CONFIDENTIAL BDHL | PagePDO Warehouse Strategy Study 2015

PDO Port of Duqm Strategy

May, 2017

By; Sulaiman Al Shaqsi

PDO Logistics Manager and

Corporate Function Discipline Head

Dimensions

Duqm• Capacity: 2 000 000 TAU

• Multimodal Logistics hub encompassing the maritime, road, air and rail modes of transport.

• Break bulk capacity

• Heavy lift capacity

• Storage capacity

• Chemical capacity for both dry and liquid

DUBAI

YEMEN

R 32

R 31

Sur

Masirah

Salalah

Sohar

Duqm

Muscat

IRAN

UAE

KSA

ABU DHABI

Hayma

Al Buraymi

Ras Musandam

Nizwa

Sinaw

GPS Co-ordinates of all In Field Destinations were weighted by the volume delivered to each location for a consolidated North & South center of gravity calculation.

200 KMsFromDuqm

Best Combined COG

Duqm

Weighted Centre of Gravity (COG)

Existing

South COGBetweenMarmul/

Nimr

COGNorthNear

Fahud\

North & South COG

North and South are consolidated into 5 satellite locations Fahud, Qarn Alam, Nimr, Marmul and Harweel

Desire for Inbound Origin to be 100% Duqm

Inbound average ton/trip remains as-is

Inter-warehouse flows removed and replaced with Hub to Satellite replenishment trips (assumption based on current ton despatched from existing warehouses)

Direct deliveries ex origins and Direct deliveries between field locations stay as-is (not shown on map)

Customers are allocated to either near to the satellite areas

<Single HUB

Fahud Satellite

Nimr Satellite

Distribution Overview

Overall

51% to

North

Over

800K Ton

of Cargo

+34m KMs

2017

Journey to Duqm

Duqm bringing increased efficiencies to its Supply Chain (potential elimination of 1/3rd km’s)

100,000 sqm of land has been aquired at Duqm

Duqm provides greater flexibility and reliability over other high activity Ports.

Deman for Sohar cgrew 300% in the past 3 years, and expected to further grow another 50% by 2022”.

Key Dependencies for Duqm Strategy

Port readiness for heavy cargo and container volumes.

Oman PDO suppliers continue to establish Duqm area.

Major Shipping companies are not currently calling at Duqm and this will not change until significant volume is diverted.

Duqm

Duqm

Rail – Added Benefit

Oman Rail Network is 5 year phased plan to connect industrial centers in Sohar, Duqmand Salalah, and later GCC.

The Oman Rail network offers major efficiencies to PDO’s Supply Chain :

Significant RT HSE Exposure Reduction (Tubulars & Chemicals).

Potential removal of 50 trucks per 1,000 tons of cargo.

Improved supply chain reliability.

30% cheaper (est).

9X Safer according to industry studies.

80% fewer emissions

Al BuraimiSohar Port

Muscat

Airport

Salalah

Port

Duqm

Port

Ibri

NizwaIbra

Marmul Amal

Thumrait

Haima

Oil Gas Fields

Potential Mining

Existing Mining

Sumitomo Pipe Agreement 2018-2023:

US$1.2 Billion Agreement with Sumitomo

Beginning Q3 2018, 3,000 metric tonnes of pipe a week through Duqm for years.

Forges PDO as an anchor tenant of Duqm as primary hub for Sultanates Oil & Gas

Sector.

SNC-Lavalin Agreement 2017-2022:

Ongoing funding of Rabhab Harweel Integrated & Yibal Khuff Projects.

Agreement signifies ongoing investment in 2 Oman mega projects with planning

and strategy to utilize Duqm.

Prior Success of 2016:

Major Project Overview

Vessel/MetricsCargo

TonnageCargo

QuantityCargo

DamagedVehicles

DeployedTrips

Completedkm's Driven

Driving Hours

Incidents

MV Aquila J 1,316 355 0% 38 99 153,288 2,264 0%

MV Industrial Dart 71 22 0% 8 11 22,550 336 0%

MV Regine 97 70 0% 5 9 16,444 244 0%

MV Genius Star 228 42 0% 11 14 29,762 444 0%

MV Morning Pilot 45 22 0% 6 6 6,924 99 0%

Totals 1,757 511 0% 68 139 228,968 3,387 0%

Closing

Reducing HSSE Exposure

Reducing KMS driven

Improving consolidation (Ton/KMs & Optimized Distribution)

Improving Availability and Responsiveness of Critical Materials

Reducing Inter Site Transfers

Sufficient and efficient use of space to store the right materials in the right way promoting good stock keeping principals and to reduce waste often caused by material degradation and obsolescence

Improved utilisation of Resources and Assets

Flexibility to align and implement further optimization opportunities with future developments (Rail/Duqm)

Flexibility to optimize ICV opportunities (current 70% International supply origins)

Promotes simplification and standardization.

Promotes the establishment of Duqm as a viable Oil & Gas Sector Port

Thank you