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 Kazazhanbas Oilfield, Kazakhstan
Hainan-Yuedong Block, PRC
Seram Non-Bula Block, Indonesia
Kazazhanbas Oilfield, Kazakhstan
 The Karazhanbas oilfield is located on the shore of the Caspian Sea in close proximity to refineries, pipelines and port facilities which supply oil to the major markets in Central Asia, Europe and the Middle East. It covers a gross area of approximately 160 square kilometers with a depth of up to 500 meters. The estimated gross reserves of the Karazhanbas oilfield in Kazahkstan consisted of approximately 341.1 million barrels of proved reserves, 148.1 million barrels of probable reserves and 34.2 million barrels of possible reserves as of 31 December 2007. The average volume of oil production in 2007 was about 35,500 barrels per day. The quality of oil produced from the Karazhanbas oilfield is typically 19 degree API.
There were approximately 1,160 active productive wells in the Karazhanbas oilfield. Oil has traditionally been produced in the Karazhanbas oilfield primarily through the recovery process known as Cold Heavy Oil Production with Sand (CHOPS) and water injection in the development drill area. Starting from 2005, pilot tests of the thermal enhanced recovery processes of Cyclic Steam Stimulation (CSS) and steam flooding technologies were implemented on a small scale in the eastern part of the oilfield. During the period from 2004 to 2006, KBM drilled a total of 431 productive wells.
 On 12 December 2007, the company completed the acquisition of the Kazakhstan interests from CITIC Group. It now has an indirect interest in 50% of the issued voting shares of KBM and 50% of the participation rights in each of TMS and ATS. TMS is principally engaged in the provision of oil well drilling, construction and workover services. The principal activities of ATS are the provision of transportation and other oilfield related logistics services. KBM is engaged in the exploration, development and production of oil and holds the right to develop and produce oil in the Karazhanbas oilfield in Kazahkstan until 2020. The company and JSC KazMunaiGas Exploration Production (the holder of the remaining 50% Kazakhstan interest) will manage and operate the Kazakhstan Business as a joint venture through respective ownership interests.
The development plan of Karazhanbas oilfield in the next five years is expected to improve recovery rates and increase production volume throughout the oilfield, which includes the introduction of CSS and steam flooding technologies, redevelopment of existing wells and introduction of new wells. In order to meet increased production requirements and achieve cost efficiency, additional supporting infrastructure and facilities, such as installation of additional steam generation system, power supply system, natural gas utilization system, water supply system and water filtration system will be installed to enhance field processing capacity.
Hainan-Yuedong Block, PRC
 Hainan -Yuedong Block is located in the Bohai Bay Basin in Liaoning Province, PRC. The principal field in the Hainan – Yuedong Block is Yuedong oilfield, According to an oil reserve evaluation report prepared by Sproule International Limited (an individual technical advisor), the principal field with the Hainan-Yuedong Block, the Yuedong oilfield, has an estimated total recoverable proved, probable & possible oil reserves of about 63.5m bbls as of 30 Jun 2007.
In October 2007, CITIC Haiyue, an indirect wholly-owned subsidiary of the Group, completed the acquisition of a 90% interest of Tincy Group from Far Great Investments Ltd. Tincy Group is the contractor who holds the right to explore, develop and operate the oilfield in the Hainan – Yuedong Block until 2034. Tincy Group will co-operate with China National Petroleum Corporation (“CNPC”) to develop the Hainan-Yuedong Block and engage CNPC to carry out certain oil operations under the Petroleum Contract (“PSC”) on terms to be agreed by Tincy Group and CNPC in an operation agreement. The retained contract area under the PSC will cover an area of approximately 110 square kilometres.
The oilfield is currently in the appraisal and development stage and we believe the recoverable oil reserves can reach 100 million bbls.
Seram Non-Bula Block, Indonesia
 The Seram Non-Bula Block is located on Seram Island, Indonesia and covers an area of about 4,572 square kilometres. The principal field in the Seram Non-Bula Block is the Oseil Field. The Oseil field is located in the Seram Non-Bula PSC area on the island of Seram about 300 kilometers east of the city of Ambon. The field is located inland from the northeast coast of the island. The gross oil reserves of the Oseil Field have been estimated by independent technical advisers to be about 39 million barrels as at 31 December 2005 and comprises 7 million barrels of proven reserves, 6 million barrels of probable reserves and 26 million barrels of possible reserves. The average production in 2007 was about 4,100 barrels per day (gross) of 15° to 22° API oil.
Discovery of the Oseil Field occurred in 1993 with the drilling of the Oseil-1 well, which found oil-bearing sections within the Manusela Carbonate. Since that time, nine additional wells, both vertical and horizontal, have been drilled to develop the field and have identified oil-bearing Manusela accumulations in four separate closures. Currently, oil has been produced from three of the four fault block closures. In the period from 1988 to 2002, the operator has drilled four exploration wells in the Seram Non-Bula Block, resulting in commercial oil discovery in the Oseil Field.
 On 23 November 2006, CITIC Seram (an indirect wholly-owned subsidiary of the Company) completed the acquisition of a 51% participating interest from KUFPEC. As of the same date, CITIC Seram became the operator responsible for the day to day petroleum operations at the Seram Non-Bula Block. As the operator of the Seram Non-Bula Block, CITIC Seram is expected to maintain and improve current production levels at the Oseil Field on an economic and efficient basis in order to maximise output at the Oseil Field. Under the Production Sharing Contract, the Contractor (collectively the participants other than BPMIGAS namely CITIC Seram, KUFPEC, GPI and Lion) has been granted a 100% right to explore, develop and produce oil from the Seram Non-Bula Block for a period of 20 years until 2019.
The development of the Oseil Field is divided into two phases in accordance with the Production Sharing Contract. Phase one of the development includes the acquisition and processing of 3D seismic over the Oseil Field, drilling of well, well completions, installation of production facilities, pipelines, storage facilities, oil export facilities and other supporting infrastructure to operate and produce the wells, and establish a commercial market for Oseil crude oil. Phase two of the development includes drilling and completion of additional development wells and expansion of production facilities, pipelines, storage facilities, oil export facilities and other supporting infrastructure to operate and produce the wells. Proposed future exploration in the Seram Non-Bula Block also expected to include a seismic exploration program, seismic survey and the drilling of additional exploration wells.
The Company used to hold direct interests in the oil and gas sector and until February 2006, it had converted its participating interest in the Kongnan Block within the Dagang oilfield in the PRC into common shares of Ivanhoe Energy Inc. The Company’s interest in the Kongnan Block was previously a 40% participating interest with the 60% balance held by Ivanhoe Energy Inc.
(19 May 2008)
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