) belongs to china National Nuclear Corportion,is a oil and gas resources development services business of professional geological mining industry platform company. which set up by CNNC Department of Geology and Mining.

Oil and Gas Engineering Co.,Ltd of CNNC Geo-Mining Shaanxi (CNOG) can allocate geological mining sector as a whole in the nuclear group member units in all the business of oil and gas industry.concentrated in the field of nuclear geological mining sector geological talents,technology,equipment and geographical advantages,the member unit of professional and technical ability omplementary,radiation wide regional layout.basic covers important domestic oil and gas,coal-bed methane,shale gas production areas and key exploration area.and radiation to central Asia.Company based on oil and gas industry.through strengthening trchnical innovation,service innovation,strengthen the market development and resource integration,make full of the core area is located in the northern shaanxi oil and gas resources location advantage and in changqing oilfield ,prolong oilfield and xinjiang oilfield operation for many years the accumulation of customer relationship network . relying on the member unit of vigorously expand domestic and international oil and gas resources development services market and business, on the portfolio and the oil and gas, unconventional

energy development at home and abroad enterprises, formed the collection of oil and gas resources development and engineering services (such as drilling, well logging , fracturing technology services ) the integration of business system, has been the development of oil and gas blocks at the same time , the refined oil liquefied natural gas trade ,and other areas of the business, the company has developed into a complete industrial chain of integrated technology services and engineering company.

At present,the company business scope:petroleum engineering,drilling,logging,well logging,testing,well cementing,fracturing,acidizing,profile control and oil displacement,oil well text and field technical services,seismic and integrated geophysical-geochemicai data acquisition,processing,interpretation and physic-chemical technology research and development,rock,oil and gas samlies text,computer services,geological mapping measurement service,mechanical and electrical products,logging,mud logging instrument,chemical products(excluding dangerous goods)environmental protection,production and sales.

Corporate Governance

CNOG is a solely state enterprise. According to laws and regulations such as the Company Law of the PRC, and the Law of the PRC on the State-owned Assets of Enterprises, in addition to arrangements made by the State-owned Assets Supervision and Administration Commission of the State Council, CNOG promotes and regulates the establishment of a board of directors, and constructs and continuously perfects the legal person governance structure with clearly defined rights and responsibilities among the board of directors, board of supervisors and management, to ensure that each department carries out its own duties with effective balance, scientific decision-making and coordinated operations. CNOG pays a great deal of attention to honesty and operational compliance. We abide by laws, regulations, international common practice and business ethics, and insist on basing our relationships with stakeholders based on the principles of justice and integrity to win the market and respect, and improve our quality and value through operational compliance.

CNOG continues to strengthen the building of a corruption punishment and prevention mechanism and a power exercise system featuring scientific decision-making, resolute execution and effective oversight. In 2016, focusing on improving our corruption punishment and prevention system, we continued to strengthen supervision and inspection; and pay special attention to inspecting the implementation of decision-making systems, including decisions on major issues, the appointment and dismissal of leading officials, arrangement of important projects, utilization of large amounts of funds, etc. Our anti-corruption activities and measures were further enhanced.

CNOG continues to promote the establishment of an internal control system, and its integration into enterprise management. We continue to strengthen process and risk awareness, reinforce the prevention and control of major risks, standardize professional processes, and improve the quality of our tests. All of these initiatives contribute to the effective operation of our internal control system. By building and operating the internal control system, we have built a fundamental platform for standardized management which has contributed to the overall enhancement of CNOG’s management leve.

Management of Corporate Social Responsibility

Corporate Citizenship Philosophy

For a company, fulfilling corporate social responsibility is not only a necessary path to achieve economic, environmental and social sustainability, but also an inevitable choice for its sustainable development; it is not only an external requirement to adapt to economic and social development trends, but also an internal requirement to enhance our sustainability; it is not only an important way to change our development mode and achieve scientific development, but also a strategic requirement for our internationalized operation.

Upholding the mission of “Caring for Energy, Caring for You”, we aim to achieve the organic unity of economic, environmental and social responsibilities, and strive to become an outstanding global corporate citizen with higher profitability, stronger influence, and a greater contribution to society. We have never relented in our efforts to implement our social responsibilities, adhere to legal operation, be honest and trustworthy, save resources and protect the environment, insist on the people-oriented principle and build a harmonious enterprise, in order to give back to society and realize value sharing.

Mechanism of Advancing Responsibility Management

CNOG has established the Committee of Social Responsibility Management, consisting of the Social Responsibility Promotion Office, the Editorial Office of the CSR Report and the External Expert Panel. The Committee is responsible for formulating the mission and principles of corporate social responsibility to provide unified guidance. The Promotion Office follows the deployment of the Committee, and organizes and coordinates relevant departments and workplaces to fulfill their social responsibilities. The Panel is responsible for consultation and the Editorial Office is responsible for report drafting. A working mechanism has been established, in which the Committee takes the lead, departments in charge organize the work, business sectors take respective responsibilities and affiliates are fully engaged.

In 2016, CNOG enhanced its corporate social responsibility management, guided affiliated enterprises to better perform corporate social responsibility management and developed the Guideline of CNOG on Fulfilling Corporate Social Responsibility. We also held seminars attended by external experts, who offered advice on social responsibility issues to enhance our corporate social responsibility management.

Employee Development Employees are our most valuable resource and asset, and the Company’s development and success is attributed to the joint efforts of all our employees. Upholding the people-oriented concept, we attach great importance to the protection of employees’ legal rights and interests, build an effective platform for employees to develop, and promote employee localization and diversifcation. With their physical and psychological health in mind, we care about the life of our staf in order to make all employees beneft from our achievements and realize the common development of both our Company and employees.

1. Employees’ Rights and Interests

Complying with international conventions on labor and human rights, we respect and protect employees’ legal rights and interests, and advocate the employment policy of equality and non-discrimination. We continue to perfect the compensation and benefits system, and improve democratic mechanisms, in order to create a fair and harmonious working environment for employees.

Employment Policies

We strictly follow relevant international conventions, laws and regulations and abide by the Labor Law of the People's Republic of China, the Labor Contract Law of the People's Republic of China , the Trade Union Law of the People's Republic of China , and host countries’ relevant laws and regulations. We have established and continue to improve the employment management regulation system, promote the employment policy of equality and nondiscrimination, comply with the newly revised Labor Contract Law, ensure that all employees enjoy equal rights, and provide equal opportunities and fair treatment to all employees regardless of nationality, race, gender, religion or cultural background. We strictly prohibit child labor and oppose all forms of forced labor. In addition, we always aim to promote the employment of women and ethnic minorities. We promote the reform of the employment system based on marketization. In addition, to ensure efficient personnel allocation, we optimize the internal organizational structure and establish policies for orderly internal staff turnover.

Compensation and Benefts

The Company steadily reforms and improves the compensation and benefits system covering wages, subsidies and material benefits. Linking employees’ wages with their performance, more rewards and disciplinary measures are adopted based on enhanced performance evaluation. We also increase remuneration along with the improvement of the Company’s labor productivity, and maintained the steady growth of employee incomes. We continue to pay special attention to staff in grassroots units and talents in key positions working in harsh environments in terms of remuneration and gradually improved their living standards. In addition, we optimized our pension and multilevel insurance systems, and established a mechanism to provide insurance and aid in the event of serious illnesses.

Democratic Participation

The Company continues to improve its democratic management system and enterprise affairs publicity system in the form of workers’ congresses, and follows the democratic process, and defines and substantiates publicity content. We actively communicate with employees through multilevel public communication, and encourage them to participate in the Company’s decision making according to law, and protect their rights to know, express, participate and supervise. In 2016, we carried out the “mass line” education campaign, and listened to the opinions of staff in grassroots units. Our employees actively participated in these activities.

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