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| Message from the Chairperson and President |
Thanks to the concerted efforts of our entire staff, the revenues of CPC Corporation reached a historic record of NT$1.03 trillion in 2011, the centennial year of the Republic of China. This marked the official entry of CPC into the trillion NT dollar club, and we hope that our employees will hold firmly to the spirit of ¡§Feet planted in Taiwan, deployment throughout the Asia-Pacific, eyes on the world¡¨ as they continue striving to achieve the goal of NT$1.5 trillion in revenues at an early date.
The entire world suffered in 2011 from the impact of the political turbulence that the ¡§Jasmine Revolution¡¨ brought to Northern Africa and the Middle East, the disastrous Fukushima earthquake and Tsunami that struck Japan, sluggish economic growth in the United States, flooding in Thailand, debt problems in Europe, and instability in Iran. These factors, plus drastic fluctuations in the stock and foreign exchange markets, boosted oil prices to the high level of US$100 per barrel and raised the cost of procurement for CPC. Despite the improvement in our revenues compared with 2010, CPC worked in line with the government¡¦s efforts to lessen the pressure of rising international oil prices, lighten the burden on our people, and stabilize prices by implementing an oil and gas price-adjustment mitigation mechanism that brought our before-tax losses in 2011 to NT$38.7 billion and after-tax losses to NT$32.3 billion. To prevent losses from growing further, creating financial difficulties and rising capital costs that would affect the company¡¦s credit rating and its operations, in addition to striving rigorously to increase income, reduce expenditures, and enhance operating performance, CPC will seek permission from the higher authorities to reduce gradually the amount of petroleum and diesel fuel costs that it absorbs so that our operations can move in the direction of normality.
CPC Corp. won numerous awards for its communication with and service to society in 2011, making this a year of ¡§Brilliant Centennial, Glorious CPC.¡¨ In addition to ranking 350th in the world and 5th in Taiwan on the Fortune 500 list, as a single enterprise CPC topped the list as the largest manufacturer in Taiwan; it won a Platinum Award in the Reader¡¦s Digest Trusted Brands for the 11th year in a row, First Place petrol station award in the service category for the 6th year in a row and Total Vote King for the 2nd year in a row from Next magazine, first place in Energy and Resource Integration Benchmark Enterprise awards by the Industrial Development Bureau, Consumers¡¦ Ideal Brand from Management Magazine, and Public Construction Golden Quality Award from the Public Construction Commission. CPC Corp. also topped the list among state-owned enterprises in the ¡§overall service,¡¨ ¡§public image,¡¨ ¡§social perspective,¡¨ and ¡§corporate integrity¡¨ categories of the customer satisfaction survey commissioned by the Commission of National Corporations. These honors, won by the endavours of our staffs, reflect the ongoing affirmation from the government and the public.
In oil and gas exploration, CPC continued cooperating with large international petroleum companies in the acquisition of high-quality overseas exploration blocks. In 2011 we completed three acquisition projects¡Xin Niger, and Prelude and Ichthys in Australia¡Xwhich will increase our reserves by an estimated 200 million barrels of oil equivalent, and we also acquired six blocks in the United States. We are also actively pursuing opportunities for the cooperative development of overseas blocks in the U.S., Canada, Congo, Iraq, Myanmar, and Indonesia with the aim of boosting our ratio of self-owned energy. Our production reached 6.6 million barrels of crude oil and 810 million cubic meters of natural gas in 2011, and our overseas blocks increased from 18 to 21 in seven countries. The first well in the Chad block discovered oil and gas with an estimated conditional amount of 32 million barrels, and follow-up exploration is now being carried out. In Taiwan, abundant natural gas was discovered in Chuhuangkeng wells No. 145, 146, and 147 in 2010; after piping and other engineering work, production began in early 2012 with a daily capacity of 100,000 cubic meters. In addition, the development of the F Structure gas field off Kaohsiung is being carried out and production is expected to begin in 2015.
Both production and sale of petroleum products declined in comparison with 2010 because of an increase in the number of unplanned refinery stoppages and delayed restarts following major repairs. Facilities that will begin producing in 2012 include a residue fluidized catalytic cracking (RFCC) plant with a daily capacity of 80,000 barrels, a gasoline HDS plant with a daily capacity of 48,000 barrels, and a general 6,500-ton product carrier, all of which will boost production capacity by an estimated 3 million kiloliters of major oil products that year. With the increase in production and further development of the company¡¦s operations, refining units should switch their production strategy to a trade orientation, and in line with exports of petroleum products, turn out customized products to increase refining efficiency. In the field of domestic sales, we will continue to promote quality services and carry out construction and maintenance of petrol-station hardware, keep up the attractive appearance and cleanliness of petrol stations, and provide diversified services to attract customers and enhance the company¡¦s image.
In line with the government¡¦s policy of ¡§quantity expansion overseas, quality enhancement at home,¡¨ CPC Corp. is cooperating with large domestic and foreign petrochemical product manufacturers to carry out the appropriate utilization of previously undeveloped and low-value materials (such as C5, C9, and bitumen) in the manufacture of high-value products. We have signed strategic alliances with Mitsui Chemicals and Mitsubishi Chemical of Japan, along with 31 strategic alliances for technical cooperation 15 domestic industrial, academic, and research organizations (including companies) in the field of high-value petrochemical products and green energy industries. We have also set up a green energy laboratory and a new materials trial production and certification center, and have established a petrochemical products division within our Refining and Manufacturing Research Institute.
Because of the continuous growth in sales, our natural gas imports reached 198 shiploads in 2011 and the figure is expected to reach 211 shiploads in 2012. The Taichung LNG Receiving Terminal alone broke the 100-dockings mark on Oct. 8, 2011. To meet the constantly growing demand by the Taiwan Power Co., stabilize domestic LNG supplies, and reduce greenhouse gas emissions, CPC Corp. has settled long-term procurement amounts with Qatar and with Prelude and Ichthys in Australia.
In our reinvestment in other enterprises, we have moved into the field of high-value-added petrochemicals by setting up the Taiwan Yiu Petrochemical Materials Technology Co. We have also, in response to the growth of imports and exports of petrochemical raw materials and products and the need to transport liquefied petroleum gas and liquefied natural gas, we have established the Global Energy Maritime Co. to operate a fleet of new-generation tankers.
Despite the harsh external environment, CPC Corp. will continue coordinating with government policy and vigorously implementing its corporate governance system while making full use of the expertise of our directors and supervisors. We may not be able to achieve our goals overnight; but, with the efforts of all our employees, there is no peak that we cannot climb.
We extend our sincere thanks to the domestic and overseas customers who have afforded us their long-term care and support, and to the cooperating partners who have favored us with their help throughout our 65 years of growth and transformation. In the future we will continue operating at a stable pace as we advance toward the vision of becoming ¡§a competitive international energy conglomerate that encompasses exploration, oil and gas, petrochemicals, and high technology.¡¨ It is our earnest hope that our original partners will stay with us and new partners will join our ranks to form our strongest support in the years to come.
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