Powering The Nation

OMAN GAS COMPANY S.A.O.C.

ANNUAL REPORT-2013

2 3

His Majesty Sultan Qaboos bin Said

4 5

• 95% Omanisation rate;the highest in the Oil and Gas sector in

the Sultanate.

• Gas availability at 99.997%, with improved station trip and

recovery performance.

• OGC operations start in the Sur region along with the handover

of gas supply from Petroleum Development Oman (PDO) to Sur

Power Station.

• The Salalah LPG, City gas and ORPIC’s Fahud NGL projects

progress for FEED stage.

• As part of its commitment to support local businesses, OGC

awards around 85% of the total contracts to local companies

during the year.

OGC’s future focus is on opportunities to optimise the gas

value chain for the Sultanate. We have very successfully

progressed the Salalah LPG concept study work and the

project looks technically and economically solid. While

taking this project forward, OGC will also evaluate other

similar opportunities in different locations in Oman,

where LPG or NGL extraction based.

As we grow our business in above areas, we recognise

that we also have an important obligation to increase our

In Country Value contribution as well as to develop the

Sultanate’s Small to Medium Enterprises.

2013 key achievements

Outlook 2014

• 963 safe working days, 3.83 million km and 5.17 million man-

hours without ‘LTI’ achieved by OGC and its contractors.

• Annual gas transportation 15.34 billion cubic meters.

• Gas transportation average 42 million standard cubic meters

per day.

• Highest gas transportation rate of 50.34 million standard

cubic meters per day.

Sohar GSSSIE

S.A.S

WadiAl JizziBuraimi

CompressorStation

FuhudCompressor

Station

GGP

NimrCompressor

Station

PTTEP

WudamBarka

Al GubrahMAF

OCC

SQUMAM

RPP-RIE

Izki PLSOLNG

Shafa

KGP

SNGP

Mukhaizna GSS

MirbatSalalah GSS

Saih Rawl CPP

Barik

Marmul

OXY

OXY

La Khuwair

Manah GSS

N.I.E

32

” Gas Lin

e

24” Gas Line

32” Gas Line

16” Gas Line

36” Gas Line

48” Gas Line

20” Gas Line

24”

Gas Line Operated by OGC

Gas Line Operated by PDO

OGC Gas Facility

Gas Supply Facility

Compressor Station

Contents

Foreword from the Chairman .......................................................................................................... 7

Board of Directors ............................................................................................................................................ 8

CEO’s Review .......................................................................................................................................................... 11

Leadership Team ............................................................................................................................................. 12

Operations .................................................................................................................................................................. 16

Project Delivery ................................................................................................................................................... 20

Contracting & Procurement ............................................................................................................... 22

Human Resources ............................................................................................................................................. 24

QHSE ..................................................................................................................................................................................... 26

General Welfare .................................................................................................................................................... 28

OGC Snapshot

6 7

Foreword from the Chairman

Oman Gas Company S.A.O.C. (OGC) had an exceptional year in all areas of our operations. We delivered a robust business performance

while further strengthening our sustainability agenda. Please allow me to take this opportunity to present to you our comprehensive

2013 Annual Report, which is a reflection of what we achieved and delivered as a team in the execution of our business plans. We

expanded our footprint across the Sultanate and continued enhancing OGC network to deliver gas to more customers.

The year 2013 was a year full of milestones. With a significant step to optimise the gas value chain in the Sultanate, the Salalah

Liquefied Petroleum Gas (LPG) project is now ready to go for the Engineering design stage. In addition, the Duqm gas pipeline is in

its final stages for materials supply contract. These successes were also reflected in our vision towards quality, health, safety and

environment. We excelled in meeting the increased demand and managed our rapid network expansion with a year free of Lost Time

Incidents (LTI).

With impressive records of Omanisation, our people went over and beyond to contribute to our long term strategy of becoming a

world-class midstream gas value chain company. These dedicated individuals give us confidence in the future to continue maximising

the gas value for Oman.

Our ability to deliver consistently strong results in the midst of rapid growth requires focus, teamwork and commitment, and I want

to thank all our shareholders for their tremendous support in our journey to deliver consistent growth rates during 2013.

Above all, and on behalf of the entire Board of Directors, I express our deepest gratitude to His Majesty Sultan Qaboos bin Said

for his wise leadership and guidance that has nurtured our country for so many decades and for his vision towards achieving a

sustainable economy while maximising the value of our natural resources supported by a strong infrastructure.

Hilal bin Ali al Kharusi

8 9

Abdulrahman bin Ahmed al HarthiChief Audit ExecutiveOman Oil Company Board Member

Board of Directors

Hilal bin Ali al KharusiVice President Emerging BusinessesOman Oil CompanyChairman

Salih bin Ali al HarthyDirector of Gas RevenuesMinistry of FinanceBoard Member

8 9

Kalat bin Ghalum al BalushiChief Executive OfficerOman Investment CorporationBoard Member

Abdullah bin Ahmed al ShanfariDirector General, Exploration & Production for Oil & Gas Ministry of Oil & GasBoard Member

10 11

CEO’s Review

The year 2013 was a significant milestone for Oman Gas Company. In terms of growth figures, the Company achieved gas availability of

99.997%. In fact; it was an excellent ‘HSE year’, as OGC and its contractors recorded a landmark by reaching close to 1,000 LTI-free days.

Integrity management was given utmost importance; to the extent that a Company level Policy statement was issued highlighting OGC’s

priority and commitment towards technical as well as business integrity.

Throughout the year, OGC was steadfast in its goal to provide uninterrupted and reliable supply of natural gas to its consumers throughout the

country. It undertook a number of expansion projects to meet the growing demands of its customers, both public and private;started operations

in the Sur area, and began supplying gas to Oman Aluminum Rolling Company and Gulf Special Steel Industry. The Salalah LPG project was

progressed to the pre-FEED stage which is crucial for OGC to progress from providing gas infrastructure, which of course we will continue to

upgrade, into gas value chain projects as well.

OGC’s Human Resource approach was robust in the last year. In accordance with His Majesty Sultan Qaboos bin Said’s directive to cultivate

national talent, OGC recruited and trained a huge number of Omani nationals. It gives me immense pleasure to announce that the Company has

achieved 95% Omanisation level and earned itself an unrivaled reputation of having the highest Omanisation rate in the oil and gas sector in

the country.

Training Omani nationals to highly skilled jobs and giving experience to talented students is a fundamental part of our CSR ethos;as also is our

dedication to give back to our community for good causes and contributing to public and social projects as much as we can.

I would also like to take this opportunity to thank our government, board members, shareholders, employees, and customers who have given

us immense support and guidance.

Yousuf bin Mohammed al Ojaili

12 13

Abdulaziz bin Said al MujaibiGeneral Manager, Operations

Amer bin Salim al JabriGeneral Manager, Finance

Hakeem Noor Assaid al TauqiActing General Manager, Corporate Services

Yousuf bin Mohammed al OjailiChief Executive Officer

Leadership Team

Mansoor bin Ali al AbdaliActing General Manager, Engineering

History Timeline

2000

2003

2005

2009

2002

2004

2006

2010

2008 2012

2013

2007

2011

• OGC was set up through a Royal Decree with the transfer of asset of 1000 kilometre pipelines and associated facilities.

• Loans were successfully secured to finance new pipeline projects.

• Successfully took over the operation and maintenance of the gas transportation facility from PDO.

• Completed laying 1000 kilometres of new pipelines.

• Added the Barka Pressure Reduction Terminal to OGC facilities.

• Supplied gas to Dhofar Power Company.

• The head office building and Salalah pressure reduction terminal (PRT)were added to the OGC facilities.

• The State-of-the-art SCADA system became operational from the control center located in OGC.

• Successfully took over from Canadian Energy Services to perform operations and maintenance works in-house –2 years ahead of scheduled takeover.

• First gas customer in the Sohar Industrial Port area (Sohar Refinery).

• Completed gas supply facilities to Salalah Methanol Company –part 1.

• Completed the 252-kilometer 32’’cross-country pipeline from Saih Rawl to Sadad.

• Completed the upgrade of Barka gas supply station control system.

• Completed the upgrade of gas supply stations at Rusayl, Wadi Al Jizi, and Al Gubrah Power plants.

• Supplied gas to Sohar Power Plant.

• Successfully completed Refinancing.

• Supplied gas for the first time from PTTEP.

• Supplied gas to Oman Refinery Company.

• Gas Supply to Vale Pelletizing Company.

• Gas Supply enhancement to Oman Cement Company.

• Laying additional new 20" pipeline from Murayrat to Al Ghubrah.

• Gas Supply to Salalah Methanol and Shadeed Steel & Iron.• Supplied gas to Oman Methanol

Company.

• Supplied gas to Sohar International Urea & Chemical Industries.

• Supplied gas to Oxy Mukhaiznah.

• Completed gas export to Dolphin Energy, UAE.

• Supplied gas for the first time to Sohar Aluminum power plant.

• Concluded Feasibility and Concept Study for Muscat City Gas Distribution Network.

• Supplying gas to new Taqa Power Plant.

• Completed Front End Design (FED)for Ad Duqm Pipeline Project.

• Commissioning Fahud Compression Station.

• Supplied gas to Sohar Aluminium smelter.

• Supplied gas to Sharq Sohar Steel Rolling Mills.

• Supplied gas to SMN Barka power and desalination plant.

• Commissioned Al Buraimi compressor station and gas import from Dolphin Energy.

• Supplied gas to OCTAL.

• OGC and contractors completed three years without lost time or injury.

• Supplied gas to Aromatics Oman.

• Successfully managed two major gas production interruption emergencies with minimum impact on gas supply to customers.

• Supply gas to Barka III and Sohar II Power Plants.

• Completed FED for Ad Duqm EPC Pipeline Project.

• Executed a concept study for BP’s export pipeline.

• 70 trainees completed their training with ORPIC.

• Commissioning Nimr Compression Station.

• Moved OGC operations to its head office building and regional offices.

• First gas export made by OGC to UAE, the first ever between two GCC countries.

• Construction was commenced on the Sohar Pressure Reduction Terminal with 5 streams, which will increase OGC's gas

deliveries to almost double of its current deliveries.

VISION

To be a world-class midstream gas

value Chain Company in Oman.

MISSION

To maximize Country’s value by developing and operating Oil & Gas facilities to

international standards through innovation, efficiency and development of local talent.

• Achieved 95% Omanisation rate;the highest in the Oil and Gas sector in the Sultanate.

• Completed nearly 1000 Lost Time Incident (LTI)free days.

• Sucessfully maintained Gas

availability at 99.997%, with improved station trip and recovery performance.

• Started operations in the Sur region along with the handover of gas supply from Petroleum Development Oman (PDO)to Sur Power Station.

• Progressed the Salalah LPG, City Gas and Fahud NGL projects for FEED stage.

• Awarded around 85% of the total contracts to local companies.

16 17

Operations

The Year’s Highlights

u Supply of Gas to Oman Aluminium Rolling Company.

u Supply of Gas to Gulf Special Steel Industry.

u Supply of Gas to Sur Independent Power Plant.

u Delivery of 15.34 billion cubic meters (BCM) of natural gas to its diverse customer base.

u Catering of 42.02 million cubic meters daily average of gas.

u The highest daily gas delivery of 50.34 million cubic meters recorded on the 17th of June which is

the highest-ever quantity in the history of the Company.

Integrity Management

In 2013, an Integrity Management Policy statement was developed and issued to demonstrate management approach towards

technical integrity. Along with the policy, other standards and procedures were also framed so that the objectives of safeguarding

technical integrity are systematically managed throughout the year. The Integrity Management policy will help ensure that the

Company’s facilities and infrastructure perform at optimal levels and comply with all standards, codes and legislation;hereby ensuring

that all the Company’s assets will do what they are intended to do, and that they have the tools and processes to continue to function

safely and effectively throughout the asset lifecycle.

Responsible for constructing, maintaining and operating natural gas facilities in the Sultanate of Oman, OGC ensures uninterrupted

gas supply through its 2,500km pipelines and associated infrastructure to power industries in Oman. OGC has been evolving and

slowly transforming from a gas transportation Company to an integrated enterprise harnessing the power of Oman’s natural gas

transportation.

High gas availability was maintained during 2013 to all the company’s customers, which include power and desalination plants,

methanol, petrochemical, refinery, steel and cement plants.

18 19

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

2012 Average 2013 Average

Average Gas Delivery 2012 - 2013

50

45

40

35

30

25

20

15

10

5

0Ave

rag

e D

aily

Gas

De

live

ry (

mill

ion

SC

M)

Average Gas Consumption

Peak Gas Consumption

Total Gas Consumption

Gas Interruptions

Gas Interruptions

Gas Availability

Million Sm3/d

Million Sm3/d

BCM

Number

minutes

%

42.02

50.34

15.34

4

73

99.99995

42.14

49.92

15.42

3

86

99.99968

-0.3

0.8

-0.6

33.3

-15.1

0.0002

Unit 2013 2012 Change %

u Pipeline inspections were successfully completed with total of 15 ILI runs. All critical facility inspections were also carried out including high and

medium criticality piping and static equipment. GIS implementations were successfully completed for 5 pipelines within the OGC network. The

purpose of the pilot was to outline the main requirement for such project implementations and also to make the foundations for future project

phases. The objective was to have all data related to technical integrity centralized within the GIS solution.

u During the course of 2013, corrosion management played a major role in providing protection to the exposed pipelines. The main achievement

was related to qualification of coating systems for sweating conditions. The new systems were successfully applied in 2013 in Salalah, Barka

and Wudam.

u The Company acquired an on-line condition monitoring system which could identify equipment degradation prior to failure. The system worked

with the principle of sophisticated analysis and performance trending.

u Knowledge of pipeline integrity, cathodic protection, and condition monitoring were imparted to Omani employees so that they acquire skills of

integrity management in line with the Company’s Omanisation objectives.

Sector-wise Gas Delivery 2013

Power &Desalination Oil Operations

Industrial &Commercial

17% 30%53%

Operations

20 21

Project Delivery

The Year’s Highlights

u Concept Study for LPG Extraction Project.

u Concept Study for NGL Extraction Project for ORPIC.

u FEED for Gas Pipeline to Ad Duqm Industrial Area.

u Concept Study for Oil Pipeline to Ras Markaz.

u Receipt of the Line Pipes for SLL 32” Loopline – Phase 2.

u Completion of Business Continuity Project at Al Mabelah.

u Concept Study for Tie-in of DNO Oman Ltd export gas to North Gas Grid.

u Concept Study for Additional Gas Supply to Salalah Methanol Company.

u Concept Study for Gas Supply to Carmeuse/Majan at Salalah Free Zone.

u Detail Engineering of Gas Supply to Associated Industries Limited located at

Salalah Free Zone.

u FEED for additional Gas Supply to Raysut Cement.

u FEED for Gas Supply to Technical Research Center.

The demand for gas increased dramatically across the Sultanate throughout 2013.

OGC has been able to rise to the challenge through strong management practices and

project delivery. Not just this, the Company has been able to strategically plan ahead by making

use of previous years’ data, and has achieved the objective of high delivery through a series of projects.

20

22 23

Contracting & Procurement

A majority of OGC’s operations depend on contracts and agreements with third parties.

The Company has not only improved its cost efficiency in the year 2013 by working

with local contractors and suppliers, but also done its bit towards contributing to the

In Country Value (ICV) status of the nation, as 85% of the company’s contracts and

tenders were awarded to local companies in the year 2013.

RO. 1,378,786

RO. 4,959,314

RO. 130,238

Contracts 2013

Major Tender Committee

Government Tender BoardM

illio

n O

MR

Secondary Tender Committee

24 25

The year 2013, was an important year for OGC, as the Company won the Ministry of Manpower Excellence award in Omanisation. The Company continued playing

its role in creating new job opportunities for Omanis throughout 2013, and achieved 95% Omanisation, the highest in the Oil and Gas sector in the country. The year

also saw the inception of several initiatives and measures that will transform the way the HR function works in the Company.

To recruit and retain a highly skilled workforce, the company took the following measures in 2013:

u Underwent “Critical Workforce Identification” and “Attrition Analysis” studies.

u Hired 104 permanent employees.

u Trained and counselled 65 academic trainees.

u Achieved outstanding record in the training plan implementation with 18,972 hours of training.

u Conducted “Employee Engagement Survey” to see the level of employee motivation in the interest of the organization.

u Successfully implemented the following SAP modules:

u Performance Management System (PD).

u E- Recruitment.

Human Capital

26 27

QHSE

20

12

Co

mb

ine

d M

anh

ou

rs (

OG

C &

its

Co

ntr

acto

rs)

30

00

00

28

00

00

26

00

00

24

00

00

22

00

00

20

00

00

18

00

00

16

00

00

14

00

00

12

00

00

10

00

00

80

00

0

60

00

0

40

00

0

20

00 0

JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

162,

410

149,

319

140,

654

141,

657

0.30

0.20

0.10

00

Manhours

LTI Frequency Rates

Co

mb

ine

d M

anh

ou

rs

133,

449

118,

187

133,

581

104,

944

111,

642

108,

276

107,

044

132,

484

Num

ber o

f Inc

iden

ts to

reac

h th

e se

t fre

quen

cy ra

te

Inccident Frequency Rates

Inci

de

nt

Rat

es

- K

PI

20

13

0.80

0.70

0.60

0.50

0.40

0.30

0.20

0.10

0.00

Fata

lityLT

ITR

CRT

ARO

ATR

OI

0.00 0.

30

0.30

0.80

0.80

0.80

0.00

0

0.00

0

0.00

0

0.00

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0.00

0

0.00

0

Targ

et-C

ombi

ned

Freq

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tes

Actu

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Freq

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tes

Actu

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Incid

ents

Fata

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Lost

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Tota

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orda

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Road

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ents

Rollo

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Tota

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Occu

patio

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ses

0.30

0.80

0.80

0.80

0.30

3 2 1

Quality and HSE

OGC recognizes the importance of Quality, Health, Safety, and Environment management systems and commits itself to apply

their philosophy at all levels. Furthermore, it keeps implementing measures to ensure that the key messages are conveyed to all

personnel and that the fundamental procedures are followed and understood.

Quality

The Company carried out 19 internal audits and 2 external audits as part of QHSE Plan 2013. Vendor assessment audits for different

projects were conducted. OGC successfully completed the surveillance audit which helped in maintaining the IMS certification. To

train all personnel, quality awareness sessions were also organized at the regional offices.

HSE Statistics

The Company has sucessfully maintained its records since the last LTI up to 31st December 2013 as shown in the chart.

3,836,571Safe Km Driven

5,178,756Manhours

963Safe Days

without LTI

Contribution to the welfare of people and the natural environment

is enshrined in OGC’s business principles. The Company ensures

that it respects people’s health and safety, benefits the communities in

which it operates, and helps maintain the environmental richness of the country.

28 29

General Welfare

Career and Training Opportunities Fair at Sultan Qaboos

University

At the Career and Training Opportunities Fair of Sultan Qaboos University,

OGC officials acquainted a large number of students and job-seekers with the

employment opportunities offered by the Company.

Sponsorship of Annual Oman Traffic Safety Expo

In line with its commitment to help reduce road accidents and promote

the traffic safety awareness, the Company once again supported the Annual

Oman Traffic Safety Expo. Safety is a prime area of focus at OGC and adequate

training of employees in all matters related to traffic safety is an integral part of

the Company’s HSE policies.

The 9th Annual Gas Arabia Summit

OGC once again actively participated at the annual Gas Arabia Summit as the co-host sponsor. Also the Company delivered at the event two work papers on managing old and new assets and an overview on the LPG and NGL extraction projects undertaken by the company.

Social Performance

As a responsible corporate citizen, OGC has undertaken a host of initiatives for shared and long-term prosperity and strongly believes that the true success of a company is aligned with its commitment to give back to the society in which it operates.

In line with this belief, OGC began 2013 with a CSR initiative and organized a campaign to clean-up the beaches of Sohar to protect Oman’s coastline from the threat of contamination. It also rendered support for maintenance of two Falajs at Izki to aid the communities living near OGC gas pipelines and facilities.

Throughout the year, OGC supported social programs such as Deaf Arab Child Week organized by Al Amal School for Deaf, the ‘Young Investor Program’ by Arwa Bint Al-Mutalib School-Muscat, Mental Health Awareness Open Day organized by Al Masarra Hospital, Oman Cancer Association’s 10th Annual Oman Cancer Walkathon, among many others.

OGC has actively contributed to several Omani charity organizations for their programs and to provide specialized wheelchairs for the differently-abled.

30

In-Country Value Conference

OGC also took part at the In-Country Value (ICV) Conference for the Oil

and Gas Industry and showcased the available business opportunities for

local companies in the sector.

A milestone achieved

On June 17th, the Company achieved a new record for natural gas

delivery, with 50.34 million standard cubic metres delivered in a single

day compared with 49.9 million standard cubic metres daily rate delivered

in 2012. There was an increase of 0.8%, reflecting the excellent performance

of OGC in 2013.

General Welfare

Al Roya Economic Forum

In keeping with the company’s belief that a diversified growth is the

backbone of Oman’s continued economic progress, OGC sponsored the

Al Roya Economic Forum at the beginning of the year. The main theme of

the forum was ‘Investment:Opportunities and Challenges’.