Oil recovery refers to the processes by which crude oil is extracted from beneath the Earth’s surface. Oil recovery can be categorised into three phases:

Primary	Secondary	Tertiary
• Uses natural pressure of the reservoir to push crude oil to the surface • Allows about 5% to 10% of the oil in the reservoir to be extracted	• Injects pressurised gas and water to drive the residual crude oil and gas remaining after the primary oil recovery phase to the surface wells • Allows additional 25% to 30% of the oil in the reservoir to be extracted	• Injects different materials to improve the flow between oil, gas and rock, and to recover crude oil remaining after the primary and secondary oil recovery phases • Allows additional 20% to 30% of the oil in the reservoir to be extracted

We believe that the majority of PRC oilfields have not commenced tertiary oil recovery technology. Given the limited supply of crude oil resources in the PRC, as well as a growing focus on improving the oil recovery rate and extending the production life of oilfields, tertiary oil recovery is expected to play an increasingly important role in the near future.