Annual Report 2012

Head Office: P.O. Box 560, Mina Al Fahal, P.C. 116, Sultanate of Oman. Tel: (+968) 24609999, Fax: (+968) 24609900 Qalhat Complex Office: P.O. Box 888, Sur, P.C. 411, Sultanate of Oman. Tel: (+968) 25547777, Fax: (+968) 25547700 www.omanlng.com

His Majesty Sultan Qaboos Bin Said

5

Annual Report 2012

Contents Oman LNG in Brief

6

Our Vision, Mission, Core Values and Strategic Objectives

7

Board of Directors

8

Chairman’s Report

10

Corporate Governance

12

Chief Executive’s Summary

14

Management Team

15

The Crew: Employing and nurturing talent

16

Powering the engine: Producing LNG safely and reliably

18

Setting sail: Protecting and caring for people and the environment

20

Arriving the destination: Global ambassadors through LNG cargoes sales

22

Taking inventory: Financial Performance

24

Returning home: Social Investment Programme

26

The Shareholders:

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Annual Report 2012

6

Annual Report 2012

Oman LNG in brief

6

Oman Liquefied Natural Gas LLC (Oman LNG)

The Company operates 3 liquefaction trains - two

is a limited liability incorporated joint venture

owned by Oman LNG LLC and one by Qalhat

company established by a Royal Decree in 1994

LNG SAOC - at its site in Qalhat near Sur with

and operates under the laws of the Sultanate of

a nameplate capacity of 10.4 million tonnes per

Oman. The Company engages in the business

annum (mtpa).

of producing and selling Liquefied Natural Gas

The Company’s activities contribute to the

(LNG) and its by-product, Natural Gas Liquids

Government of Oman’s objective of diversifying

(NGLs).

the economy away from its current level of

Oman LNG undertakes, directly or indirectly,

dependency on oil. Oman LNG’s Liquefaction

project operations and related activities essential

Plant is located on the coast at Qalhat near Sur

to liquefy, store, transport and market Oman’s

in the South Sharqiyah Governorate and its head

natural gas and to deliver LNG to customers.

office in Muscat.

Annual Report 2012

7

Our

Vision

The Best At What We Do

Our

Mission

• To produce, market and deliver LNG safely, reliably and profitably, • To develop our business and employees to their full potential and • To be a trusted partner in the sustainable development of Oman and its people.

Our

Core Values

Individual Behaviour Integrity • Living the OLNG values • Doing what is right even if: - No one is watching - You know you could get away with something Professionalism • Producing quality work at all times • Efficiency and effectiveness in carrying out assigned roles and responsibilities Accountability • Delivering on promise based on agreed targets • Demonstrating ownership of mandated assignments Organisational Behaviour Team Work • Collaborating with others to deliver on organisational objectives • Value differences and leverage on diversity of the team Care & Respect • Listening to concerns of stakeholders • Respecting diversity • Considering stakeholders’ needs Empowerment • Having confidence and trust in delegated responsibilities to staff to execute tasks competently • Coaching and mentoring to continuously develop staff Business Behaviour Transparency & Fairness • Engage staff/stakeholders in an open, transparent and timely manner • Provide equal opportunity to all staff without prejudice • Impartiality in staff reward and recognition • Build courage to give objective feedback Reputation/Loyalty • Compliance with the law and business principles in order to maintain credibility with stakeholders and the license to operate • Uphold business interests at all times without breaching organisational confidentiality 7

Annual Report 2012

Annual Report 2012

Our

Strategic Objectives 1. Creating Value for all our Stakeholders In an environment of no short-term upward flexibility in feed gas supply from domestic sources and continuing uncertainties in international markets it is imperative that we continue to satisfy our customers as a dependable supplier of LNG and NGL whilst maximising the value along our entire hydrocarbon chain. We will achieve this through minimising energy usage, hydrocarbon losses and operating costs and maximising the value creation of all our assets by seeking and exploiting conventional and non-conventional commercial and logistic opportunities. 2. Engaging Effectively with our External Stakeholders The reputation of our Company and sustaining our licence to operate depends critically on retaining the trust of customers, suppliers and contractors and their continuing desire to do business with OLNG. This can never be taken for granted and will depend, ultimately, on the professionalism, integrity and fairness that all our employees demonstrate in their relationships with our stakeholders. In equal measure, effective and engaging relationships with our communities and the Omani people at large are equally important for retaining our licence to operate. As we move our efforts in this area for a Social Investment Programme to a Development Foundation, it is imperative that the effectiveness and reputation of the Company's Social Investments activities increases. 3. Managing our Business Safely, Reliably and Efficiently The reputation of our industry and credibility of Oman LNG as a reliable and trustworthy supplier has grown to depend strongly on excellence in personal safety and asset integrity, coupled to effective management of all the business processes within the company, plant reliability and dependable delivery of our products. Achieving topquartile performance in these areas require operational excellence, organisational effectiveness and passionate adherence to best practices. 4. Growing our People and our Business After 12 years of successful operations and the development of a truly professional cadre of staff, our focus moves to transforming Oman LNG into a mature organisation with efficiency and professionalism at the core of all we do. With the employment opportunities 2013-2016 Business Plan. In the Omani market remaining bullish, we must ensure that we remain attractive to the best talent and offer development and challenges that bring real personal growth to our employees and parallel growth in our business results in the critical areas of optimised revenues, cost efficiency and robust processes that wins the trust of our customers, communities and other stakeholders. The case for continuous change remains compelling

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Annual Report 2012

Board of Directors H.E. Dr. Mohammed bin Hamad Al Rumhy Minister of Oil & Gas, Government of Oman, Chairman of the Board of Directors of Oman LNG L.L.C.

H.E. Dr. Abdulmalik bin Abdullah Al Hinai Advisor to the Ministry of Finance, Government of Oman, Deputy Chairman of the Board of Directors of Oman LNG L.L.C.

H.E. Dr. Mohammed bin Hamad Al Rumhy

H.E. Khalifa bin Mubarak Al Hinai

Technical Advisor to H.E. the Minister, Ministry of Oil and Gas, Government of Oman

H.E. Dr. Abdulmalik bin Abdullah Al Hinai

Tahir bin Salim Al Amry

H.E. Khalifa bin Mubarak Al Hinai

Saif bin Hamad Al Salmani

Tahir bin Salim Al Amry Director General of Treasury and Accounts, Ministry of Finance, Government of Oman

Saif bin Hamad Al Salmani Director General of Planning & Projects Evaluation, Ministry of Oil and Gas, Government of Oman

Bader bin Ali Al Sariri Director of Petroleum Concessions, Ministry of Oil and Gas, Government of Oman

Bader bin Ali Al Sariri 8

Annual Report 2012

Saber bin Said Al Harbi

Saber bin Said Al Harbi Director General of Economic Statistics, National Centre for Statistics and Information, Government of Oman

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Annual Report 2012

John Blascos Shell Country Chairman and General Manager, Shell Development Oman LLC

John Blascos

Ryuichi Minoda

Ryuichi Minoda General Manager, Oman Project Unit, Natural Gas Business Division B, Energy Business, Mitsubishi Jonathan Osborne Vice President Finance Middle East and North Africa, Shell Upstream International

Jonathan Osborne

Toru Ukishima

Toru Ukishima Deputy General Manager, LNG Project Division I, Energy Business Unit II, Mitsui & Co. Ltd. Xavier Preel Vice President General Affairs Middle East Exploration and Production, TOTAL

Xavier Preel

Sang Hwan Park

Sang Hwan Park Managing Director and Chief Executive Officer, Korea LNG Limited Dr. Antonio Jose Da Costa Silva Chairman of the Management Commission, Partex Oil & Gas

Dr. Antonio Jose Da Costa Silva

Ryohei Suda

Ryohei Suda Deputy General Manager Natural Gas Business Development Energy, Metals & Minerals Company Itochu Corporation* Harib Al Kitani Chief Executive Officer Oman LNG Olawale Animashaun Oman LNG’s General Counsel and Company Secretary

Harib Al Kitani

9

Annual Report 2012

Olawale Animashaun

* ITOCHU Corporation attends all Board Meetings but does not have voting rights on the Board.

10 Annual Report 2012

• HE Chairman's visit to Qalhat Complex 10 Annual Report 2012

11 Annual Report 2012

Chairman’s Message has been effective in improving the quality of lives for Omanis across their many spheres of existence. Now

with

the

license

secured

for

the

establishment of an Oman LNG Foundation, the company’s long-term value addition to the country through social investment has been The results of Oman LNG‘s continued strong

further assured.

business performance in 2012 show good stewardship by the different role players in the value chain— feed gas supplier, shareholders, employees, contractors and customers—that has facilitated the company’s primary obligation of supplying a key source of energy to its buyers and bringing the value of this endeavor home to the Sultanate. Internationally, the demand for energy led to higher pricing with a barrel of oil averaging $112, which was slightly higher than its median price of about $100 per barrel in 2011, as the world economy began to stabilize and exit a period of recession. Domestically, the demand for gas to power

Also in 2012, Oman LNG continued to emphasize the safety and integrity of its people and assets leading to the achievement of a remarkable 6.7 million man-hour LTI milestone. Every effort should be employed in maintaining this standard to assure that no threat is posed to the safety and health of staff and contractors. In the coming years, our main task will be to give our utmost with prudent management and attention to the production and export of Oman’s natural gas, in such a way that enables the nation derive the fullest benefits of this resource for the sustained progress of the nation and its people.

Oman’s growing energy needs have meant a more careful management of our gas resources. Without doubt, the company continues to write

H.E. Dr. Mohammed bin Hamad bin Saif al Rumhy

its success story at home through the application

Minister of Oil & Gas and Chairman of the Board of

of a robust social development programme that

Directors

12 Annual Report 2012

Corporate Governance Board Composition The Board of Directors comprises a maximum of fourteen (14) non-executive members as follows: Government of the Sultanate of Oman: Seven (7) members, including the Chairman and the Vice- Chairman; Shell: Two (2) members; Other shareholders (except Itochu Corporation): One (1) member each. Itochu Corporation is represented at Board meetings by an Itochu nominee who has no voting rights. Board Activities in 2012 In 2012, the Board of Directors met in April, June and November. At the first meeting in April held at the OLNG Head Office, Muscat, Oman, the Board reviewed/ approved the 2011 corporate performance and scorecard. It also endorsed the financial statement and final dividend for approval by Shareholders at the General Meeting. Following the recommendation of the Board, the General meeting of the Shareholders approved the appointment of KPMG as the company’s external auditors for 2012.

*Reports directly to the Audit Committee Chairman

Receiving the Best Company in Corporate Governance Award

12 Annual Report 2012

The Board also reviewed the impact of the Hay 2011 Salary Survey Results on staff remuneration and was apprised of the status of the company’s Process Safety and Asset Integrity – an area that received a lot of attention from the directors. Developments in Oman Law that impact the company and directors were also presented to the Board at the April meeting. A report on the company’s Enterprise Resource Planning (ERP) project was also. The summer Board meeting in June 2012 was hosted by Shell in Granada, Spain. The boards of Petroleum Development Oman and Qalhat LNG were also hosted by Shell at the same venue and this provided unique opportunity for interaction amongst delegates from the three entities. One of the major highlights of this meeting was the appointment of Mr. Harib Al Kitani as the Chief Executive Officer of Oman LNG to take over the leadership from Dr. Brian Buckley with effect from 1 August 2012. The Board also reviewed the 2012 Scorecard Performance

Update and Oman LNG Business Plan 2013-2017 Premises. The Long Term Loan Management Strategy as well as the Social Investment Reserve Fund Strategy were also examined. As part of the drive towards improved efficiency, the Board reviewed the Power Purchase Project proposal for better utilisation of gas with a view to supporting the country’s increasing energy demands. The November meeting was also held at the company’s Head Office in Muscat, Oman. At this meeting, the Board approved the Proposed Business Plan 2013–2017 and the Operating and Capital Budgets for 2013. Furthermore, the proposal to review the Facilities Management Contract Strategy was approved. In preparation for 2013, the Board approved the 2013 meetings’ schedule for the Board and Shareholders Committees. There were changes in the Board membership in 2012: The Itochu Representative - Mr. Hisato Okubo was replaced by Ryohei Suda. Mr. Sang Hwan Park of Korea LNG succeeded Mr. Sang Kyung OH. There were two changes in the Mitsui directorship in the course of the year – the first being replacement of Mr. Genjiro Torii by Mr. Shu Tanaka, who was later replaced Mr. Kazuhiko Gomi. Shareholders’ Committees The Shareholders’ Committees were established under the Shareholders’ Agreement to assist the Board in an advisory capacity. There are four committees which address 1) Technical 2) Personnel 3) Financial and 4) Commercial matters and meet prior to each board meeting. Each shareholder has the right to be represented on each shareholder committee. To improve efficiency, the Personnel, Financial and Commercial Committees meet jointly, whilst the Technical Committee sits separately. The Shareholder Committees do not take decisions for the company, but review and endorse the management recommendations for the Board of

13 Annual Report 2012

Directors to approve. Each committee met three times during 2012. As planned, these meetings were prior to the meetings of the Board. Board Committees There are two Board Committees: 1) Audit Committee and 2) Management Remuneration and Succession Committee. The purpose of the Audit Committee is to provide an independent oversight of the systems of internal controls and financial reporting processes through a review of the quality, independence and effectiveness of internal and external audits. The Audit Committee reports directly to the Board of Directors via its Chairman and comprises non-executive members as follows: Government of the Sultanate of Oman: Three (3) representatives, including the Chairman; Shell: One (1) member; (1)

Any Shareholder: One (1) technical representative agreed by the shareholders. The Audit Committee met four times in 2012. The meetings were attended by the Chief Internal Auditor and the Chief Executive Officer. The Chief Financial Officer was present when the Statutory Financial Audit and Management Letter were presented by the Statutory External Auditor.

13 Annual Report 2012

To ensure independence, the Chief Internal Auditor reports directly to the Chairman of the Audit Committee. In line with best practice, the Internal Audit department adopts a risk based methodology in proposing and executing its audit programme. Several assurance audits were also carried out by external parties, including the

The Audit Committee

Non-Shell shareholders: One representative chosen in rotation;

Audit Activities in 2012

Company’s External Auditors, Shareholders, International Standards Organizations (ISO), and the Technical Advisor. During the 2012 meetings, the audits carried out during the year were reviewed by the committee for levels of compliance with the control framework. In addition, the Audit Committee reviewed proposals relating to Anti-Bribery and Corruption (ABC) Guidelines as part of Company’s Code of Conduct and introduction of accounting policy relating to unpaid creditors. As part of its mandate to ensure an effective control is in place, the committee tracked the management's compliance with proper and timely closure of agreed audit actions. The Committee also reviewed audit reports, the management letter and associated Financial Statements for 2011 by the Statutory External Auditors for endorsement by the Board of Directors. Furthermore the committee discussed the implementation of the following Royal Decrees by the company: • Royal Decree No 111/2011 on the State’s Financial & Institution Law.

Administrative

Audit

• Royal Decree No 112/2011 on the Conflict of Interests Avoidance Law. Management Remuneration and Succession Committee The Management Remuneration and Succession Committee was established in November 2008 by a Board Resolution to ensure that Oman LNG continues to identify, and develop its leadership talent and provides it with rewards and incentives commensurate and competitive with market practices. The Committee reports directly to the Board of Directors via its Chairman and comprises non-executive members as follows: Government of the Sultanate of Oman: Three (3) representatives, including the Chairman; Shell: One (1) member; Non-Shell Shareholders: Two (2) representatives chosen in rotation. The first sitting of the Committee was held in 2009. The Company Management Management of the Company implements an Enterprise-wide Risk Management (ERM) approach that provides a proactive framework of risk management and mitigates risks and their potential impacts on the achievement of company’s strategic objectives and goals. Each identified risk is assessed and appropriate measures are introduced to provide all reasonable assurances that threats will not materialise and in the event they do any adverse impact is minimised. The process and identified risks are reviewed annually.

14 Annual Report 2012

Chief Executive’s Summary Liquefied natural gas (LNG) continues to maintain a global position of relevance in the broader energy mix with demand forecast to double by 2020. In 2012, Oman LNG’s stable production of liquefied natural gas (LNG), contributing some three per cent (3%) to the total world supply continued to provide comfort to our buyers. At the close of the year, we had successfully executed shut-down activities on Trains 1 and 3, critical work to ensure the overall reliability of the plant’s three-train operations. The Sultanate’s auspicious geographical location remains a boon to our ability to supply the two critical LNG markets of the Far East and the Atlantic Basin, and making the most of competitive pricing available for our cargoes that by the end of the year translated into a better financial result. HSE Sustained emphasis on safety in every aspect of company’s activities and operations led to the milestone achievement by the end of the 2012 as we retained an unblemished safety record, reaching almost seven million man-hours without LTI and expect this trend, through a series of planned engagement and awareness activities, to continue as a standard and tradition in the company. Oman LNG continues to promote the culture of safety of every one with all staff encouraged to undertake an “I will” statement of his/her role in emphasising health, safety and the environment as a business priority. This focus will remain so across all levels of engagement with staff and contractors, as well as our broader family of stakeholders. Underscoring the safety of our people and operations will assure the integrity of our assets and earn the trust of all those we partner with. OMANISATION Through a consistent investment in staff training and development, we are growing our Omani staff and positioning them to take on new challenges and responsibilities that will secure our place as a world class company that delivers quality service in the global energy industry. Aside from changes in the management cadre that came with the Omanisation of Chief Executive position, overall Omanisation at Oman LNG grew to 89.8 % and our strides in developing our Omani staff earned us a prestigious recognition award from the Ministry of Manpower. TOUCHING LIVES As Oman’s primary producer and exporter of the country’s 14 Annual Report 2012

natural gas resource, our value to the country can only have meaning through the contribution we make to the national economy and our execution of a well-structured social investment programme that improves the lives of Omanis. To this end, we partnered with some responsible agencies in carrying out a number of key initiatives: • Ministry of Health—For supply of new equipment • Ministry of Higher Education—100 Scholarships for Omanis • Environment Society of Oman—Support for Capacity Building for Environmental Conservation • Oman Sail—Establishment of a professional sailing school in Sur FUTURE OUTLOOK In the future, we will concentrate our efforts in the following three areas: • Integration with Qalhat LNG • Oman LNG Foundation • Investments Our aim is to operate a sound foundation that continues to add great value to Oman and its people. This will require an investment strategy that grows capacity for people and organisations, meeting the needs of not only the present but future expectations of social investment based on sustainability. We are also looking forward to completing Oman LNG’s integration with Qalhat LNG presenting the world with same face of LNG supply from the Sultanate of Oman. OUR RESULTS In this annual report we are happy to share with you the progress we have made in the critical areas of our operations. We remain a trusted partner throughout the LNG value chain and in the growth, development and diversification of the economy of the Sultanate and its people. The management and staff of Oman LNG are extremely grateful for the continuing guidance of our shareholders, the Board of Directors and its Chairman for their support throughout 2012. We also recognise the opportunities that have been created for all of us through the continuing success of Oman, made possible by the vision and stewardship of His Majesty Sultan Qaboos bin Said.

Harib Al Kitani Chief Executive Officer

15 Annual Report 2012

Management Team Harib Al Kitani Chief Executive Officer Amor Al Matani Deputy CEO

Harib Al Kitani

Rene de Nier Chief Operating Officer

Adnan Rajab Chief Commercial Officer

Amor Al Matani

Rene de Nier

Ahmed Al Zakwany Acting Chief Financial Officer - 2013

Shukri Al Mandhary Chief Human Resources Officer

Nasser Al Kindi Acting Chief External Relations Officer - 2013

Adnan Rajab

Ahmed Al Zakwany

Shukri Al Mandhary

Nasser Al Kindi

15 Annual Report 2012

16 The Crew

Employing and nurturing talent Oman LNG takes pride in the quality of its staff and continues to support their development by providing a challenging work environment that supports them to reach their potential and add greater value to themselves and the company.

globally recognised companies. Some of the highlights in Staff Development for 2012 included: • Total Staff: 476 • Omani Staff: 421 Through a well-structured training programme, the • Omanisation: 89.8% staff have access to internationally certified courses • 11 Omanis on cross-posting assignments and enjoy a broad range of experience from working • 44 staff sponsored to pursue further education on short- and long-term assignments in many other • Implementation of Skill Pool Management Framework

16 Annual Report 2012

17 Human Resources

Recruitment • Retention • Learning • Development u World-class

u Open and

u Delivered focused

transparent discussions with all staff

training to staff with internationally recognised and accredited professional bodies

training facilities

Omani Joiners & Leavers

9  

5   13  

2008

31  

2009

-­‐9  

41  

2010

9  

-­‐22  

15  

2011

2012

73  

22  

-­‐10   -­‐9  

-­‐13  

Omani Joiners

Omani Leavers

Net Intake/Exit

Expatriate Joiners & Leavers

-­‐1  

-­‐4  

6   11  

2008

2009

-­‐3   7  

14  

-­‐17  

2010

8  

2011

16  

2012

10  

-­‐18  

-­‐17  

-­‐11  

-­‐3  

Expatriate Joiners

Expatriate Leavers

Net Intake/Exit

Employment Profile

402  

2008

334   398  

2009

343  

402  

Omanis

Report Report 20122012 17 Annual 17 Annual

2010

               348  

465  

Total Staff

2011

409  

476  

2012

421  

18 Powering the engine

Producing LNG safely and reliably Oman LNG continued to lay a strong emphasis on the integrity of its three-train operated plant with the first major shut-down successfully executed on Train 3. Adverse weather conditions led to the temporary closure of our Qalhat Port facilities on 28th and 29th December. Our plant continues to be very reliable with high availability.

18 Annual Report 2012

Some of the highlights in Production and Operations for 2012 included: • LNG Production & Capacity : 8.4mtpa production against 10.4mtpa capacity • Unused Capacity : 2.0mtpa • Reliability : 96.9% • Utilisation : 73.3% • NGL Production : 251,468 tonnes

19 Operations

Reliability • Availability • Capacity • Asset management u Successfully

u Omani staff in the

executed shutdown exercises to ensure overall efficiency of plant

LNG Production in Million Tonnes

8.7  

8.4  

253,306  

2011   2010  

95.80  

Plant Reliability (%)

2011   2010   2009   2008  

Report Report 20122012 19 Annual 19 Annual

2010   2008  

98.80  

2012   91.00  

94.50  

2011   2009  

251,334  

Plant Available Capacity (%)

89.90  

2012  

251,397  

2008  

92.10  

251,468  

248,602  

2009  

8.8  

strong plant complex reliability

NGL Production in Tonnes

2012   8.7  

8.6  

u Maintained

control room.

96.90  

2012   96.10  

98.80   95.80  

2011   2010   2009   2008  

20 Setting sail

Protecting and caring for people and the environment Oman LNG continued to give prime emphasis to the value of Health, Safety, Environment (HSE), Security and Quality in all activities. The employees followed closely the precautions outlined by the 12 Life Saving Rules and maintained an unblemished LTI record throughout the year

• Approximately 5,000 Safety Walk observations reported • Renewed Compliance Certification of ISPS Code • Executed safe and proper disposal of accumulated waste materials

Some of the highlights for 2012: • Achieved Zero Lost Time Injury despite a number of shutdowns

6.7m 20 Annual Report 2012

• 6.7 million man hours –totaling 936 days- without LTI

21 Health, Safety and Environment

Health • Safety • Security • Environment • Quality u Maintained

excellent safety record with Zero LTI

u Looking after

u Liquefied Natural

staff and their families' welfare

Gas is helping to preserve the environment.

12 Life Saving Rules

Key Performance Indicators

Flaring (As% Weight of Feedgas)

0.35 0.3

0.3

0.35   0.30  

0.28

0.25  

0.2

0.20   0.15   0.10   0.05   0.00  

2008  

Report Report 20122012 21 Annual 21 Annual

2009  

2010  

2011  

2012  

22 Arriving the destination

Global ambassadors through LNG cargo sales Since exports began in the year 2000 from our Surbased plant, we have taken great care in nurturing the strong bond and relationship with customers that assures them of the reliability of our cargo deliveries. Some of the highlights in Marketing for 2012 included: • 85 LNG Cargoes Lifted from two trains, bringing

22 Annual Report 2012

the total of cargoes lifted to a total of 131 Cargoes (46 Cargoes for Qalhat LNG) • 45 NGL Cargoes Lifted • Effective deployment of the vessel Sohar LNG for 349 Days

23 Shipping and Marketing

LNG Cargoes • NGL Cargoes • Shipping Capacity • Diversions u Kept our

commitment to all our key buyers

u Participated in

key local and international summits, conferences and exhibitions

Commercial Activities

Report Report 20122012 23 Annual 23 Annual

u Kept our

reliability to supply key markets with clean energy

24 Taking inventory

Financial Performance Through a combination of higher average energy prices which stood at US$114.11 and effective cost management, Oman LNG achieved higher revenues and profits in 2012. Prudent cost effectiveness brought actual cost expenditure lower than budgeted.

24 Annual Report 2012

• Some of the highlights in Finance for 2012 included: • Revenue: US$ 4,342m, US$ 379m higher than 2011 despite two (2) fewer cargoes • Net Income After Tax (NIAT): US$ 1,950m, an increase of US$ 168m from 2011 • Cost Savings: US$ 15.7m

25 Finance

Revenues

•

Costs

•

u High Omanisation

Financing

•

C&P

u Rising energy

of contracts for plant and building maintenance services

u Astute financial

prices and sound financial management led to higher revenues

management has guided expenditure.

Historical Opex 2008-2012

173

172

175   170  

160

158

160   155  

150

USD million

165  

150   145   140  

2008  

2009  

2010  

2011  

2012  

Opex 2012 (Actual)

9%  

15%  

Corporate  

19%  

Manufacturing   16%  

9%   32%  

Manpower   Shutdown   Interest   SIP  

Report Report 20122012 25 Annual 25 Annual

26 Returning Home

Social Investment Programme With 1.5% of company’s net income after tax (NIAT) dedicated to social investment, Oman LNG has remained a front-runner in championing privatesector’s contribution to the development of Oman and its people. Our carefully directed support for new, promising initiatives has led to a brighter outlook in a number of areas where we have made some significant contributions. Following a landmark agreement between Oman LNG and Oman Sail work is now underway for the construction of an Oman Sail school in Sur. Beyond offering employment to Omanis at its completion, the school will teach youngsters the fine navigation skills of sailing. It will thus continue with

Oman’s tradition of close interaction with the sea for which the country is renown. Some of the highlights of Oman LNG’s Social Investment in 2012 included the funding of: • Housing maintenance initiative in partnership with Oman Charitable Organisation in sur, • Equipment for oil and gas laboratory at Nizwa College of Technology • Equipment for Handicap Rehabilitation Centre, Al Khoudh • Training ship for the Fishermen Training Institute in Salalah • Electronic learning devices for Omar Bin Al Khatab Institute for the Blind

© Lloyd Images

1.5% 26 Annual Report 2012

• 1.5% of Company's NIAT dedicated to Social Investment

27 External Relations

National Fund • Community Fund • Sponsorship & Donations • Human Resource Development u Regular

communication channels with all stakeholders

u Signed a number

of key agreements to support social development and building capacity

u Robust

engagement with the community

Key Sustainability Indicators (USD Million)

Fostered robust engagement with all our key stakeholders, so together we can build a better country for many future generations to be proud of.

Report Report 20122012 27 Annual 27 Annual

The establishment of the Oman LNG Foundation will assure the long-term sustainability of our social investment programme.

Over 1,400 employment opportunities created as at December 2012, enabling our youth begin to earn a living for themselves and contribute meaningfully to society.

28 Our Numbers

90%

4.8

Omanisation - Oman LNG has remained at the forefront of attracting and retaining the best talent with Omani nationals occupying 6 positions of the seven slots in the company's Management Team.

million USD, approximately The amount expended on staff training and deveopment

44

129

Staff sponsored by the company for tertiary education.

staff are undergoing profeasional courses, sponsored by Oman LNG.

1.5%

of the company's net profit is set aside for Social Investment.

5

35

2012

million OMR amount invested in 270 projects all across the Sultanate of Oman in the past decade.

35%

information provided are as at December 2012.

www.omanlng.com

28 Annual Report 2012

staff - Graduated with Business and Technology Council (BTEC) from the company's Edexcel Accredited Training Centre.

of yearly allocation for Social Investment is put aside as Reserve Fund to secure the future viability of Oman LNG's Social Investment Programmes.