On October 11, 2012,the CIRC issued an announcement,approving China National Petroleum Corporation and PetroChina Company Limited to jointly initiate preparations for the establishment of CNPC Captive Insurance Co., Ltd.,with a registered capital of RMB 5 billion,registered in Karamay, Xinjiang.

In January last year, PetroChina announced that an interim meeting of its board of directors held on January 4, 2012had reached a valid resolution: PetroChina and its parent company CNPC agreed through consultation to establish a captive insurer,with a registered capital of RMB 5 billion(approximately HK$6.135 billion). Of this, CNPC would contribute RMB 2.55 billion(approximately HK$3.129 billion),accounting for 51%of the registered capital, while PetroChina would contribute RMB 2.45 billion(approximately HK$3.006 billion),accounting for 49% of the registered capital.

The company stated that the captive insurer will mainly engage in property damage insurance, liability insurance, credit insurance, surety insurance, short-term health insurance and accident insurance within the CNPC group,reinsurance of the above business, and the use of insurance funds as permitted by laws and regulations.

        PetroChina said that because the petroleum industry is characterised by high risk and specialisation, ordinary commercial insurance currently available cannot cover all of the company's business areas. To meet the risk management needs of high-risk and overseas projects, rationally transfer operational risks, balance commercial insurance expenditure, enhance risk response capability and ensure the effectiveness of claim settlement after losses occur, a captive can also save the company's overall premium expenditure.