OER Special on Oman LNG
A decade of Excellence Gas – The Game Changer for Oman
Sustaining the momentum
EDITORIAL Editor-in-Chief HH Sayyid Tarik Bin Shabib Group Editor Mayank Singh Assistant Editor Visvas Paul D Karra DESIGN Senior Art Director Sandesh S. Rangnekar Senior Designer M. Balagopalan Senior Photographer Rajesh Burman Cover Concept M. Balagopalan Production Manager Govindaraj Ramesh MARKETING Business Head Jacob George CORPORATE Chief Executive Sandeep Sehgal Executive Vice President Alpana Roy Senior Business Support Executive Radha Kumar Distribution United Media Services LLC Published by United Press & Publishing LLC PO Box 3305, Ruwi, Postal Code - 112 Muscat, Sultanate of Oman Tel: (968) 24700896, Fax: (968) 24707939 Email: publish@umsoman.com Website: www.umsoman.com All rights reserved. No part of this publication may be reproduced without the written permission of the publisher. The publisher does not accept responsibility for any loss occasioned to any person or organisation acting or refraining as a result of material in this publication. OER accepts no responsibility for advertising content. Copyright © 2012 United Press & Publishing LLC Printed by Oman Printers Correspondence should be sent to: Oman Economic Review United Media Services PO Box 3305, Ruwi 112, Sultanate of Oman Fax: (968)24707939 Email: editor@oeronline.com Website: www.oeronline.com
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They say that the ‘past’ is the mirror in which the ‘present’ looks at the ‘future’. If that is the case, then Oman LNG certainly has every right to proudly look into the mirror and take a peek into the future with a contented look. The interim period, from the time the Royal Decree was issued in 1994 for the establishment of Oman LNG until 2010 when the company shipped its 1000th cargo, witnessed tremendous changes not only within the country but all over the globe. All this had a direct bearing on the operations of Oman LNG and enabled it to metamorphose from being a benign producer of LNG to the second biggest revenue earner for the national economy of Oman. That is indeed a great change and no wonder that Oman LNG’s role in the ‘gas-as-the-gamechanger’ concept has assumed a whole new meaning. In fact, gas in Oman got a new identity from being an unwanted byproduct of oil drilling to being the most wanted commodity to drive the country’s growth plans following the establishment of Oman LNG. The company could have easily basked in this crowning glory, but after a decade of operations, Oman LNG is not resting on its laurels. It has moved on and is now miles ahead from its primary function of being a producer of LNG to becoming a major contributor in the country’s social development as well. Numerous social investment projects have been undertaken by Oman LNG which enhance its value among the community it operates in. The company considers its human capital as its foremost stakeholders and strives to bring benefits to them in whichever possible manner. It is making its presence felt not just in the A’Sharqiyah South Governorate, where the plant is located, but across the length and breadth of the Sultanate. In the years to come, Oman LNG’s contribution to the country can only multiply thanks to the commitment and strategies adopted by its management. The success of Oman LNG, today, has only been made possible thanks to the vision of His Majesty Sultan Qaboos bin Said, under whose leadership Oman follows a policy to tap its natural resources in a judicious and sustainable manner. Because internal and external challenges will always remain but sustainability is the key to the development and growth of a company or a country and that is what ultimately matters at the end of the day. OER wishes Oman LNG continued success in its operations and all future social endeavours.
An
Presentation
– Visvas Paul D Karra
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CONTENT
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Future Perfect
Oman LNG provides not only good dividends to shareholders, but very valuable enhancements to their reputation
4 GAS: The game changer
Natural gas is one of the most important and cleanest sources of energy and accordingly the government has been encouraging gas production
1,000 and counting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Building The Nation, Empowering People . . . . . . . . . . . . . . . 14 In the Vanguard of Omanisation . . . . . . . . . . . . . . . . . . . . . . . 28 The Value Chain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Creating a Safe Haven . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Snapshots . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Turtle Turf . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
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Enduring Partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Pioneering success
Oman LNG is expected to continue its success story which began more than ten years ago
Key Driver of Diversification . . . . . . . . . . . . . . . . . . . . . . . . . . 52 41 Staff Members Feted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Caring for the Society . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Sunaysilah Fort gets a make-over . . . . . . . . . . . . . . . . . . . . . . 62 Nurturing the Future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Pursuit of Progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Pictorial Glimpse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Role Model Par Excellence . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 On a Responsible Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
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Capacity building
After over a decade of successful growth and milestone firsts, Oman LNG has evolved as a role model
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CONGRATULATORY MESSAGES Ministry of Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ministry of Social Development . . . . . . . . . . . . . . . . . . . . . . . . . . Shell Development Oman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mitsui & Co. Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Oman Oil Refineries and Petroleum Industries . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ministry of Manpower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mitsubishi Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Crossing Oceans To Secure The Future… OMAN SHIPPING COMPANY S.A.O.C. P.O. Box 104, P.C. 118, Al-Harthy Complex, Sultanate of Oman Tel: +968 2440 0900 • Fax: +968 2440 0922 info@omanship.co.om • www.omanship.co.om
Hearty Congratulations to Oman LNG on completion of more than 10 years of service to our Nation
OVERVIEW
GAS: THE GAME CHANGER Natural gas is one of the most important and cleanest sources of energy and accordingly the government has been encouraging gas production. This has led to a spurt in new gas-based industries as well as export revenues, thus providing impetus for the economy 4
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The Sultanate of Oman is primarily dependent on its hydrocarbon resources, which accounts for more than 80 per cent of government revenues. In 2002, the then Minister of National Economy, HE Ahmed bin Abdulnabi Macki, and Deputy Chairman of the Financial Affairs and Energy Resources Council, reported that Oman’s recoverable oil reserves were estimated at 5.8 billion barrels. The main producer of oil is the government majority-owned Petroleum Development Oman (PDO in partnership with Royal Dutch Shell, Total and Partex), which controls 90 per cent of reserves and the lion’s share of total production. Oman’s gas reserves stood at 33.4 trillion cubic feet (tcf). Some analysts believe gas reserves could reach 40 tcf in the coming years, owing to efforts that encourage companies to actively explore for gas. There has been a steady trend in natural gas production in the Sultanate as it is seen as one of the leading base-load power generation and heating sources, due to its cleanliness, abundance and reasonable cost. Natural gas drives industry, desalination plants and power plants in the Sultanate, apart from being used for domestic purposes. The government’s priorities for natural gas have changed and export in the next decade will
be balanced between domestic need and the generation of foreign revenues to sustain the government’s investment in the country’s strategic growth. The urgency in boosting production of natural gas to meet domestic requirements, and to power industrial projects in the Sultanate cannot be overstated. Oman’s natural gas production rose by 7.2 per cent in 2010 to reach 1,176.8 billion cubic feet compared to 1,097 billion cubic feet in 2009. The associated and non-associated gas production rose by 5 per cent and 7.7 per cent in 2010.
Key to country’s future Liquefied Natural Gas (LNG) was identified by the government in early 90s as key to the country’s future economic sustainability and has been often quoted in “Oman 2020 Vision” stating that gas will contribute 10 per cent of the GDP in the coming years. When Oman LNG started operations in 2000, it was estimated that Oman’s gas reserves stood at about 25 trillion cubic feet, and forecasted to rise to about 40 trillion cubic feet by the year 2015. In 1978, gas was discovered in Jibal/Nitieh.
Exports of LNG Companies Qalhat LNG
Oman LNG
LNG (million mt)
NGL (million mt)
LNG (million mt)
Year
–
0.03
2.32
2000
–
0.16
5.81
2001
–
0.16
6.54
2002
–
0.20
7.03
2003
–
0.21
6.90
2004
–
0.22
6.90
2005
2.3
0.21
6.80
2006
2.5
0.20
6.56
2007
2.4
0.25
6.33
2008
2.7
0.26
5.78
2009
3.3
0.25
5.55
2010
The government decided to establish an LNG project to benefit from surplus gas 5
OVERVIEW
~ Oman LNG’s plant at Sur
However, the development of the natural gas industry started when the government started focusing the economic development plans on the diversification of the national sources of income. A significant step, forming an important turn in the gas industry, started when PDO started gas explorations on behalf of the government in the 1980s. Huge amounts were invested in exploration, with an excellent success rate, culminating in the discoveries at Saih Nihayda in 1989 and
Saih Rawl and Barik in 1991, resulting in a positive impact on fulfilling the local demand for natural gas at the time. The electricity sector was the first to benefit from gas in Oman, followed by smaller industries in various industrial estates. However, the discovery of surplus quantities of gas which exceeded the demand in Oman, made the government consider major gas industries and projects that would bring
Production of Natural Gas – Unit: Million M3 2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Associated
7,057
7,716
7,956
7,504
8,129
7,647
6,869
6,180
6,255
5,882
6,173
Non-Associated
8,192 12,992 14,366 16,577 15,974 18,291 23,340 24,082 23,975 25,140 27,086
Total
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15,248 20,709 22,322 24,082 24,104 25,937 30,209 30,261 30,230 31,022 33,259
good income to the country, thus the idea of establishing a liquefied natural gas project came to fruition with the formation of Oman LNG with its two trains of 6.6 million tonnes per year. This later increased to around 10 million tonnes annual capacity by adding a third train on behalf of Qalhat LNG. LNG exports began in early 2000, with the completion of a 6.6-million-tonne-per-year liquefaction plant located at Qalhat, near Sur. The project was developed by the Oman Liquefied Natural Gas Company (OLNG) – a joint venture between the Omani government (51 per cent); Shell (30 per cent); Total (5.54 per cent); Korea LNG (5 per cent); Mitsubishi (2.77 per cent); Mitsui & Co. (2.77 per cent); Partex (2 per cent) and Itochu (0.92 per cent).
Pillars of gas industry Oman LNG and Qalhat LNG have proved to be the successful outcomes of the government’s drive to maximise on the potential of its gas reserves. In 2010, both companies delivered a total of 138 cargoes according to Annual Delivery Programme (ADP) with 36 condensate cargoes.
GAS CONSUMERS } AES Barka Power & Desalination plant
} Salalah Methanol Company (SMC)
} Al Ghubrah Power & Desalination Plant
} Jindal Shadeed Iron and Steel Comapny
} Aromatics Oman LLC } Dhofar Power Company } Ministry of Defence
} SharqSohar Steel Rolling Mills } SMN Barka Power Plant
} Nizwa Industrial Estate
} Sohar Aluminum Company
} Occidental Oman- OXY
} Sohar Industrial Estate
} OCTAL Salalah } Oman Cement Company } Oman Methanol Company
} Sohar International Urea and Chemical Industries } Sohar Power Company (SPC)
} Oman Refineries and Petrochemicals Company (ORPC)
} Sultan Qaboos University
} Petroleum Development Oman
} Takamul Investment Company
} Raysut Cement Company } Raysut Industrial Estate
} United Power Company-Manah
} Rusayl Industrial Estate
} Vale Oman
} Rusayl Power Plant
} Wadi Al- Jizzi Power Company
In the years to come, industries here in the Sultanate are sure to see renewed growth propelled by adequate gas supplies 7
OVERVIEW
Domestic consumption overtook exports and natural gas swung 180 degrees from being the unwelcome byproduct of oil to being a central player in Oman’s overall growth 8
The investment in Oman LNG has been a great success story from the first export cargo just over 11 years ago. The impact on revenues and the GDP of the country continues to be significant and Oman LNG’s investment in corporate social responsibility (CSR) has grown to be second to none in the private sector in Oman. As LNG export volumes grew in the last decade so also did the domestic consumption of natural gas for power, industry and other strategically important commercial initiatives. By the end of the decade domestic consumption overtook exports and natural gas swung 180 degrees from being the unwelcome by-product of oil to being a central player in Oman’s overall growth. Oman LNG production in 2011 reached 8.7 million tonnes per annum produced against 10.4 million tonnes per annum nameplate capacity. Which represents a plant utilisation of 83.7 per cent of name plate capacity.
Qalhat LNG Subsequent to its marked success with Trains 1 and 2, managed and operated by Oman LNG, the government embarked on establishing a third train. The train is owned by the newly formed company, Qalhat LNG SAOC. This train was constructed adjacent to the two trains facilities in the eastern village of Qalhat, near Sur, some 350 kms from the capital, Muscat. It is operated by Oman LNG to enable the sharing of already existing facilities and maximise the efficiency of LNG operations. Construction of the 3rd LNG train began in the first quarter of 2003 and was completed ahead of contractual 34-month schedule; it was also well below budget and delivered new records in Omanisation during constructions and health, safety and environment (HSE) with no Lost Time Injury (LTI) in almost 20 million man-hours. Qalhat LNG plant capacity is 3.7 million tonnes per annum – the same as the each of the two earlier trains on site.
CHAIRMAN’S INTERVIEW
FUTURE PERFECT
Oman LNG provides not only good dividends to shareholders, but very valuable enhancements to their reputation within Oman and throughout the LNG world, says HE Dr Mohammed bin Hamad Al Rumhy, Minister of Oil & Gas and Chairman of Oman LNG
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What is your opinion about your association with Oman LNG as the Minister of Oil and Gas and more recently as chairman of the Company? The proposal for an LNG project originated in the early 1990s when significant quantities of gas were discovered in Oman. The Royal Decree forming Oman LNG was issued by His Majesty in February 1994. By that time, Oman was already economically strong thanks to His Majesty’s commitment to investments in infrastructure, health, education and employment. However, our economic base was still very dependent on oil, which faced price uncertainties in international markets. Vision 2020 gave particular focus and impetus to economic diversification and LNG was a significant step in that direction. As Minister of Oil and Gas since 1998 I have had the privilege of seeing the construction and initial 11 years of operation of Oman LNG. During those years of operations, revenues have grown steadily and the company is now the largest contributor to Oman’s revenues, second only to oil. Its contributions and reputation for social investment is also second to none in the country. So when I was offered the opportunity of chairing this company last year, I took it willingly.
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As Chairman and Minister, I see a more challenging future for Oman LNG in which others in Oman will compete for the country’s natural gas. In the 90s, there were few, if any alternatives for Oman’s natural gas as LNG for export. Looking back, what we and others did not anticipate were the rate of growth in domestic power and water production and demand from Oman’s industrial sectors, which have been bigger than anyone had anticipated. So, today, we – as the Government – have alternatives for our gas. In this new environment and as Chairman of Oman LNG, I see future opportunities for cost efficiencies and the potential for greater utilisation of the company’s facilities in Sur as domestic and regional gas supply balances improve. As the Chairman I will be strongly encouraging the management of the company to pursue these opportunities. Please comment on LNG’s contribution to the economic progress of the country In the late 90s and early 2000s, oil price uncertainties were very worrying; being able to generate alternative revenues through LNG sales added greatly to the government’s ability to sustain its necessary investments in infrastructure and industrial diversification. For this alone, we have to be grateful for LNG’s contributions. Another area in which Oman LNG has excelled is social investment. It is clearly the undisputed leader in the important area of corporate social responsibility and offers a role model for others to follow. For this reason, the government recently supported the registration of the “Oman LNG Development Foundation” in recognition of its important contributions to improving the sustainable economic self-sufficiency of communities throughout Oman. A third area in which Oman LNG excels is the development of its employees. It not only provides careers, but also excellent professional development for all its employees through structured and systematic programmes of learning and development. What is the economic value being created by Oman LNG for its shareholders?
Oman LNG has created enormous value for all its shareholders and stakeholders. It is the largest revenue generator of all the public-private ventures in Oman; and as a commodity, second only to oil. For the buyers of our LNG, we are meeting their need for a low-carbon and highly efficient alternative fuel. We have created highly professional development opportunities for staff and we support the largest social investment programme in the country. All put together, Oman LNG provides not only good dividends to shareholders, but very valuable enhancements to their reputation within Oman and throughout the LNG world. Natural gas is becoming more important in the domestic and regional markets. How will Oman LNG manage this scenario? Oman LNG will continue to meet its contractual commitments to supply its long-term buyers with LNG. This has the full support of the Government of Oman, the major shareholder in the company. All other gas will be directed to strategically important domestic needs, that is power, water, industrial expansion and diversification and, where the economics support it, enhanced oil recovery in the country. Our strategy is focusing more on the supply side. With our partners, we are confident in adding more reserves to our portfolio and will be in a position to continue supplying to the needs of the country. In the future, what role will Oman LNG play in the economic development of the Sultanate? Oman LNG already plays an extremely important role in Oman as the largest generator of revenues for the government after oil. It is expected to continue in this important role in the coming years. The company will continue to seek ways to increasing its value to the government and people through improved operational efficiency, being ready and able to take advantage of future supply opportunities when presented and ensuring that its social investment programmes support the national priority of employment creation and empowering communities to become more economically self-sufficient throughout Oman.
“We have created highly professional development opportunities for staff and we support the largest social investment programme in the country” 11
ACHIEVEMENT
1,000 and counting South Korea’s KOGAS became the proud recipient of the 1000th cargo that was shipped from Oman LNG
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Oman LNG celebrated the export of the 1,000th cargo of liquefied natural gas from the Sultanate of Oman in 2009. The 1,000th cargo was shipped to South Korea in the vessel LNG Splendour on 4th January 2009 under a long-term agreement that was concluded between the two companies in October 1996 and came into force in April 2000 when the first cargo of LNG was shipped to South Korea in the vessel LNG Hanjin Sur.
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the most important milestones in the history of the company and said it was an important achievement for Oman LNG, KOGAS and for the Sultanate of Oman in general. The contribution of the liquefied natural gas sector to the gross domestic product and the country’s development is matched only by its oil revenue.
The celebrations were held under the auspices of HE Nasser bin Khamis Al Jashmi, Undersecretary at the Ministry of Oil and Gas and then Chairman of Oman LNG. In attendance to mark the occasion were a number of ambassadors, the executive chairman of KOGAS, dignitaries and sheikhs from Sur, and members of the Oman LNG board and its employees.
Dr Buckley pointed out that the story of the LNG industry in Oman has opened up a new chapter in the history of economic investment in the Sultanate. The Oman LNG project was the largest investment at that time. This project resulted in opening new horizons, and perhaps the most important opportunity was the revitalisation of the maritime history of Sur and the Sultanate in general through the government’s establishment of a fleet of liquefied natural gas tankers, followed by oil tankers.
Dr Brian Buckley, General Manager and CEO of Oman LNG, in his welcome note, reviewed
He added that a new chapter had started with the birth of Qalhat LNG in 2003 when the
Government of Oman and the shareholders of Oman LNG signed an agreement with Union Fenosa Gas for the establishment of that company which owns a third train for LNG at Sur. Dr Buckley expressed his thanks and gratitude to His Majesty Sultan Qaboos bin Said for his wise guidance. He also thanked the shareholders, customers, the community, contractors and suppliers for their cooperation and outstanding partnership. He also gave special thanks to the staff of the company, expressing his gratitude for the exceptional efforts they have made since the company began operations.
Good relations Zhu Kanjsoo, CEO of Korea Gas, thanked HE Nasser bin Khamis al Jashmi – Undersecretary at the Ministry of Oil and Gas, then Chairman of Oman LNG and guest of honour at the event – and praised the good relations between the two companies, which is reinforced by the robust relationship existing between the two friendly countries. After the unveiling of the memorial plaque, the ceremony concluded with an induction tour of the plant. The guest of honour and the officials of Korea Gas and Oman LNG also visited the captain and crew of LNG Splendour.
Suitable site After extensive studies for an appropriate site which would meet acceptable standards and be suitable geographically and climatically, the coastal village of Qalhat in Sur was selected in 1995 as the site for the construction of the plant. While construction was taking place, Oman LNG signed two longterm agreements for the sale and purchase of liquefied natural gas: one in 1996 with Korea Gas Corporation and the other in 1998 with Osaka Gas of Japan. Since 2000, when the company began operations, Oman LNG progressed with its production and export activities rapidly, supporting the growth of the national economy under the wise leadership of His Majesty the Sultan.
A fitting reputation The company has reached many milestones in safety. In 2002, it completed the first 9 million working hours without a Loss Time Injury (LTI) and in 2008 achieved another 10 million working hours without an LTI. The ISO-9001 certification for quality management systems and ISO-14001 for its environmental management systems have consistently been renewed after exhaustive checks by accreditation agencies. In the area of corporate social responsibility (CSR), the company was awarded the firstever Arabia Corporate Social Responsibility Award in 2008 and in 2010, was honoured as the Best Company in Social Investment by the Gulf Cooperation Countries’ Council of Ministers for Social Affairs. Oman LNG is one of the most prominent companies that invests in supporting many community projects across Oman in cooperation with public and private sectors. The company has formed a forum for screening and deciding which social investment programmes to pursue with its members drawn from the public and private sectors and Sur’s Majlis Shura members. The social investment programmes consists of three funds: The Community Fund for the Al Sharqiyah Region, the National Fund, and the Reserve Fund which reflects the company’s determination to protect the sustainability of this programme for the future. This aspiration received recognition from the Government of Oman in December 2011, when it endorsed the Minister of Social Development’s proposal to register the Oman LNG Development Foundation as a charity body. Oman LNG’s programmes cover a wide range of social investments from low cost housing, health, education and training and community enterprises. The company is also widely known to be in the forefront of supporting initiatives for the preservation of the environment: examples include the turtle reserve at Ras Al Jinz near Sur. Oman LNG was also the key sponsor of the “Say No to Plastic” campaign, launched by the Environment Society of Oman (ESO).
The 1000th cargo is an important achievement not only for Oman LNG but also for KOGAS and the Sultanate of Oman in general 13
NATION BUILDING
BUILDING THE NATION, EMPOWERING PEOPLE Over the last 12 years, Oman LNG has been a significant player in empowering communities, championing innovation and investing in people, through its vast social responsibility programmes
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Oman LNG has been a longtime partner of the government in investing in low-cost housing for the needy 14
Oman LNG has emerged as a role model for good corporate citizenship and a pioneer of corporate social responsibility (CSR) in Oman by investing in sustainable projects that have made a real and lasting impact. In 2010, Oman LNG was recognised as the best company in Corporate Social Responsibility (CSR) in Oman by the Council of Ministers for Social Affairs in the Gulf Cooperation Council. A trusted partner for social development in the country, the company sets aside 1.5 per cent of its annual income after tax (NIAT) to invest in a wide range of project areas, such as education, healthcare, social infrastructure, culture and heritage, sport, women’s initiatives, vocational training and the environment. After a decade, the total investment of the company in Oman’s social development hit RO35mn covering more than 270 projects spread across the Sultanate. “Oman LNG has made a hugely positive impact on the Omani economy and the development of the nation over the past 10 years,” says HE Nasser bin Khamis al Jashmi, the recent former Chairman, Oman LNG and Undersecretary of the Ministry of Oil and Gas. The company’s Social Investment Programme (SIP) comprises the Community Fund for projects in areas close to its plant, National Fund for projects spread across different governorates in oman and the
Reserve Fund to ensure the sustainability of the fund in future. The key strategic areas of SIP include social infrastructure, health, education, vocational training for local enterprise, culture and heritage, sports and recreation, environmental protection and emergency responsiveness.
Social infrastructure Oman LNG has been a long-time partner of the government in investing in housing for the low-income. Besides, the company has been the primary sponsor in delivering water to people living in Qalhat and Tiwi and in the containment and collection of waste water and sewage in the more remote hamlets in surrounding areas. Oman LNG’s premiere investment in the health sector was the construction and establishment of a $48mn refer-
ral hospital, the Sur General Hospital, to provide care for people in the entire governorate. Since then, it has funded gene-testing laboratories to better understand and reduce hereditary illnesses; the introduction of state-ofthe–art cancer treatment equipment to Oman; innovative equipment for the treatment and rehabilitation of spinal cord injuries; a regional training facility for specialist care in Ear, Nose and Throat (ENT); dental clinics for the needy and a mobile clinic to treat the disabled. This was followed by the first women-only recreational centre in Sur as a way of encouraging exercise and the pursuit of fitness in an environment that is sensitive to local traditions.
Education, Vocational Training and Local Enterprise A champion of modern and innovative
In 2010, Oman LNG marked the 10th anniversary of its social responsibility programmes. Building on very successful 10 years of its services, the company announced a new vision for its social investment programme and developed a new strategy for the future with a focus on empowering communities, championing innovation and investing in people €
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NATION BUILDING
Oman LNG has always been in the forefront of championing the “Smart Classroom”, based on cutting-edge IT-based teaching tools 16
methods in secondary and tertiary education, Oman LNG recognises the need for specific skills training for employment. In joint programmes with government and non-governmental organisations it has spearheaded training for employment in areas where shortages are more acute such as fitting and welding, pharmacists’ assistants, and tailoring. It has made investments in excess of RO 1.5 mn leading to the establishment of modern laboratories and workshops at the Technical Colleges of Ibra, Salalah, Nizwa and Musannah and invested over RO 3 mn for 48 training programmes that have placed over 1,400 Omani citizens in employment.
of replica dhows, Omani cane sticks with silver embossed handles, woven key holders from goats’ wool and embroidered bags inspired by Omani designs and patterns. Remote areas suffering from lack of arable land have been given support through the introduction of sustainable projects, such as local bee-farms for honey and wax.
The company has always been in the forefront of championing the “Smart Classroom”, based on cutting-edge ITbased teaching tools, mobile IT-laboratories in remote schools at remote villages, as well as much needed state-of-the-art laboratories with the latest technology for newly started technical colleges.
Fishing, a traditional industry in Oman for centuries, remains the largest source of employment and income for up to 70 per cent of the working men in Sur. Blessed with rich and fertile fishing grounds traditional fishing methods have sustained these communities. Today, however, their livelihoods are threatened by more efficient fishing methods and stock depletion due to over-fishing by large trawling vessels. Oman LNG after commissioning a feasibility study to identify sustainable and commercially
It has also encouraged and supported local groups to transform local skills into successful enterprises. Examples include the fabrication
Traditionally, there is a unique relationship between the Bedouin and their camels. Oman LNG has funded the establishment of Oman’s first Camel Care Centre, which extends its veterinary services to horses, antelopes and livestock from surrounding areas.
| Recognising the importance of preserving the cultural heritage of the country, Oman LNG has championed the preservation of the ancient monument of Bibi Miriam, at Qalhat, the establishment of a Heritage and Craft Museum, the revival of traditional dhow building and the sponsorship of the traditional boat and dhow race each year in Sur
viable options, introduced artificial coral reefs in key areas, funded the upgrading of fishing harbours and facilities to improve safety and is working more closely with the independent-minded fishermen to encourage and support cooperation and sustainable enterprise.
Culture and Heritage Recognising the importance of preserving cultural heritage of the country, Oman LNG has championed the preservation of the ancient monument of Bibi Miriam, at Qalhat, the establishment of a Heritage and Craft Museum, the revival of traditional dhow building and the sponsorship of the traditional boat and dhow race each year in Sur. The company is also a regular sponsor of traditional music and folklore. Besides, Oman LNG has been a constant and regular sponsor of various sports and recreation activities in its host communities.
Environmental Protection The company’s plant delivers world-class performance in minimising environmental impact on air, water and soil quality. It has also contributed significantly to setting
up modern sewage disposal plants, and through an agreement signed with the Ministry of Regional Municipalities and Water Resources undertook the development of the Sur Waste Area Project which delivered a modern compaction plant for the disposal of waste, funded with the sum of RO 400,000 provided by Oman LNG . This is in addition to RO 200,000 earlier spent on relocation of the landfill site from Sur to a location approved by the ministry, outside the town. In 2004, it partnered with the Ministry of Tourism to establish a scientific research and visitors’ centre for the preservation of the endangered green-back turtle at Ras al Jinz and has contributed over RO 1 mn towards the effort. Ras al Jinz and the surrounding beaches have offered for thousands of years a suitable ecology for the rearing of this threatened species of turtles. The aim of Ras Al Jinz is to better understand the ecology that supports these turtles and to protect and preserve their breeding grounds for the benefit of Oman and the world. Ras al Jinz also plays host to many visitors and scientists from around
Oman LNG was at the vanguard of ESO’s “Say No to Plastic Bags” campaign that seeks to curb the irresponsible use of plastic bags in the Sultanate 17
NATION BUILDING
the world and continues to foster scientific research in turtles and their survival. Oman LNG is also one of the single largest sponsors of the Environment Society of Oman (ESO), an organisation with the objective of preserving the environment through the protection of indigenous species and the promotion of positive habits which reduce the impact of man’s harmful activities on the environment. Oman LNG was at the vanguard of ESO’s “Say No to Plastic Bags” campaign that targets the elimination irresponsible use of plastic bags in the Sultanate. Amongst its many benefits to the environment, the campaign aimed at making people aware of the dangers plastic bags pose to wildlife and birds. Scores of birds die of suffocation every year due to ingestion of these bags. When Cyclone Gonu struck Oman with devastating effect, taking lives and destroying homes and infrastructure in June 2007, Oman LNG suspended non-essential work and mobilised its staff to provide basic necessities to affected areas. Financial contributions from staff were matched five-
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fold by the company. As a final gesture, the company contributed $ 13 mn to the Sultan’s Fund to assist those worst affected by the cyclone. Oman LNG has been active in contributing to the government’s efforts to harness Oman’s water resources for use by the population in maintaining a quality standard of life. It contributed RO800,000 towards the provision of potable pipeline water for Qalhat village in partnership with Oman’s Public Authority for Electricity and Water. The project is intended to bring wholesome drinking water for inhabitants in the area. The company has allocated RO 300,000 to support the maintenance of Oman’s Falaj systems. These ancient systems are still effective in directing fresh well and groundwater in support of agriculture. It is believed that their preservation will ensure that the Sultanate continues to support its traditional farming techniques as it pursues greater self-sufficiency in food. Furthermore, as a responsible corporate citizen, it’s become routine practice for Oman LNG staff and their families to engage in beach-
NATION BUILDING
~ Oman LNG’s plant delivers world-class performance in minimising environmental impact on air, water and soil quality. It has also significantly contributed to setting up modern sewage disposal plants
A key initiative in 2012 will be the launch of the ‘Young Scientist of the Year’ award in collaboration with the Ministry of Education 20
cleaning campaigns during the company’s week-long health, safety and environment exercise which is held yearly to sensitise staff and the wider society towards activities which preserve health, safety and the environment. In a relatively new initiative, the company is driving the effort towards recycling batteries, with old batteries collected at its housing complex, the Hay al Sharooq. Other initiatives include facilities and infrastructure for fishermen, maintenance of aflaj throughout Oman and support for over 51 Omani Women’s Associations’ offices across the country. The company’s recognition of the importance of contributing to build Oman’s future, has led it to set aside some 35 per cent of its total annual SIP allocation into a Reserve Fund to secure the future viability and sustainability of its social investment programme.
Looking ahead Looking towards the next decade, Oman LNG embarked on a new vision for its social investment programmes (SIP) and developed a new strategy for the future with a focus on empowering communities, championing innovation and investing in people. The programmes for empowering commu-
nities include supporting projects that create long-term prosperity in each community. The company’s vision in championing innovation seeks to identify new initiatives in education, health and local enterprises that improve individual and communities’ capacities to exploit novel technologies and ideas and promote enterprise. Through its commitment of investing in people, Oman LNG will support the transfer of knowledge, skills and competences that create employment opportunities for individuals and groups. These three core areas will, the company believes, support long term, sustainable growth and diversification in economic activities in Oman and create new employment opportunities for many. A key initiative in 2012 will be the launch of the ‘Young Scientist of the Year’ award in collaboration with the Ministry of Education. The award will recognise the contributions of individual students and schools to innovation in the sciences and applied sciences at both the regional and national levels and is intended to encourage the creative application of science in secondary schools to meet the socio-economic and environmental challenges and opportunities in Oman today and in the future.
CONGRATULATORY MESSAGE
Successful Partnership
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Oman LNG was the first LNG project in the Sultanate of Oman and the first mega economic project established under the Royal auspices as per a Royal Decree issued in February 1994. It has grown to become the leading sector after oil. In 2011, it contributed nearly 13 per cent of the state’s revenues and is forecast to be the same in 2012. The insightful leadership of His Majesty Sultan Qaboos bin Said was proven also wise when he endorsed the selection of the Wilayat of Sur for the production plant of the company. The decision was guided not only by the natural resources available in that wilayat, the deep natural anchorage and the long maritime history of Sur as a vital and historic sea port, but also for the distribution of the economic development among the different regions of the Sultanate. In pursuing Vision 2020, the government has developed a series of more detailed 5-year plans for implementing its ambitious programmes for diversifying and growing the sources of economic growth and societal wellbeing throughout the Sultanate. An important ingredient of these plans has been the promotion of public-private partnerships. Oman LNG is an exemplary example of a successful joint venture between the government and private investors, combining the provision of the right investment environment and business opportunities with the technical, financial and project management expertise of the private partners. Two further critical elements in that partnership was the provision for technology and skill transfer to Oman and Omanis and the insistence that Oman LNG should also
| HE Darwish bin Ismail Al Balushi, Minister Responsible for Financial Affairs
pioneer the development and implementation of the Social Investment Programmes (SIP) throughout the country. As a result, Oman LNG is now the leading investor in social development in Oman. The company also plays an important role in protecting the environment and supporting its renewable resources and it has gained international recognition in this field. Such a role is considered as one of the important issues included in the approved government development plans. As regards to the performance of Oman LNG, which contributes to support the national economy, the company continued its success throughout the past 11 years, where its revenues in the year 2010 amounted to $3.1bn and some 25 per cent more in 2011. The gas revenues contribute over 5 per cent to the GDP of the Sultanate. In conclusion we wish Oman LNG continued progress, prosperity and success in achieving its objectives.
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INTERVIEW
PIONEERING
SUCCESS Oman LNG is expected to continue its success story which began more than ten years ago when the gas industry was considered a poor cousin of the oil industry. The company will continue its premier status of delivering the best value for its shareholders and is committed to its customers in the already competitive LNG market, says HE Nasser Al Jashmi, Undersecretary, Ministry of Oil and Gas and former Chairman of the Board of Oman LNG. Excerpts from an interview:
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What is the genesis of Oman LNG? Back in the late 1980s and early 1990s, while exploring for oil in Block-6. Petroleum Development Oman (PDO) struck gas, which after further appraisal was found to be of sizeable quantities and contained valuable liquid condensate. At that time, gas was not an attractive commodity and was even considered a bad omen. The global market for gas in the 80s was weak compared to oil and the cross-boundary logistics is complex and costly. So, the government was interested mostly in the condensate. The Government began looking for projects to monetise the gas and considered various options and settled on the two alternatives of either LNG, or a subsea pipeline to Asia.
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At that time the subsea pipeline technology was considered too immature compared to LNG, hence the decision to go for LNG. Oman LNG was established in 1994 by a Royal Decree. I was lucky to be a member of the first board of the company. The LNG, which is an abbreviation for “Liquefied Natural Gas�, is the natural gas in liquefied form which makes its export to the international markets economically feasible. When exploring the market for LNG buyers, we received interests from Korea, Japan and India. Long term lucrative contracts were signed with Korea and Japan. In the case of India, the Dhabol project, which
was the focus, was delayed and the LNG sales agreement was not pursued further. The construction of Oman LNG was completed in early 2000 and the first cargo was sold in April of that year. Today, the project is regarded as one of the benchmarks for LNG projects. I witnessed with pride the flagging off of the first shipment of LNG to Korea. Oman LNG, has come a long way since then, completed 10 years of production and has sold over 1,000 cargoes. Today looking back, I can proudly say that the investment in Oman LNG has yielded rich returns to the government and its shareholders and has become one of the biggest economic success stories of Oman. For how long have you been associated with the oil and gas industry? My association with the oil and gas industry dates back to 1993 when I was at the Ministry of Finance and was asked to review some of the projects for the Oman Oil Company. In the same year I became involved in the Oman LNG project as I mentioned earlier. Thereafter, I was co-opted onto various committees of PDO and other oil companies. In 1997, I was appointed Vice Chairman of the board of the then Oman Refinery Company. My association with the oil and gas sector continued to grow and deepen. In 2003, I was appointed as Undersecretary for the Ministry of Oil and Gas. Gas is considered as the game changer in the industrial development of the country: your comments? Only a few years after the succession of His Majesty the Sultan, the Government had decided to shift to gas as a means of electricity generation, being a more efficient, cleaner and economic fuel than, say, diesel. The amounts needed then were relatively small. The discovery of gas in Saih Rawl, Barik and other fields in much larger quantities changed the way we looked at gas and moved it from being a nuisance to being an important factor in Oman’s GDP. As part of Vision 2020, the government
embraced gas as one of the main sources of revenue and gas-based industries have started to surface. The investment environment in Oman has also created a sharp increase in gas demand from gasbased industries. We now have more requests for gas than what we can currently meet. This in itself is a challenge which has prompted us at the Ministry of Oil and Gas to look for alternatives to supply the requirements of future industries. The ministry has succeeded in attracting international oil and gas operators to invest their money and know-how in Oman. As we speak we now have, besides PDO, other gas producers such as BP, Occidental, Petronas, Harvest, Oman Oil Company-Exploration and Production, Daleel, PTTEP, RAK Petroleum and others who are exploring for more gas to supply future industries. We are certain that Oman has a bright future and is striding on a path towards an industrybased economy.
23
INTERVIEW
What is the contribution of Oman LNG to the Sultanate’s economy? As mentioned earlier, LNG is one of the main contributors to Oman’s revenue. The LNG business is the single largest contributor to the economy after oil in terms of dividends and gas payments. LNG consumes over 20 per cent of the total produced nonassociated natural gas. Therefore, the overall contribution of gas to the State Exchequer is significant. If one counts condensate as part of the gas business then the contribution of gas is actually much higher than what is reflected in the books. On the other hand, Oman LNG as a company has a high Omanisation level of over 88 per cent and is now employing over 400 people. Additionally, they are recruiting another 100
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new employees in response to His Majesty’s recent directives. Furthermore the contribution of Oman LNG to the society through its social investment programmes is massive. What is the future of gas in the country? As mentioned earlier, the demand for gas has surpassed the supply. Therefore it is of paramount importance that we are successful in exploring and producing more gas and we utilise it wisely to grow Oman’s industry towards becoming one of the cornerstones of the economy. Although Oman’s geology is complex by world standards, we are very optimistic that there is a lot more gas in the ground. We need to find ways and means to unlock it economically. We have embarked on a twopronged strategy; whereby we are, on one
hand, trying to maximise the recovery from existing fields through installation of wellhead compression. The second prong of our strategy involves pursuing aggressively exploration for tight and unconventional gas. The two prongs are going hand-in-hand. We have done well in attracting international companies to come and explore for gas in Oman. The companies are now investing hundreds of millions of dollars in Oman’s gas sector. Ongoing reports indicate positive outcomes, though the cost of producing that gas may well be more expensive. That is the reality of life and we have to accept that. Gas will remain Oman’s second biggest contributor to the economy after oil and it is expected to play even bigger roles in future through greater industrialisation, job
creation and in the development of certain regions like Duqm. What is the kind of gas available in Oman? Gas normally comes in different grades and qualities. We have fields producing almost dry natural gas such as Yibal. At the same time we have fields producing gas with significant condensate such as the Kauther/Fakhr fields. Most of the gas is produced from fields located in-land with only small quantities being produced currently from offshore of Oman Sea at Musandam Governerate. It is worth mentioning here that majority of gas produced comes from depths greater than 4000m. It is also anticipated that future gas will come from depths greater than 5000m. These depths translate into much
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INTERVIEW
tighter rocks and could mean leaner gas in future, making it more difficult to extract and it development more expensive. We are beginning to extend our interest to explore the treasures offshore. We will be floating international tenders shortly to invite reputable companies to explore for oil and gas in Omani terrestrial waters. Oman LNG is dependent upon gas supplied by the government. Do the buyers have assurance about their long term contracts? Oman LNG has three main buyers for Oman’s liquefied natural gas, namely Korea Gas Corporation (KOGAS), Osaka Gas of Japan and Itochu Corporation. These are the main long term contracts. KOGAS and Osaka signed for supplies starting in 2000, while Itochu came in a little later. The government throughout the years has honoured its supply commitments to the customers of Oman
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LNG and is fully committed to the remainder of those contracts that run till 2025. What is your view on Oman LNG’s social investment programmes? Oman LNG’s shareholders committed from the onset of production to set aside 1.5 per cent of its net profit for social projects. Oman LNG has performed very well to remain in the forefront of corporate social responsibility among companies in the Sultanate. The CSR programmes and schemes of Oman LNG have proven to be very successful and have helped the community around Oman LNG and the nation as a whole. The programmes not only cover the Sharqiyah governorates but also the whole of Oman and successful projects can be found in areas such as Musandam, in the north, Nizwa in the middle and right down to Salalah in the south. Wherever you go you will see the social projects sponsored by Oman LNG. Later on, many other companies adopted a similar model.
CONGRATULATORY MESSAGE
Contributing to community growth
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Oman LNG has completed over 10 years that have been full of achievements and is prepared for more achievements and a brighter future in the decade ahead.
| HE Sheikh Mohammed bin Said bin Seif Al Kalbani, Minister of Social Development
The success story of Oman LNG (OLNG) makes it a role model for everyone. We are of course all proud of its achievements in terms of liquefying, storing, transporting and marketing Oman’s natural gas to countries around the world thus contributing to the growth of revenues and the national economy. We are not exaggerating when we say that these activities also contribute to the stability and growth of the world economy. Oman LNG has developed and focused its resources through adopting effective strategies and programmes that earned the company the prestigious status it enjoys today on the world map. It has also been among the foremost companies in Oman in terms of giving back to society. It’s noteworthy that the company considers its social responsibilities among its top priorities. Oman’s development march has been hallmarked by streamlining the efforts of all public and private sector players to ensure that our national human resources are provided with the skills and incentives to be active players in this development. Oman LNG has been a very strong supporter of innovative programmes in education, health and infrastructure that help communities towards greater economic selfsufficiency. In doing so it attaches particular importance to women and child development as well as funding programmes that support the handicapped integrating more fully into society. By so doing, Oman LNG shows a real
commitment to its corporate social responsibilities and the need to contribute directly to the society at large. Oman LNG’s role is not limited to contributing to communities, but it also supports different cultural and sports activities in Oman, partners, non-governmental organisations (NGOs) such as the Omani Women’s Associations and other charitable organisations that deliver aid to the underprivileged. Whilst we appreciate the great efforts that the private sector makes towards the growth and prosperity of Omani society, we must stress the importance of redoubling these efforts to ensure the wellbeing and prosperity of everyone. Finally I wish Oman LNG even greater progress, success, development and growth in the future.
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OMANISATION
In the vanguard of Omanisation Apart from offering rewarding career opportunities for young Omanis, Oman LNG has played a pioneering role in educating and training Omani youths in order to equip them with a different set of employable skills that will boost the industrialisation of the Sultanate
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With one of the highest levels of Omanisation, currently at 88.9 per cent, and Omani nationals occupying five of the seven most senior executive positions in the company, Oman LNG supports and consistently looks for ways to build on the Omanisation policy of the government. All its contracts for example, contain specific requirements for Omanisation.
Oman LNG supports and consistently looks for ways to build on the Omanisation policy of the government. All its contracts for example, contain specific requirements for Omanisation 28
Oman LNG recruits, trains, develops and offers rewarding career opportunities to suitable and motivated Omanis and offers careers for school leavers, diploma holders, college and university graduates in diverse areas such as engineering, plant operations, finance, human resources, external relations’ management, marketing and administration. Oman LNG and the government have partnered in a series of broad-ranging training programmes aimed at equipping Omanis with different skill sets to boost the industrialisation of the Sultanate. The company also takes great pride in the development of its staff spending approximately $4mn every year on staff training and development since it began operations. Over 100 employees have graduated with Business and Technology
Council (BTEC) from the company’s Edexcel Accredited Learning Centre located in Sur. Around $4.8mn was invested in staff training and development in 2009 alone. In addition, the company regularly sponsors its employees on tertiary education and professional membership of internationally recognised bodies. In 2009, Oman LNG was honoured with the HR Excellence Award for Employer of the Year by the Institute of International Research (IIR), Middle East for its consistent efforts in developing its manpower.
Training Oman LNG’s efforts at Omanisation include regular partnership with reputable organisations like the Oman Society for Petroleum Services (OPAL) to finance the training of students for tailor-made jobs in different sectors of the economy. In one such recent agreement with OPAL, Oman LNG funded the coaching of 30 candidates under a Hearing Impaired Training Programme in the use of Desktop Publishing Software and 25 candidates in instrumentation, drafting and designing, and pipe-fitting. OPAL for its part, works with the Ministry of Manpower (MoMp) to ensure that the candidates secure
well-paid employment upon graduation from their training programmes, which in this case spanned a period of six months. Over 1,000 jobs have been created through such partnerships. Successful candidates from these training-to-hire schemes are guaranteed job placements, enabling them to become gainfully employed and allowing them to deploy their new-found skills and abilities in the work environment. In another striking example, around 40 graduates were drawn from two sets of skill pools. The first set of thirty graduates received training from OPAL in a Stores Quality course for developing quality assurance skills, while the second set of ten graduates specialised in Architectural Drawing using the AutoCAD software application. Successful candidates are given employment in their areas of specialisation, after completion of the programmes. An important
factor to note is that all of the trainees move into suitable employment, where they can practice what they have learnt once they have completed their training and have been awarded their diplomas. Within the company, Edexcel recently granted accreditation for Oman LNG to run a Level 4 Diploma in LNG Technical Support. This has allowed the company to broaden further the diverse range of training programmes available to groom its staff to take up leadership responsibilities in the LNG industry.
Long-term benefits Seen as playing a pivotal role in the Sultanate’s quest for an industrialised economy, these training categories, which provide internationally recognised programmes for Omani nationals, have longterm benefits for the Sultanate. It
provides
a
focused
determination
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OMANISATION
to earn income, become self-reliant and foster the preservation of Omani tradition and heritage.
Workshops The 14 workshops in seven wilayats of the Sharqiyah South and North Governorates will undergo periodic evaluation and follow-up visits by the Ministry of Social Development to ensure the success of the programme. Already the ministry is liaising with a number of furniture companies to secure a market for the carpets when ready. Although carpet production is now mostly mechanised, traditional hand woven carpets are still widely valued around the world, and usually attract higher prices than their machine woven counterparts because of their individual artistic presentation.
towards continuing the growth of the country’s industrial sector and the diversification of commercial activities away from oil revenue as the mainstay of the economy.
Oman LNG has boosted technical training in Oman through the supply of scientific equipment to the Higher College of Technology, Muscat 30
Yet another benefit of Oman LNG’s training programmes is its support of entrepreneurial activities to drive job creation. In an agreement with the Ministry of Social Development in April 2011, the company funded the purchase of vital equipment for candidates who had completed training in hand-made carpet weaving. In this agreement, Oman LNG is providing funds to equip 14 workshops with requisite tools and materials such as silk, wool, cotton for traditional carpet making materials, a valuable yet potentially dying craft. Setting up of a workshop at the cost of RO75,000 is the second and final phase of the training programme for 50 women who completed a six-month course in handmade carpet weaving facilitated by the Murj al Zohoor Training Institute. This will enable them to begin a sustainable endeavour
“With these workshops, we are completing the second and final phase of an entrepreneurship programme for these candidates and it is our expectation that with the support of the Ministry of Social Development, they will be able to turn around their own fortunes, become self-reliant and further the prospects of the carpet-weaving industry in the country,” says Ali al Hashar, Oman LNG’s Chief External Relations Officer, about the agreement. Oman LNG has also boosted technical training in Oman through the supply of scientific equipment to the Higher College of Technology, Muscat. The company agreed to fund the supply of research equipment for the specialised fields of Physics, Chemistry, Biological and Environmental Sciences, all of which come under the department of applied sciences at the college, an institution supervised by the Ministry of Manpower. In January 2011, Oman LNG in association with the Ministry of Manpower also agreed to build physics and chemistry laboratories as well as a gas-pipeline welding workshop for the Musannah College of Technology with RO 208,000. Oman LNG has also invested over RO 1.5 mn in modern laboratories and workshops in the Technical Colleges of Ibra, Salalah, and Nizwa.
www.renaissance-oman.com
Congratulations
to Oman LNG on over 10 years of service to the nation
Aligned in business. Aligned in values. As a long-term partner of Oman LNG, the Contract Services Group (CSG) of Renaissance Services salutes the milestone achievements of the company in its decade-long history – both, as one of the largest contributors to the economy of Oman, and as one of the leading investors in its citizens. Over 25 years, CSG has reiterated its focus on delivering the highest standards of safety and service to customers, while living up to its strong commitment to community development through the recruitment and training of the local workforce.
Contract Services Group
PRODUCTION
The value chain Oman LNG uses a sophisticated and state-of-the-art process to produce world class Liquefied Natural Gas. A report on the procedure
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Oman LNG (OLNG) is a limited liability incorporated joint venture company established by a Royal Decree in 1994 and operating under the laws of the Sultanate of Oman. It produces and sells liquefied natural gas (LNG) and a by-product, Natural Gas Liquids (NGLs).
liquefaction trains at its site in Qalhat, near Sur, in the Sharqiyah region. Two of the trains are owned by Oman LNG and one by Qalhat LNG SAOC. The total nameplate capacity of the three trains is 10.4 million tonnes per annum.
Satisfying diverse needs The company undertakes, directly or indirectly, project operations and activities necessary to liquefy, store, transport and market natural gas. The company has its head office in Muscat and operates three
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The business of natural gas starts with many customers across the world requiring clean, efficient energy for power generation, industrial and domestic needs. Getting gas to customers starts with the exploration
for natural gas fields across the world and developing these gas fields in preparation for production. Such raw gas is often produced with heavier hydrocarbons, water and other contaminants which are largely removed in a ‘production’ process before being piped to further processing and use. In the past, natural gas was only delivered by pipeline. This left many potential customers without access to this very useful source of energy. In the late 1960s, the first commercial ventures exploited the fact that liquefied natural gas occupies some 600 times less volume than it does in gaseous form, allowing it to be transported efficiently and economically to distant customers by ship. This paved the way for what became a global business of enormous benefit by bringing clean and efficient fuel to many more customers. Today, where moving natural gas by pipelines is not possible or economical, it can be transported by specially designed cryogenic ships (LNG carriers) or cryogenic road tankers. LNG is for many today a cheap and efficient method for transporting natural gas to markets where it is degasified and distributed as pipeline natural gas. Apart from its key role in power generation and as a feedstock for industrial uses, many novel options are emerging as the markets expand, for example in the fledgling area of road vehicles powered by LNG. This can play a particularly important role, alongside compressed Natural Gas (CNG) in congested areas where air pollution is a threat. The density of LNG is roughly 0.41 to 0.5 kilogramme per litre (kg/L) , depending on temperature, pressure and composition [compared to water at 1.0 kg/L]. The heating value depends on the source of gas that is used and the process that is used to liquefy the gas and can vary from 24 mega joules per litre (MJ/L) at the upper end to heating value as low as 21 MJ/L. The energy density of LNG is 2.4 times greater than that of CNG, also equal to that of liquid propane, but only
60 per cent that of diesel and 70 per cent that of gasoline.
~ Omanis are fully equipped to run the operations of the plant
Oman LNG receives it untreated natural gas from the interior of Oman. This feed gas is produced and transported along a 360 km, 48 inch pipeline by PDO. At Oman LNG’s plant in Qalhat it is transformed into finished products of LNG and Natural gas Liquids (NGL) which are shipped to regional and global markets. The bulk of the LNG produced at Sur is sold to buyers in Japan, Korea and Europe. The NGLs are sold locally to be processed further into high value transport and petrochemical products..
Process of liquefaction Natural gas used in power generation, industrial processes and domestic heating and cooking throughout the world is over 90 per cent pure methane, the lightest occurring hydrocarbon with the lowest carbon footprint. Although predominantly methane, the ‘Feed
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PRODUCTION
Exploration & Development
Production
Transport
Liquefaction to LNG
Transport
Regassification
Distribution & Transport
Marketing & Sell
Exploration & Development Production
Transport
Transport
Liquefaction to LNG
Distribution & Transport
Customers
Customers Regassification
Gas’ from the interior of Oman also contains ‘sour gases’ (mainly carbon dioxide (CO2)), water (H2O), some mercury and heavier hydrocarbons. These need to be removed before the methane can be cooled to form Liquefied Natural Gas (LNG). Liquefaction of LNG takes place in what are called LNG trains. Each train consists of three steps: treatment, removal of condensates by fractional distillation and liquefaction of natural gas. In some other LNG plants, where the volumes allow and markets exist, an additional intermediate cooling and distillation step to remove LPGs (propane and butane) is undertaken. However, this is not done at Oman LNG currently. Step 1: Treatment The carbon dioxide, water and mercury are removed from the feed gas. This clean-up is a necessary step to enable liquefaction of the natural gas and to deliver a safe product to customers.
Oman LNG’s mission is to produce, market and deliver LNG safely, reliably and profitably 34
Step 2: Removal of NGL’s NGL’s(natural gas liquids made up mainly of pentane and hexane) are removed by fractional distillation of the feed gas after treatment. These liquids are also referred to as ‘condensate’. Step 3: Liquefaction of Natural Gas The gas, which is now mainly methane is sent to the Main Cryogenic Heat Exchange (MCHE), where it condenses to liquid at -162°C.
The liquefaction process is driven by two large turbine driven compressors, which through a series of compression and adiabatic and non-adiabatic cooling steps cools the gas to -162°C at which temperature the gas turns into liquid. Thereafter, it is stored in specially designed cryogenic tanks awaiting shipment by LNG vessels to customers around the world. Each LNG train has a capacity that is determined primarily by the size of the compressors. In the early days of LNG, trains were less than one million tonnes per annum (mtpa). At Oman LNG, each of the three trains can produce over three mtpa.
Transporting LNG LNG is transported in vessels with specially insulated storage tanks and cryogenic facilities for handling LNG safely and economically. Today, the size of such vessels ranges from under 100,000 cubic metres up to over 217,000 cubic metres. There are two main containment designs for LNG vessels: Moss Spherical (about 60 per cent of the total) and Membrane (40 per cent). The Moss LNG vessel can be recognised by their hemispherical shaped storage tanks. Membrane vessels appear more rectangular, similar to crude and product tankers. Oman LNG’s mission is to produce, market and deliver LNG safely, reliably and profitably. By so doing it contributes greatly to the Government of Oman’s objective of diversifying the economy and reducing its dependency on oil. The company is also committed to developing its business and employees to their full potential and to be a trusted partner in the sustainable development of Oman and its people. The company’s stated vision is – ‘To be the preferred partner of customers and communities.’ And with its impeccable state-of-the-art infrastructure, technical prowess, commitment to excellence in dealing with global customers and local communities – Oman LNG is delivering on that promise.
Congratulates
on successful completion of over 10 glorious years and for its contribution to the Omani Society
Sultan Centre LLC, 2nd Floor, Al Qurum, P.O. Box 2279, Ruwi, P.C. 112, Sultanate of Oman. Tel: 24660900 • Fax: 24566476 • E-mail: Àcins@omantel.net.om
HSE
CREATING A SAFE HAVEN Oman LNG believes that the success of its operations is dependent on how well it succeeds in maintaining the highest HSE standards
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Health, safety and environment are crossdisciplinary areas concerned with protecting the safety, health and welfare of people engaged in any and all of our business activities. It achieves this through fostering safe work environments through occupational health and safety programmes and ensuring the safety of facilities and machinery for use.
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While ensuring the safety of workers, the programmes also bring benefits to co-workers, family members, employers, customers, suppliers, nearby communities, and other members of the public who would otherwise be impacted by the workplace environment. It involves interactions of many subject
OMAN LNG HSE POLICY Oman LNG shall: } Manage Health, Safety and its Environmental responsibilities systematically through a documented HSE Management System which ensures continuous improvements in its HSE performance } Comply with all relevant legislation, regulations and agreements it has entered into } Set and measure targets for improvement and appraise and report performance } Require contractors to manage HSE in line with this policy } Include HSE performance in the appraisal of all staff and reward accordingly } Report the HSE Performance annually } Use its influence to promote this policy with whom it does business.
areas, including occupational medicine, occupational and industrial hygiene, public health, safety engineering, occupational safety, management of potential materials, defensive driving the sciences of air, water and soil quality conservation, the safe disposal of waste, etc. In 2010, Oman LNG implemented its 12 life-saving rules, which are contributing to a significant reduction in number of medical treatment cases at work and an even greater reduction of Lost Time Injuries. Such achievements bear witness to the priority extended to health and safety by Oman LNG. The plant is designed and operated to the highest efficiency standards in the business and focuses on reducing, reusing and recycling all of its process materials wherever possible. The plant also ensures that unavoidable waste is disposed of responsibly and with no damage to the environment. Oman LNG believes that the success of
its operations is inescapably linked to how well it succeeds in safeguarding the health and safety of all who work for the company and ensuring that future generations in the Sultanate continue to enjoy the natural beauty and bounty with which Oman is blessed. In doing so it also accepts responsibilities for supporting efforts in the community for protecting the environment beyond its operational sites. It is not surprising then that Oman LNG was honoured with both the GCC Award for Best Industry Establishment Compliant with Environmental Regulations and the Excellence in Energy/GASTECH Award for Best Company in Environmental Management in 2009.
HSE commitment Oman LNG is committed to pursuing the goal of causing no harm to people and protecting the environment, using material and energy efficiently and minimising
Oman LNG applied the highest environmental standards in the design of its plant 37
HSE
important to note that we must all have an orientation that puts health, safety and the environment at the forefront of our activities and commitments 365 days in the year. In 2010 we re-launched our 12 life saving rules and continue to be guided by them in all our activities throughout 2011 and into 2012.”
Plant design Sensitive to the environment surrounding its establishment, Oman LNG applied the highest environmental standards in the design of its plant. This was completed only after carrying out an extensive Environmental Impact Assessment (EIA). Oman LNG has also installed low emission burners in all its gas turbines and implements virtually zero effluent discharge. And all waste water produced on site is treated and re-used for irrigation purposes.
waste and developing its products and services consistent with the above aims.
It’s important to note that everyone must have an orientation that puts health, safety and the environment at the forefront of their activities 38
The company’s HSE commitment also extends to consulting with Oman LNG’s stakeholders and publicly reporting on its HSE performance, managing health, safety and environmental matters as critical business activities and promoting a culture in which all Oman LNG contractors and employees actively demonstrate personal commitment to its HSE policy. In this way, Oman LNG aims to have an HSE performance the company can be proud of and earn the confidence of its customers, contractors, suppliers, shareholders and society at large and contribute to sustainable development. Dr Brian Buckley, Oman LNG’s CEO, commenting on the need for a sustained awareness in Health, Safety and Environment (HSE) notes, “At Oman LNG, priority is given to health, safety and environment in all we do. Not just as a responsible organisation but as responsible people in the society. It’s
Another aspect of Oman LNG’s plant design worth mentioning is its flare. A flare is a vertical pipe at the top of which a small amount of gas is continuously burned, forming a pilot flame that sets light to any vapours and liquids that occasionally are released from the process. The flare acts as a safety device to protect vessels or pipes from excessive pressure due to unplanned upsets. Whenever plant equipment items are over-pressured, the pressure relief valves on the equipment automatically release gases (and sometimes liquids as well) which are routed to the flare stacks. The flare also enables the start-up and shutdown of the plant by burning outof specification gas/liquid upon start-up. Additionally, the flare system is used to remove any gas left in the plant before major maintenance takes place. The flare is an environmentally responsible safety system that does not produce smoke during normal operation. During start-ups, shutdowns, upsets and when maintenance work is taking place, the size and brightness of the resulting flame depends upon how much flammable material is released. Smoke may then be seen for a brief period.
A flare is usually accompanied by noise measured at approximately 70 decibels (dbA).This is equivalent to the noise heard from normal car traffic.
safely incinerated at the Sur General Hospital. If no environmentally acceptable options are available, waste is stored on site, awaiting appropriate outlets to be found.
The flare system at the Oman LNG plant has been designed and constructed to comply with both Omani and internationally recognised health and environmental standards. Furthermore, research has shown that it does not have known adverse effect on the health of the people living nearby or Oman LNG staff working at the plant.
World-class operations
On a monthly and annual basis, Oman LNG compiles an extensive report on its environmental performance and shares this with local and national authorities to demonstrate its compliance with all relevant regulatory requirements. Additionally, it organises Green Table Meetings with the relevant sections of the Ministry of Environment and Climate Affairs to discuss ongoing issues and projects.
Oman LNG was awarded ISO 14001 certification in 2001 for its world-class environmental management practices and performance. Oman LNG is committed to continually improve its environmental management systems which manage and control its activities, products and services that do or can give rise to environmental impacts.
Confirming its continued striving towards increasingly greater conformance to the highest standards, Oman LNG recently complemented its ISO14001 certified Environmental Management System and its ISO9001 Business Management system with the Occupational Health and Safety system OHSAS18001.
The company has applied the Shell Multivariable Optimisation Control (SMOC) systems in the heart of its plant, resulting in significant improvements to the plant’s thermal efficiency, thereby reducing emissions. Oman LNG also closely monitors its potential impacts on the environment. Online analysers are complemented by own and external laboratory analyses. Marine studies assessing the ecological health of the coastal environment in the vicinity of the Oman LNG plant are conducted on a regular basis.
Beyond the work-place Outside the work place, Oman LNG has spearheaded a number of initiatives that promote the need for safety, health and care for the environment in the daily activities of Omani life. In 2010 for instance, working as joint-sponsor with others in the private sector including Omantel, Oman Press, Publications and Advertising Establishment, the Royal Oman Police (ROP) and Shell, the company moved to address the deadly challenge of Road Safety in Oman.
Moreover, Oman LNG operates an Air Quality Monitoring Station (AQMS) located at its housing complex, Hay Al Shrooq (HAS), assessing the combined impact on air quality of neighbouring activities.
Presentations, seminars and public engagement sessions were organised in over on the dangers of unsafe practices on roads at 50 locations across the Sultanate.
Waste disposal is professionally managed to ensure no damage to the environment. Mercury contaminated activated carbon and spent solvents are exported under the Basel Convention for safe destruction. Waste oil is exported to an indigenous company for treatment and recycling. Clinical waste is
These kinds of engagements take on an even more focused meaning during the company’s annual “HSE Week” which engages staff, contractors and families on the importance of health, safety and environmental protection in daily lives outside work and not only whilst at work.
Marine studies assessing the ecological health of the coastal environment in the vicinity of the Oman LNG plant are conducted on a regular basis 39
SNAPSHOTS
Social Investment Programmes Budget – SIP (US$ million) 7.7
8.0
6.0 6.0 5.0
4.5
3.5
4.0
3.6
1 2006
0.5
2007
1.5
0.7
2009
Human Resource Development
2006
2007
2008
2010
National Projects
Key Performance Indicators Year
1.2
1.5
2008
Community Fund
2.0
1.5
1.3
1.5
0.5
US$ million
4.9
4.6
4.5
4.1
Sponsorship & Donations
Number of Cargoes delivered per year
2009
2010
110
107 102
102
95
Loss Time Injuries
0
0
0
2
1
Total Recordable Cases
4
2
3
3
4
First Aid Cases
5
6
7
6
23
95
89
80
65
50
Near Miss Reports
285
335
273
187
108
Unsafe Act Audit Findings
1764
1519
1739
2530
2642
35 2006
2007
2008
20 2009 2010
LNG Production and Capacity 10.0
9.1
9.0
8.7
8.8
8.6
7.5
MTPA 5.0
1.2
2006
Q LNG Production / MTPA
40
2.0
1.5
2007
2.5
1.8
1.6 0
2008
Q Unused Capacity / MTPA
2009
2010
Opex 2010 (Budget) 8%
NGL production in tonnes
11%
280,000 277,274 277 7,27 27 2 74 273,998
13%
27%
272,000
264,000
18% 22%
256,000
253,306 248,602
251,334 248,000
2006
Shutdown
SIP
Corporate
Manpower
Interest
Manufacturing
2007
2008
240,000 2009
2010 0
Investment in Training & Development 4.8
5.0
4.5 4.3 3.8
4.0
3.0
2.0
US$ million
3.8
1.0
2006
2007
0
2008
2009 2010
Historical Opex 2006-2010 200
193 158
172 150
150
100
50 2006
2007
2008
2009
US$ million
179
0 2010
41
SNAPSHOTS
88.9%
+4
Information provided as at December 2011.
Omanisation – Oman LNG has remained at the forefront of attracting and retaining the best talent with Omani nationals occupying 5 positions of the seven slots in the Company’s management team
Million US$, approimately – The amount expended on staff training and development.
www.omanlng.com
22
114
41 staff
Staff graduated with Business and Technology Council (BTEC) from the Company’s Edexcel accredited training centre.
staff undergoing professional courses, sponsored by Oman LNG.
sponsored by the Company for tertiary education.
35
35%
1.5%
Million OMR atleast – amount invested in 270 projects all across the Sultanate of Oman in the last decade.
of yearly allocation for social investment is put aside as reserve fund to secure the future availability of Oman LNG’s social investment programmes.
of the company’s net profit is set aside for social investment.
Buyer
Million Tonnes per annum
From
To
Korea Gas Corporation
4.1
April 2000
Dec. 2024
Osaka Gas of Japan
0.7
April 2000
Dec. 2024
Itochu Corporation
0.7
March 2006
Dec. 2025
Oman Refineries and Petroleum Company
Approx .130000
Jan 2008
Dec. 2017
42
CONGRATULATORY MESSAGE
Partner from the beginning
A
At Shell, we are honoured to have been a contributor and witness to the development of the Sultanate of Oman to a modern country. We are also proud to have been involved with Oman LNG since the first gas discoveries in the early 1990s. Under the wise leadership and vision of His Majesty Sultan Qaboos bin Said, Oman LNG was able to start operations at the turn of the century in 2000. At the time, together with Shell as a shareholder and technical advisor, the plant was built ahead of time and below budget, becoming a role model for other projects around the world to follow. Shell looks forward to another successful decade in its association with Oman LNG, a company that provides LNG to customers, allowing them to use a cleaner fossil fuel. Oman LNG has also been an important contributor to the development of the Sultanate. Over the last 10 years, the company has been involved in over 270 projects investing over $90mn and created a Social Investment Reserve Fund which will ensure the sustainability of its social investment programmes.
~ John Blascos, Chairman, Shell Development Oman
We wish Oman LNG many more successes to come and Shell is looking forward to continue working together with the Government of the Sultanate of Oman under the leadership of His Majesty Sultan Qaboos bin Said and our other joint venture partners to further develop the economy and bring prosperity to all Omanis.
43
ENVIRONMENT
Turtle turf
The Ministry of Tourism partnered with Oman LNG to establish a scientific research centre for the preservation of the endangered green-back turtle at Ras al Jinz, near Sur
O
Oman LNG has become a reference point for other companies in the global LNG trade. It is also a role model for how companies can work closely and effectively with the government towards preserving Oman’s exquisite ecosystem for future generations to enjoy. A perfect example of Oman LNG’s involvement with the environment is the part it has played in developing the Ras al Jinz Turtle Reserve as a world class tourist destination whilst ensuring that the source of attraction – namely the turtles – are protected and preserved. The beaches around Ras al Jinz offer a suitable ecology for the breeding of the rare greenback turtles, which have laid their eggs in the sands around Raz Al Jinz for thousands of years. Hatchlings that survive
44
the rigours of the initial years of life return as adults to continue the circle of life that began for them some 40 years early on these pristine beaches. Ras al Jinz has played host to many visitors and scientists from around the world and is fostering scientific research into the ecology of the area the supports these turtles and the nature of the turtles that entice them to return. Capturing the many activities the company pursues to preserve the environment, Dr Brian Buckley, CEO and General Manager of Oman LNG, notes, “I believe that for all of us as human beings the environment is an invaluable asset in which our very lives and futures are inescapably linked. It is obligatory for individuals, governments and companies to play our roles in protecting
it. One of the key contributions of the LNG industry today is that it provides a clean form of energy with the lowest impact on the environment of all non-renewable sources of energy. At Oman LNG, protection and care of our environment guides our business plans and activities. It is imperative that we, too, play our part in preserving the environment so that future generations can enjoy the benefits that we enjoy today. We continue to partner with the government, industry and NGOs in seeking ways to protect our environment and mitigate the harmful impacts that some modern human activities can have.”
Oman is oft described by visitors as “the secret of the Middle East” With over 1,700 km of coastline with pristine waters – magnet for fishermen, sailors and scuba-divers; from the fabled Jebal Akhdhar and the snow-caped Jebal Shams during the winter, through the drifting dessert sands and the tropical microcosm of Salalah, the Sultanate hosts a kaleidoscope of natural wonders. One such ‘wonder’ is located on the unspoiled beaches of Ras al Jinz where the natural breeding habitat of the near extinct greenback turtle is being protected and researched. Born from a co-operation between the Ministry of Tourism, the Ministry for the Environment and Oman LNG, the Ras al Jinz Turtle Research Centre is a multi-million dollar sustainable enterprise that has forged the need to better understand and protect an endangered species indigenous to this part of Oman with the economic opportunities of eco-tourism. With guest rooms, a restaurant, souvenir shop, exhibition centre and well trained rangers, this enclave’s appeal as a tourist attraction is enhanced by its modern amenities and up-to-date information on current understanding of the life-cycle and habits of the green back turtle. Oman LNG’s contribution of RO1,000,000 towards the building and establishment of the Ras al Jinz Turtle Research Centre has made this possible. The Centre is unique in that it allows close viewing of nesting habits
of the turtles under close supervision of rangers. Scientists have evidence that these turtles have existed on our planet going back millions of years and have been nesting on the beaches of Oman for hundreds of thousands of years. In the last hundred years, or so, their survival has been increasingly challenged by humans who find nutrition in their flesh and eggs and make jewelry from their shells. Other more recent threats to turtles are their entanglement in fishing nets, pollution, human debris and the relentless encroachment onto their nesting grounds by the development coastal roads, housing and marine infrastructure. The entire coastal area starting from Ras Al Had and under the Government protection includes a 120 square kilometre coastal area, a 45 kilometre coastline and goes a kilometre into the sea. The facility at Ras al Jinz which includes some 2.5 km of coastline hosts every year thousands of tourists who come to have a unique learning experience by seeing and hearing about the green sea turtles in their natural habitat. For those that visit at the peak breeding seasons, a common sight is the exciting scramble of the baby turtles towards their first experience of the ocean. The centre’s rangers estimate that some 30,000 nests are dug each year by the visiting female turtles, which number between 10,000 and 15,000. The concentration of turtles on any one of the centre’s two beaches largely depends on the wind. Beach One, some 700 metres long, will have more nesting mothers when the wind blows from north to south, which is often the case in the summer months of April to October. Conversely, when the wind is from south to north, usually in the winter months of November through March, the turtles are more likely to frequent Beach Two which is 1200 metres long.
Supported by Research The sight of male and female turtles mating in the water off Raz Al Jinz is a regular occurrence. After a period of some three
Ras al Jinz Turtle Research Centre is a multimillion dollar sustainable enterprise that has forged the need to better understand and protect an endangered species indigenous to this part of Oman 45
ENVIRONMENT
If it survives into adulthood a greenback turtle can weigh between 68 to 250 kgs, with a length between 80 to 120 centimetres and can live to around eighty years. The male turtle can be distinguished from the female by its longer tail, though both have shells of the same green colour: ergo their name. This skin colour is also the differentiator between this species of turtle and others. For example, the Olive Ridley Turtle has a red hue and the Leatherback Turtle has a leathery shell.
~ The Turtle Centre funded by Oman LNG
The sex of the baby turtles is not determined by the egg but by the temperature of the sand in which the eggs are laid 46
weeks the female turtle leaves its mate and comes ashore to lay its eggs. The nesting process, which happens only at night, begins with the female turtle using her front flippers to prepare the nesting area in the sand. This is followed by the mother using her back flippers to burrow a hole in which she will deposit her eggs. Often the female will clear more than one area as decoys for the foxes and dogs that regularly search the beaches for the nests which can contain as many as one hundred eggs. When finished she returns to the seas to mate once or twice more and lay further clutches of eggs before returning to the ocean and restarting her lonely migration. The sex of the baby turtles is not determined by the egg but by the temperature of the sand in which the eggs are laid. Further up the beach, where the sand below the surface is 29 degrees and above all of baby turtles will be female. Lower down the beach the sand is a cooler, 28 degrees or a little lower and the babies will be male. In between – midway up the beach where the temperature is between 29 and 28 degrees the babies of mixed gender.
Within the grounds of the Centre Research facility built with funding from Oman LNG. Researchers have, for example, fitted turtles with tracking devices to monitor their movements around the world’s oceans. They have discovered that the greenback turtles of Ras Al Jinz travel to far-flung places like Yemen, Somalia, India and even Australia. But these visits are mere courtesy calls for feeding and grazing, staying only short periods until they return again some 4 years later to their Omani home to recommence the breeding cycle.
An Enclave for Turtles Today, protection for the turtles is provided not only by the natural backdrop of mountains, but by rangers and the centre that restrict access to the beaches and ensure that humans are discouraged for harvesting the nests of eggs and fishermen dissuaded from casting their nets in the mating areas. The rangers do not, however, take steps to fend off nature’s other predators – the foxes and dogs that scavenge the beaches for eggs and hatchlings, believing that these animals form an integral part of the ecosystem that are the turtles’ nesting grounds. Indeed, understanding that ecosystem better is another aspect of the scientific work which makes Ras Al Jinz one of the world’s leading conservation centres for investigating the lifecycle and ecosystems that support turtles and brings this information to the world. Its ultimate goal is to help us protect this wonderful species from the relentless increase of man’s activities in the turtle’s natural environments on land and sea.
CONGRATULATORY MESSAGE
Invaluable contributions, excellent achievements
O
On publication of this special edition of the Oman Economic Review about Oman LNG, we would like to take this opportunity to congratulate Oman LNG most sincerely on the honour that it marked 10 years of its operations and has ushered in the start of a new decade. As one of the shareholders, we are pleased to express our deepest gratitude to all the board members and employees of Oman LNG for making such sterling efforts to ensure the stable operation and LNG supply to the contracted buyers since its establishment in 1994 and start-up of operation in 2000. Oman LNG plays an important role in Oman’s key industries, contributing to the development of Oman through generating stable revenues and employment, developing LNG related industries and revitalising economic activities. We would like to honour those invaluable contributions and excellent achievements which have been accomplished by Oman LNG. In addition, we highly respect Oman LNG’s goodwill contributions to the country and local communities through not only natural gas business but also other activities, such as its Social Investment Programme. Oman LNG’s long term buyers include Japanese utilities, and the Oman LNG Project is very important for Japan. Mitsui has been devoted to thoroughly supporting marketing by offering market information and constructing and maintaining relationships between Oman LNG and Japanese LNG buyers. We are pleased to have been involved in the Oman LNG project from its establishment up to the present as one of Oman LNG’s shareholders.
| Mitsuo Hidaka Managing Officer, Chief Operating Officer Energy Business Unit II, Mitsui & Co. Ltd.
Last year, Japan experienced an unprecedented natural disaster on March 11. We would like to take this opportunity to express our sincere gratitude for Oman LNG’s splendid support, including monetary donation and additional LNG spot cargoes supply, which reflects the excellent leadership and warmest regards of the Omani people, their government and Oman LNG’s management. As a consequence of this tremendous earthquake and tsunami, the perceived importance of LNG has increased not only in Japan but also all over the world. Therefore, a stable supply from Oman LNG is also very important. We are committed in maintaining and enhancing Oman LNG’s reputation through this project as one of its shareholders. On a final note, we wish all of Oman LNG’s board members, employees and their families, success and prosperity in the future.
47
CLIENTS
ENDURING PARTNERSHIPS The impeccable technical and professional standards set by Oman LNG helps it to service the needs of world class companies across the globe. A report
O
Oman LNG has entered into long term partnerships with companies across the globe that buy its products. A look at a few such clients is illustrative of the company’s strengths. Since April 2000, Korea Gas Corporation (KOGAS) buys 4.1 million tonnes of gas annually from Oman LNG. The contract runs until December 2024. Osaka Gas of Japan began buying LNG from the Company in the same month and year as KOGAS under a contract to buy 0.7 million tonnes per annum over the same period. Finally, Itochu Corporation is committed to buy 0.7 million tons every year from March 2006 to December 2025. Oman LNG also sells a quarter of a million tons of condensates (NGL’s) to the Oman Oil Refineries and Petroleum Industries Company (ORPIC) under a 10 year contract that began in January 2008.
KOGAS KOGAS, an abbreviation for Korea Gas Corporation, was incorporated by the Korean government in 1983. Since its foundation, it has grown to become the world’s largest LNG buyer. As the nation’s sole LNG importer for general uses, the Corporation is fully committed to providing clean, safe and convenient energy to the people of Korea. In keeping with this mission, KOGAS currently operates three LNG terminals and
48
a nationwide pipeline network spanning over 2,739 km in order to ensure stable supply of gas to all its customers throughout Korea. KOGAS imports LNG from around the world and supplies it to power generation plants, industry, gas-utility companies and city gas companies throughout the country. It produces and supplies natural gas, purifies and sells gas-related by-products, builds and operates production facilities and distribution network, and explores, imports and exports natural gas for domestic and overseas markets. KOGAS has received the sovereign credit rating of A1 and A, the highest credit rating ever given to a Korean company by Moody’s and Standards and Poor (S&P). On the foundation of its accumulated experience and expertise, the corporation is actively developing new technologies, expanding the scope of businesses, and participating in foreign projects in its efforts to realise the goal of becoming a leading integrated energy company in the world. The purpose of the existence of KOGAS is to safely and stably supply clean and convenient natural gas to all people in Korea at an economically low cost.
Osaka Gas of Japan Osaka Gas is a leading energy supplier with its core natural gas supply business serving
| Mina Al Fahal Refinery
seven million customers in the Kansai region of Japan. With its portfolio of diversified energy businesses, Osaka Gas is developing into a multi-energy services provider of natural gas, electricity, LPG, district heating/ cooling, and other services. With its affiliated enterprises, the Osaka Gas Group is also active in various non-energy business fields.
segment is engaged in the development, leasing, management and subdivision of real estates. The other segment is involved in the leasing of automobiles, the sale of home security systems, the manufacture and sale of fine materials and the operation of sports facilities, among others.
ITOCHU Corporation Osaka Gas started business operations in 1905 and it currently serves seven million natural gas customers in the Kansai Region. The company imports over seven million tonnes of LNG annually (about 10 per cent of Japan’s total imports) from six countries – Indonesia, Malaysia, Brunei, Australia, Oman, and Qatar. The company has five business segments. The gas segment is involved in the manufacturing, provision and sale of gas. The Liquefied Petroleum Gas (LPG), Electric and Other Energy segment is engaged in the sale of LPG, the supply of electric, the investment in petroleum- and natural gas-related businesses, the leasing of liquefied natural gas (LNG) tankers, as well as the heat supply business. The Tool and Gas Fitting segment is engaged in the sale of gas equipment and housing equipment, as well as the piping work for gas facilities. The Real Estate
The history of ITOCHU Corporation dates back to 1858 when the company’s founder Chubei Itoh commenced linen trading operations. Since then, ITOCHU has evolved and grown over 150 years. With approximately 130 bases in 68 countries, ITOCHU, is a leading sogoshosha (general trading company) engaged in domestic trading, import/export, and overseas trading of various products such as textile, information and communications technology, machinery, energy, metals, minerals, chemicals, forest products, general merchandise, food, construction, realty, finance, insurance, and logistics services, as well as business investment in Japan and overseas. ITOCHU operates its business in accordance with the ITOCHU Group corporate philosophy and code of conduct. Its fundamental policy is to work towards the long-term preservation and enhancement of its corporate value by
Osaka Gas imports over seven million tonnes of LNG annually (about 10 per cent of Japan’s total imports) from six countries – Indonesia, Malaysia, Brunei, Australia, Oman, and Qatar 49
CLIENTS
building positive and effective relationships with its stakeholders. To execute its business activities in a fair and efficient manner the company is increasing the transparency of its decision-making processes and constructing a corporate governance system that incorporates appropriate monitoring and supervisory functions.
ORPIC ORPIC (the Oman Oil Refineries and Petroleum Industries Company) has been created from the integration of three companies – Oman Refineries and Petrochemicals Company LLC (ORPC), Aromatics Oman LLC (AOL) and Oman Polypropylene (OPP). ORPIC is one of Oman’s largest companies and is rapidly growing its businesses in the Middle East’s oil industry. Its refineries at Sohar and Muscat, as well as its aromatics and polypropylene production plants in the Sohar complex, provide fuels, chemicals and feedstock to Oman and to the world. Orpic has a team of over 1,600 employees – the majority of whom are Omanis – working across four plants with the common goal of building an integrated Omani refining and petrochemicals business of which the nation is proud. ORPIC is owned by the Government of the Sultanate and Oman Oil Company SAOC, which is wholly owned by the Omani government and created to pursue investment opportunities in the energy sector both inside and outside Oman.
Oman LNG competitively tenders from a pre-approved list of technically and financially qualified suppliers 50
ORPIC’s integrated complex includes four industrial plants operating at two locations in Muscat and Sohar. The two locations are joined by a 266 km pipeline, delivering feedstock from Mina Al Fahal Refinery to the Sohar plants. The plants take raw materials, the main one being Omani crude oil, and process them to create a series of important fuels and petrochemicals.
Partnership Oman LNG believes in partnership and fairness; what is best for the company and best for the country; Omanisation and industry sector cooperation, especially through OPAL. The company applies these
beliefs to itself internally, and to its suppliers and in its relationship with them. Oman LNG contracts out the provision of goods and services where it makes good business sense, seeking long-term partnership with suppliers in strategically important areas. It purchases goods and services on the best possible commercial terms from those with the demonstrated necessary and appropriate technical expertise, skills, commercial standing and strength and preparedness to work with Oman LNG.
Fairness To ensure fairness, Oman LNG manages contracts transparently and consistently. At all times the technical and financial terms of every contract are measurable, clear and unambiguous to minimise misunderstandings and disputes during execution.
Best for the company and country Oman LNG competitively tenders from a pre-approved list of technically and financially qualified suppliers. And wherever possible, it seeks to create opportunities for Omani companies, products and services based on their technical competence and commercial viability.
Omanisation Oman LNG fully supports and looks for ways to build on the Omanisation Policy of the Government of the Sultanate. All its contracts contain specific requirements for Omanisation.
OPAL Oman LNG is a member of OPAL and requires of its contractors to acquire OPAL’s Compliance Verification Certification (OPAL CVC). Since inception, Oman LNG has developed strong and enduring partnerships with all its stakeholders – customers, contractors and communities. These partnerships are the foundations of its past and future successes and give witness to its passionate adherence to professional competence and world class standards in the company an in all its dealings.
CONGRATULATORY MESSAGE
Customer and partner of Oman LNG
O
Orpic is the brand name for Oman Oil Refineries and Petroleum Industries SAOC. Orpic represents the integrated management of three operating companies, Oman Refineries and Petrochemicals Company LLC (ORPIC); Aromatics Oman LLC (AOL); and Oman Polypropylene (OPP). Oman LNG and Orpic have been enjoying excellent business relationship since day one of the implementation of condensate supply by Oman LNG to Orpic. Our teams work closely to ensure smooth and economical operations for both companies and that we are constantly able to bring value and quality to Oman’s hydrocarbon value chain. On behalf of Orpic, I congratulate Oman LNG for completing over 10 years of operations. Oman LNG is a significant revenue contributor to the Government of Oman and its people. Orpic has been procuring Natural Gas Liquids (Condensate) from Oman LNG for quite some years. The operations involve close monitoring of inventories and operational requirements at both companies to ensure economic benefits are delivered. I would like to compliment the Oman LNG team for their continuous efforts to make sure we maintain safe and smooth operations. Orpic is a customer and partner of Oman LNG and the two companies play an important role in advancing Oman’s economy with
~ Musab bin Abdullah bin Mohammed Al Mahruqi, CEO, Orpic
significant contributions to the sustainable development of Oman and its people. Oman LNG has never failed to deliver on its obligation in all the years since it started supplying Orpic with Natural Gas Liquids (Condensate) through a contract which began in 2007 and due to expire in 2017.
51
FACTSHEET
Key driver of diversification
FACT 1 Oman LNG was established in February 1994 by a Royal Decree and is Oman’s premier liquefied natural gas (LNG) company, exporting LNG and natural gas liquids (NGL) to countries in many parts of the world with its main market in the Pacific Rim and Europe. The company remains one of the key efforts by the Sultanate to diversify its economy away from oil as the only major revenue contributor. FACT 2 Its shareholders are: Government of Oman (51%); Shell Gas BV (30%); Total
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S.A. (5.54%); Korea LNG (5%); Mitsubishi Corporation (2.77%); Mitsui & Co. Ltd (2.77%); Patex (Oman) Corporation (2%) and Itochu (0.92%) FACT 3 Built by the Joint Venture of Chiyoda and Foster Wheeler, based on the Engineering, Procurement and Construction (EPC) contract awarded in November 1996; construction commenced in the same year and was completed in 2000. The project cost $2 bn. FACT 4 Oman LNG currently operates a three train
plant, with a nameplate capacity of 10.4 million metric tonnes per annum (mtpa) at its plant site located on a 1.4 square kilometre site at Qalhat, near Sur, some 200km southeast of Muscat. One of the trains is owned by Qalhat LNG, the second LNG company in Oman. Oman LNG owns 36.8 per cent shareholding in Qalhat LNG. FACT 5 The company’s first LNG production train was ready for start up (RFSU) in 2000 and exported its first cargo in April of the same year to Kogas of Korea. Its 500th cargo and 1000th cargo were exported in 2005 and 2009 respectively to KOGAS, Korea and Osaka Gas of Osaka, Japan. Oman LNG has long term Sales and Purchase Agreements (SPAs) with Korea Gas Company, Osaka Gas Japan and Itochu. It also sells natural gas liquids (NGLs) to Oman Refineries and Petrochemical Industries Company. FACT 6 For its shipping activities, Oman LNG charters vessels on a long-term basis from the Oman Shipping Company (OSC), a government-owned shipping company established in 2003. FACT 7 Oman LNG purchases feedgas from the government which is supplied from the PDO- operated facilities at Barik, Saih Rawl and Saih Nahayda fields. The gas is transported from these facilities through a 360 kilometre pipeline to the Oman LNG plant in Qalhat, Sur.
systems are certified to ISO 9001(Quality), ISO 14001 (Environment) and OHSAS 18001 (Occupational Health and Safety). FACT 9 In 2009, the company was recognised as Best Industry Establishment Compliant with Environmental Regulations by the Gulf Cooperation Council (GCC). It is also a recipient of the Excellence in Energy/ GASTECH Award for Best Company in Environment Management for 2009. FACT 10 In 2009, the company introduced the 12 LifeSaving Rules that set out clear and simple “dos and don’ts” in activities with the highest potential for risks to safety. These rules are being enforced to ensure that everyone who works with Oman LNG follows them and returns home safe. FACT 11 By December 2011, 88.9 per cent of the workforce in Oman LNG L.L.C. is Omani and five of its seven top management positions are filled by Omanis who are experienced professionals in their respective fields. FACTS 12 The company regularly invests in the development of its staff through high calibre training programmes. Oman LNG has also provided sponsorship to Omani staff to undertake bachelor’s and master’s degree courses from various recognised universities in Oman and abroad as well as to pursue specialised qualifications in their respective fields.
FACT 8 Oman LNG achieved the first nine million man-hours without LTI (Lost Time Injury) in 2002, and continually strives to maintain world-class safety standards in all its operations.
FACTS 13 In 2011, the company spent in excess of $4mn on staff training and development and in 2010, it received Edexcel’s accreditation to run the Business and Technical Education Council’s (BTEC) Level 4 Diploma in LNG Technical Support for its operational staff.
The company’s Quality, Health, Safety, Security and Environment management
Oman LNG was honoured at the HR Excellence Awards as the 2009 Employer of
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FACTSHEET
the Year award by Institute of International Research (IIR) Middle East.
Company has also funder shore protection facilities in Sur and the Sur Walkway.
FACT 14 The company routinely partners with the Sultanate, the Sur community and many other responsible agencies to deliver sustainable social investment programmes for the benefit of Oman and its people. Some of the main areas where Oman LNG has left its footprints in social investment are:
Other areas of investment are agriculture, women’s development and entrepreneurial activities and social welfare.
a) Health Care Where the company has provided modern equipment to hospitals and health centres as well as assistance to the handicapped and orphanages: e.g.; Equipping a genetics laboratory in Royal Hospital and an post-graduate Ear Nose and Throat (ENT) experimental training laboratory at Al Nahda Hospital, basic equipment such as wheelchairs, medical beds and stethoscopes in clinics the funding of cancer treatment and care facilities.
In 2010, the company was honoured by the Council of Ministers for Social Affairs in the Gulf Cooperation Council (GCC) as the Best Company in Corporate Social Responsibility (CSR) in Oman.
In 2010, the company funded the acquisition of a 64 Slice Computer Tomography scanner, popularly called a CT Scanner, for the Sur General Hospital at the cost of RO 450,000. Most recently in 2011, Oman LNG provided OMR 400,000 for equipping the hospital’s newly planned Coronary Care Unit. b) Education The company has partnered with the Ministry of Education and the Ministry of Manpower (MoMp) in funding: Sunshades for schools across the Sultanate; Chemistry and Physics Laboratories at Ibra Technical College; “Oman LNG Smart Classrooms” in many secondary schools in Oman; In 2010, the company provided four hundred thousand rials for research equipment in of Physics, Chemistry, Biological and Environmental Sciences at the Department of Applied Sciences at the Higher College of Technology, Muscat. c) Infrastructure Oman LNG was a pioneer partner with the Ministry of Housing in the provision of low cost housing for Omani families. The
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d) Human Resource Development To date, Oman LNG has helped over 1,000 Omanis into gainful employment through its HR-D programmes.
FACT 15 After a decade of meaningful contributions through its Social Investment Programmes (SIP), Oman LNG in 2011 undertook a careful restructuring of its corporate social responsibility activities to bring additional value and impact to Oman’s most pressing needs – particularly in employment creation. The new strategy for its SI focuses on three primary categories: 1) Empowering Communities 2) Championing Innovation 3) Investing in People. FACT 16 In 2011, Oman’s Ministry of Social Development confirmed approval for the establishment of the Oman LNG Development Foundation. The purpose of the Foundation is to ensure the sustainability of Oman LNG’s successful and extensive Social Investment Programmes (SIP) that is funded by its shareholders through allocation of 1.5 per cent of the company’s annual net income after tax (NIAT) for these purposes. From 2012 the company’s social investment activities will, in future, be channelled through the newly established Oman LNG Development Foundation.
CONGRATULATORY MESSAGE
Many milestones to come
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It gives me great pleasure to congratulate Oman LNG on completing its one decade and the beginning of another ten years that promises new achievements. On this occasion, I am extremely proud, as Total President for Middle East, to address Oman LNG on behalf of Total. It is indeed a great honour for Total to have been part of this remarkable journey that is the story of Oman LNG; and I firmly believe this to be just the beginning of more milestones to come. Above all, I look back on our many years of co-operation with much joy and appreciation and great esteem for our partners at Oman LNG for the tremendous success of their operations. Oman LNG has come a long way in its achievements and contributions to the economic growth of the country and its neighbouring economies as a worldwide supplier of natural gas. Total has been involved with Oman LNG projects since inception, following the discovery of significant gas reserves in the centre of the country. Through its 5.54 per cent interest in Oman LNG, Total has also been able to participate in the development of Qalhat LNG which was successfully launched in 2003. Our somewhat modest presence in Oman in the past few years in no way indicates a narrowed commitment; we have been present in the Sultanate since 1974 and are in fact very much looking forward to expanding our partnership and developing our operations in the country. In the Middle East, Total is a leading player of the liquefied natural gas industry which has erased boundaries for natural gas transportation.
| Arnaud Breuillac, President Middle East, Exploration and Production, Total
Among international oil companies, we are now the world’s second-largest LNG operator* in the region with interests in Oman, the UAE, Qatar and Yemen. Our presence in all natural gas industry sectors makes us a preferred partner in scores of projects around the world: we thus shall continue to strive to be Oman’s unwavering partner. What has been achieved over the past ten years is beyond expectations and a clear proof that Oman is confidently moving forward with pride and prudence and we are delighted to work jointly with Oman LNG to contribute to the flourishing of the Omani economy. On behalf of Total, I wish you once again on this occasion every success, and congratulate your entire team on the 10th anniversary of their company’s foundation. *2010 company data based on upstream and midstream LNG portfolios.
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CONGRATULATORY MESSAGE
Aggressive plan for Omanisation
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The Ministry of Manpower strictly follows the royal directives of His Majesty Sultan Qaboos bin Said regarding job opportunities for the Omani citizen through carefully studied plans for the job market and business activities of the private sector. It pursues an aggressive plan to ensure Omanisation of different jobs and professions and qualify the national manpower. To this end, the Ministry maintains coordination with different private sector organisations and other stakeholders. In its bid to implement the national manpower employment programme, the ministry guides job seekers to available job opportunities within the private sector. The ministry trains the unemployed and this training is linked with the employment programme. The government bears the costs of the training and ensures that the job seekers are qualified to take over the vacancies within the private sector.
The Ministry seeks to provide those whose services have been terminated for reasons beyond their control such as layoffs on completion of projects with suitable job opportunities that meet their qualifications, skills and professional experiences. The programme also targets those who have voluntarily resigned or have been terminated. These programmes come as a bid by the government to ensure social stability for the Omani workers within the private sector. Further, the programme also targets craftsmen and entrepreneurs through the SANAD offices to benefit from the opportunities and incentives provided to
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help them. The loan ceiling for the finance of small ventures has been recently raised up to RO50,000. The ministry has developed and facilitated the employment services for the national manpower through the following initiatives: • Developing work systems through the manpower directorates. The Ministry has built facilities and halls and equipped them with state-of-the-art equipment to ensure quick processing of applications. It has also opened centres for employment services at Muscat International Airport, major malls, colleges of technology and vocational training centres. There are mobile offices that serve the needs of the Wilayats and residential areas that do not have permanent employment offices. The initiatives aim at providing citizens with the services wherever they are. At the same time, it helps the private sector in sourcing required manpower to ensure meeting the stipulated Omanisation targets. • Providing the manpower directors with the technical facilities and electronic services to ensure smooth transaction between the job seekers and the employers. It ensures hassle free exchange of information on the available training and employment opportunities for the national manpower. This in turn helps the employers to meet the Omanisation requirements in their organisations and develop the capabilities of the national manpower by providing them with the technical and administrative skills needed by the market.
• Establishing ‘Job Opportunities Bank’ to provide information on vacant positions within various business activities. The information is published on the ministry’s website to enable employers to announce the vacancies in their organisations. It also serves as a platform for job seekers through which they get an idea about the vacancies in various organisations. This website strikes as a meeting point between the supply and demand for national manpower. • Providing the technical and administrative facilities that enable companies to interview candidates for training or employment before signing the contract with them. This initiative enables companies to select the right candidates. The successful candidates may receive orientation programmes that make them familiar with the work environment in the company. This initiative enhances the stability of the Omanis at their jobs. • Establishing labour offices in the Gulf Cooperation Council (GCC) countries. An office was established in Qatar in 2003 and another one in Dubai in 2005. • Providing vocational guidance to the unemployed to assist them in selecting the profession that matches their abilities and skills. To this end, the ministry publishes a number of manuals and films. • Building an integrated and transparent information base for the job market to avail information on the private sector companies, their businesses, the number of Omanis working in these organisations,
| Sheikh Abdullah Bin Nasser Al Bakri, Minister of Manpower
their qualifications and other information that contribute to the ensuring stability in the work market. • Officials from the ministry also take part in implementing the government plan to set up a specialised centre for vocational training at the Ministry of Education. This is to promote vocational trends among the students at an early stage. On the 41st anniversary of the Omani blessed renaissance, I call on the Omani youth to renew their pledge and loyalty to His Majesty the Sultan who leaves no stone unturned to ensure welfare and better standard of living for all Omanis wherever they are. I also call on them to maintain the achievements made and benefit from the available systems by processing their transactions and applications through the internet.”
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HUMAN RESOURCES DEVELOPMENT
41 STAFF MEMBERS FETED As a dynamic company, playing a key role in the development of Oman and its people, Oman LNG applies the company values of respect, care, fairness and transparency to attract, develop and motivate its employees
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As a dynamic company, playing a key role in the development of Oman and its people, Oman LNG applies the company values of respect, care, fairness and transparency to attract, develop and motivate its employees On February 2011, Oman LNG feasted 41 members of its team at an award ceremony and dinner to recognise their long service to the company. The staff were honoured for rendering five, ten and 15 years of dedicated and committed service and received certificates and gifts as a token of the company’s gratitude. The commemorative event, “The Long Service Award Ceremony”, was held at the Recreational Club at the Company’s Hay A’Shurooq Residential Complex in Sur, home to Oman LNG’s liquefied natural gas production activities.
service award for working in the company for five years. Now with an Omanisation rate of over 88.9 per cent, an exceptional training programme for employees, internationally recognised health and safety standards, world-class work facilities and a large pool of professionals across many specialisations, Oman LNG has achieved many landmarks, becoming a much sought after organisation, with many individuals aspiring to join its highly-skilled workforce. Since it began operations the company has continued to invest over $4mn each year in local and international staff training programmes. It also actively encourages and supports its staff to achieve professional qualifications that are externally accredited and recognised.
Record breaking “Time flies and it is indeed an honour to be part of such a professional workforce over these past years. I’m proud to be part of the bigger team that makes up Oman LNG, a company that has become an important and valuable contributor to the country’s growth and progress,” said Munira Al Mukheini, one of the recipients of the long
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One such success story was in 2010 when Ahlam Al Shirawi, through company support became the ninth Omani woman to become an accredited member of the Association of Chartered Certified Accountants (ACCA), an authoritative stamp of professionalism coveted by many practicing accountants the world over.
HR POLICY Personnel Commitment Oman LNG is a dynamic, capital-intensive, modern company, playing a key role in the development of Oman and its people.
} Develop Omani employees to be able to assume all positions within the company } In this way, we believe we will motivate top performance and loyalty and provide
As an employer, Oman LNG is committed
assurance of safety, integrity, profitability
to:
and business continuity in our enterprise.
} Apply the company values of Respect, Care, Fairness and Transparency when attracting, developing and motivating its employees
Personnel Policy Oman LNG shall: } Use auditable recruitment techniques that select candidates against pre-agreed
} Be strongly competitive in the employment market and attract, recognise
criteria and that provide acceptable assurance of fairness and impartiality
and reward performance } Evaluate all positions within the company } Recruit employees on merit in compliance with the requirements of specific careers
to establish fair and competitive reward levels for each position
and positions and eschew prejudice and unfounded discrimination } Champion a learning culture in all our employees and teams } Invest in developing employees to their full potential within the company based on
} Identify well-defined development opportunities for employees based on potential career paths and backed by professional training, coaching and mentoring } Appraise performance annually and
performance, ability and equal opportunity
identify opportunities for advancement of
for advancement
skills and competencies to assist each
} Promote teamwork amongst employees based on the company’s core values } Ensure effective procedures for resolving employee grievances in a fair and confidential manner without bias to seniority
In Sur, Oman LNG’s Learning Centre offers the Edexcel accreditation Higher National Diploma (HND) in LNG Technology one of the many reasons why in 2009 Oman LNG was awarded the Regional Employer of the Year Award by the Institute of International Research (IIR), Middle East. “Our employees have been and continue to be Oman LNG’s most prized assets in our
employee achieve his/her potential } Recognise employees on merit for salary based on appraised performance and delivery of results } Reward at the 75th percentile of total cash compared to our competitors
business. I thank and congratulate them for their dedication and commitment over the years. Their service continues to be the most important factor in the drive to meet and exceed our targets as a company as well as to further deepen our partnership with the government and other stakeholders and to deliver growth and prosperity in Oman,” said Dr Brian Buckley, Oman LNG’s CEO.
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SOCIAL INVESTMENT PROGRAMME (SIP)
CARING FOR THE SOCIETY Oman LNG has signed two agreements in Bidiya towards improving the lives of women and introducing an environmentfriendly source of irrigation
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In line with Oman LNG’s policies and values of empowering communities, the company funded the acquisition of a coaster bus to ferry members of the Omani Women’s Association in the Wilayat of Bidiya for various activities, as well as children from an adjoining kindergarten to the women’s centre.
Wilayat Bidiya is situated in the middle of the Ash’ Sharqiyah North Governorate in the north east of Oman looking out to the Arabian Sea to the east. Ash Sharqiyah, in which Oman LNG is located, encompasses the interior area of Al Hajr Al Sharqi mountains in the north, the Wahibah Sands to the south and boarders Al Dakhliyah in the west.
Oman LNG also forged a partnership with Bidiya Municipality to fund a project to convert waste water from the town’s sewage treatment plant for the purpose of irrigation. This is another milestone in the increasing adoption of technology for environment-friendly initiatives. The project will be supervised by the Bidiya Municipality Committee.
Ash Sharqiyah North is made up of the wilayats (provinces) of Ibra, Bidiya, AI Qabil, Al Mudaybi, DimaWa At Taiyyin.
Ali Al Hashar, Chief External Relations Officer at Oman LNG described the initiatives as “symbolic” of the value Oman LNG places on women in the society and sustainable preservation of the environment. “The agreements express Oman LNG’s support for women as well as the responsible usage of resources for the preservation of our environment,” he said.
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The beginning To the north of Wilayat Bidiya is the Wilayat of AI Qabil and on its east are the wilayats of Al Kamil and Al Wafi and Wadi Bani Khalid. Bidiya contains some 15 villages. Story tellers relate that it was established when the Hajris (who are the majority of the inhabitants) arrived there in 1008 AH (1599 CE). They built castles, forts and laid aflaj (water channels for irrigating agricultural lands. The arrival of the Hajris was considered the beginning of the region’s prosperity and so they called it “Bidiya” (the beginning). Agriculture is the main occupation of the
| The support extended by Oman LNG to Omani Women’s Associations indicate its responsibility towards the society
majority of people in this Wilayat. The most important crops are fruit, vegetables and animal fodder for livestock and animal husbandry. The traditional industries are gold- and silversmith for jewellery, khanjars (curved Omani daggers) and swords. Other traditional crafts include the making of special tools such as the “Makharif”, used to harvest dates; the “Dharuf” to store dates; leather tanning for Khanjar belts, sword scabbards; and weaving with leaves and reeds mainly for ropes. One of the most important sites, in the Wilayat of Bidiya is the fort of Al Mintarib which was restored recently by the Ministry of National Heritage and Culture. There is also a fortress at Al Wasil, surrounded by four impressive towers and three other forts, Al Shaariq, Al Hawiya and Al Ghabi.
springs, famous in the Dhaahir area are: Ain Yaya, Habseen, Abu Saheela, Abu Sareema, Abu Ghafa and Ain Al Tamr. The geography of Bidiya is made up of sand and mountains, the coast and green oases in the interior. The Wilayat is also famous for its Arabian horse and camel racing which take place most weekends, to which enthusiasts from all over the Gulf region come to watch. And for those tourists who seek peace, quiet and a very different beauty there are the miles of golden sanded desserts and dunes to wander by camel or four-wheel drive. Oman LNG’s support to the Omani Women’s Association in Bidiya towards greater self-sufficiency is but one of a long list that includes the Women’s Associations in Khasab, Musandam; Samail in Ad Dakhiliyah; Al Qabil and Ibra in Sharqiyah North.
Magnetic appeal Thanks to the Hajjaris and their successors, Bidiya is blessed with many wonderful aflaj and beautiful natural springs. The most important of these are at Al Mintarib, Al Shariq, Hatwah, Al Qa’a, Al Jahas, Dibeek, Al Raka, Shaahik, Al Heeli, Al Hawiya, Al Dhaahir, Al Mutaaw’a and Al Ghabee. The most important water
The Omani Women’s Association (OWA) was first established in 1970 and currently has about 51 branches throughout the country. They focus on assisting women to achieve their potential by offering training courses in such areas as information technology and vocations like handicraft and tailoring.
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SOCIAL INVESTMENT PROGRAMME
Sunaysilah Fort gets a makeover The upgrading of tourist facilities at the Sunaysilah Fort in Sur underpinned the tourism potential of the Sultanate
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The town of Sur, located on the Sharqiyah coast, is described in legend as the pearl of the east coast of the Sultanate. It was the source for many sailors of Oman’s navy which played an illustrious role in Indian ocean’s maritime history for many centuries. It formed the gateway to both Asia to the east and Africa to the south and was a historical crossroads of the sea. Malik Bin Faham Al Azdi Al ’Umani adopted it as the capital of his kingdom in 2500 B.C. Besides its maritime history and traditional ship building which continues to this day, Sur is also famous for its caves and forts located in and around the town. The historical Fort at Sunaysilah in Sur had attracted tourists for many years and the opportunity to rehabilitate its tourist facilities drew the attention of Oman LNG. The company’s commitment will bolster its tourist potential and further the aspiration for increased earnings from this important economic sector for Oman. Considered the principal fort in the Wilayat of Sur, Sunaysilah, towers over 50 metres in height and dates back three centuries. It’s located on a rocky outcrop close to the centre of the Sur city and offers a panoramic view to its visitors of the Sur coastline and the town. Oman LNG’s support enabled the Ministry of Tourism expand the amphitheatre located within the premises of the fort to an area covering 338 square metres, construct a protected walk-way around the castle and to provide extended parking areas. Also included in the pact is a new administrative building to accommodate a reception area for special guests and
dignitaries and a well-equipped office to cater to the needs of tourists. It is expected when the rehabilitation is completed that the amphitheatre will stage many cultural programmes and attracts many more visitors to this wonderful landmark in Sur. Oman LNG, itself a result of country’s successful effort to diversify the economy has partnered with the ministry on other projects to promote tourism to expand Oman’s economic base. A notable example of environmental conservation and tourism is the Turtle Research Centre at Ras Al Jinz, outside Sur. The company is also the partner of the Ministry of Heritage and Culture in the establishment of the unique cultural and heritage museum of Fath Al Khair and in championing the preservation of the ancient historical monument, the Bibi Maryam at Qalhat. “The development of a vibrant tourism industry is one of the ambitions of the country as a way of diversifying the economy, offering employment and preserving Oman’s cultural heritage. Our agreement to rehabilitate the Sunaysilah Fort is an important step towards achieving these goals,” Dr Brian Buckley, General Manager and CEO of Oman LNG said after signing the agreement at the Ministry of Tourism. HE Mohammed bin Hammond Al Toby, former Undersecretary of the Ministry of Tourism signed on behalf of the Ministry. The World Travel & Tourism Council (WTTC) expects Oman’s tourism industry to grow from 1.5 per cent of total GDP in 2010 to 2.4 per cent of GDP by 2020.
Oman LNG’s support enabled the Ministry of Tourism to expand the amphitheatre located within the premises of the fort to an area covering 338 square metres 63
EDUCATION
Nurturing the future Developing human resources through scientific and practical knowledge, development of their personal discipline and interpersonal skills and releasing their creative talents are the bases of real growth for individuals and companies. Oman LNG exemplifies these endeavours
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The government is determined to see Omani nationals playing their part in all areas of employment up to the most senior levels in the Sultanate. To achieve this, education and training are identified as the priority areas and cornerstones of each of the
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Sultanate’s Five Year Development Plans. The Ministries of Education and Higher Education are committed to education – whilst maintaining traditional values – that is modern and advanced, designed to meet
the demands of modern industry, commerce and governance. His Majesty, Sultan Qaboos bin Said has said, “Giving attention to human resources, including the provision of the various tools required to enhance their performance, incentives to develop their capabilities, diversifying their creative talent and improving their scientific and practical qualifications, are the basis of real development and the cornerstone that ensures solid foundations for growth. The human being is the maker of renaissance and the builder of civilisation.” Oman LNG believes passionately in this vision and has partnered with both Ministries to provide infrastructure, ‘smart’ classrooms, laboratories, scholarships and industrial placements, amongst others, in support. “Therefore, we are sparing no effort and will continue to spare no effort in order to provide our human resources with all the help they will need to develop, hone and train. We will also provide educational opportunities for them in order that they may acquire useful knowledge, the required experience and the necessary technical skills that will be needed in the labour market and are required for sustainable development in the various fields,” His Majesty said in his 2008 National Day Speech.
Protection from elements Oman LNG started with the basics of infrastructure when it signed agreements with the Ministry of Education that benefited the Al Amal School for the Deaf in Muscat and 50 other schools across Oman. These schools have had protective sunshades installed in their play areas to promote additional and safer extra-curricular activities throughout the school year. Education experts have pointed out that participation in these activities is very important to increase a child’s selfesteem. Extra-curricular activities also improve physical fitness and help children apply theories learnt in the confines of the classroom to real-life situations.
Another project undertaken by the Ministry of Education has been the supply to 30 schools and training centres in and around Muscat with state-of-the-art teaching aids, such as interactive whiteboards, digitally controlled microscopes and electronic sensors. This equipment assists and promotes the use of advanced teaching methods, enhances the delivery of the schools’ curricula, captures and records lessons and teaching notes consistently for later reference and use and help turn abstract concepts taught in the class into practical examples and exercise. “These examples of partnership with the Ministry reflect a continuing and sustainable effort on our part as a responsible corporate citizen in Oman to ensure we work in alignment with the vision of His Majesty, Sultan Qaboos bin Said to promote education as the fulcrum of the country’s progress,” said Dr. Brian Buckley, Oman LNG’s general manager and CEO.
Stimulating environment The linkage of theoretical studies to their practical applications was offered to the students of the Accounting Department at the Sultan Qaboos University (SQU) in a recent workshop when professional staff from Oman LNG engaged the students in an Accounting Simulation Game and demonstrated to them how accounting principles taught in academia are applied with rigour and seriousness in a world-class organisation to take critical business and financial decisions. A further example of ensuring the availability of interactive learning for students in Oman is Oman LNG’s provision of scientific equipment worth over $1mn to the Higher College of Technology in Muscat. With these facilities college students have the opportunity to carry out experimental verifications of what they’ve learned in their physics, chemistry, biological and environmental sciences classes, and areas of critical importance to Oman’s technologically based industries.
Oman LNG has reinforced its contributions to the Sultanate’s drive to foster learning and establish education as the main thrust of development 65
CULTURE AND HERITAGE
Pursuit of progress The Oman LNG Day celebrates the birth of Oman’s ‘age of diversification through gas’ following the issuance of the Royal Decree by His Majesty Sultan Qaboos bin Said, in February 1994 establishing Oman LNG. Each year, the day is marked with cultural festivities and the traditional boat race in Sur, the location of the company’s liquefaction facilities
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Sur is the key coastal town in a region whose sea-faring exploits go back thousands of years. Its history is steeped in centuries’ long legions of fishing, piracy and trading with countries as far as China as early as some thousand years ago. Sur became renowned for its fearless seafaring heroes who were also instrumental in expanding the Oman’s
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spheres of influence and empire along the East Coast of Africa and in large enclaves of the Indian subcontinent. This dominance lasted many centuries and only went into relative decline in the late 19th century when the European powers, mainly Britain assumed the ascendancy. Sur remained throughout a bustling magnet for peoples
from every part of Oman’s ‘empire’ and a melting pot of traditions and the participation in fishing and trade from India down the east coast of Africa continued – following the monsoons and using the traditional dhows well into the 20th century until steam and the internal combustion engine slowly but surely displaced sail. The people of Sur remain passionately attached to the sea and reputedly 2/3rds of Sur families are still supported by it, whether through fishing, the continuance of the ancient craft of traditional ship building, maritime supplies, or more recently the modern pursuit of motor craft and jet-foils! Indeed, water sports and particularly traditional boat racing are still practised with unrivalled passion, particularly in the racing of the Al Mashuwah!
Al-Mashuwah Al-Mashuwah is a boat that was traditionally used to discharge the cargoes, passengers and crew from the big cargo dhows anchored off shore to Sur town. They varied in size and were propelled by between 4 and 20 rowers. When a large dhow arrived at Sur, the Al Mashuwah crew would race each other to be first at the dhow and carry back the most lucrative cargo and passengers. Finally, they would ferry the Al Nokhitha (local name for the captain) ashore with great ceremony and respect. Today the tradition of the Al Mashuwah is still remembered in the poetry and songs of the people of Sur.
Making of Al-Mashuwah Building the Al-Mashuwah begins with the extension of the Alheirab, the base of the ship. Its measurements are determined by the ship-builder. After constructing the Alheirab, the builders begin to install the Al-Sharaur sheets (sheets from the top of the base); followed by the Faramat and Al- Shamlan (both are wood for the inner structure). The installation of the rest of the sheets is completed to reach the desired height of the boat. The height of Al-Mashawah usually does
Boat racing teams in 2011 } Oman LNG } Sur Sports Club } Al Orouba Sports club } Al Talee’ah Sports club } Sur Healthy Town Project } Qalhat Healthy Village Project } Shinas Club } Sohar Club } Majees Club } Liwa Club
not exceed a metre and half; its length ranges from ten to 15 metres and its width in the middle not more than two metres. The number of paddles must match the number of sailors but it must not be more than 20 paddles. Al-Mashuwah has two small decks, the back deck is used by the captain and passengers and the front deck, usually small, cannot accommodate more than one person. The “al-Bankiaat” chairs are used by the sailors while rowing.
Al Mashuwah races When there were many dhows at port and they stayed for long periods –as they often did awaiting the changes in wind conditions, the Al Mashuwah provided the opportunity for sailors to meet and visit each other’s vessels. During such periods of rest, these sailors share stories about their escapades and feats of daring. Inevitably the desire for a challenge surfaced and they would arrange Al Mashuwah races. They would agree on the day and the distance, then the Al-Mashuwahs would be repaired, painted and decorated and the paddles prepared for ‘battle’. Each team would be chosen carefully for suitability at the rear and front positions – and of
Al-Mashuwah is a boat that was traditionally used to discharge the cargoes, passengers and crew from the big cargo dhows anchored off shore to Sur town 67
CULTURE AND HERITAGE
The idea of organising Al-Mashuwah boat race is an initiative depicting the maritime heritage of Sur 68
course the “Sakony” who directs the crew during the race. Equally important were the “Zanah” and musical instruments (al-Kashr – al-Rahmani – al-Zamar), selected to drive the crews to their limits.
the idea of reviving the Al Mashuwah races was born as a means of celebrating the Royal Decree that created Oman LNG with an event that typified the traditions and great heritage of Sur.
News of the chosen date for the race would spread amongst the sailors and port workers who would gather to watch and cheer the decorated Mashuwahs as they raised their flags. The competing Mashuwahs moved to the starting point - usually up to five kilometres from the finish. The signal was given and the Mashuwahs take off like arrows with each ship almost sinking from the fervour of the paddling. The onlookers’ screams of excitement are mixed with the beat of the paddles and the driving musical instruments as the boats near the finishing line and the winning Al Mashuwah slides across with the last victorious stroke of the paddles. The celebrations begin with the winning team leading the dance joined by the other sailors. A banquet of fresh fish and dates concludes the festivities.
It was also seen as a way to remind the new generation of the wonderful achievements and values of their forefathers who braved storms and other hardships to ensure their homes and Oman prospered; and to do this through reviving the traditional and exciting Al Mashuwah race.
They were great occasions – and unforgettable for the older sailors in Sur who still narrate in great detail about the course of the race, the members of each team and why each was selected for his peculiar skills.
OLNG Day Boat Race It is not surprising, given its heritage, that
To promote the event to use truly traditional craft, Oman LNG purchased three ‘Al Mashuwah rowing boats for three sports clubs in Sur: Al Oroubah, Al talee’ah and the Sur Sports’ Clubs. In 2006, two additional boats were brought into service – the Oman LNG boat and another for the ‘Sur Healthy Town Project’ team. Five new boats were again sponsored by the company in 2009 to replace the older boats. Encouraging the competition is part of a larger effort that represents the company’s commitment to the community through preservation and promotion of Sur’s traditions and cultures and bringing this together with a sporting activity that encourages the youth to be active and healthier.
CONGRATULATORY MESSAGE
Dependent supplier
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On behalf of Mitsubishi Corporation, I am pleased to extend my warmest congratulations and best wishes to our partners, friends and colleagues in Oman on the felicitous occasion of Oman LNG celebrating the 10th anniversary of its successful operations. Mitsubishi Corporation is involved in the entire gas value chain, from upstream to downstream, and we have investments in various LNG projects around the world. The Oman LNG project, in which we hold a 2.77 per cent equity position, is one of the most stable and successful projects in our LNG portfolio. The project’s LNG plant in Sur has enjoyed impeccable operational performance under a strong management team supported by world-class employees, and in the relatively short time span of 10 years, Oman LNG has become a very dependable supplier of LNG to Japan. Taking this opportunity, I would like to extend our sincere gratitude and appreciation to His Majesty Sultan Qaboos bin Said for his wise and able leadership, and express our appreciation to the Government of the Sultanate of Oman and the management team of Oman LNG for safeguarding the reliability and growth of the project. Giving back to society and growing together with the local communities where we do business is a fundamental principle of Mitsubishi’s corporate culture as a global corporation. These basic principles have also guided our CSR activities in Oman. Two recent notable initiatives are the “mistcatcher” project in Salalah, a community programme in co-operation with the Ministry of Environment and Climate Affairs, and the Mitsubishi Corporation Scholarship Fund, a grant programme funded by our organisation and managed by the Ministry of Higher Education.
| Junichi Iseda, Senior Vice President, Division COO Natural Gas Business Division B Energy Business, Mitsubishi Corporation
On March 11, 2011, Japan was struck by the Great East Japan Earthquake, one of the most powerful earthquakes in recorded history. The disaster and the destruction that followed left more than 20,000 people dead or missing. Amidst all the sadness and loss, we have drawn great strength from the expressions of sympathy that have reached us from Oman. We feel particularly indebted to the Government of Oman for donating $10mn; Oman LNG for its donation of $1.5mn in a joint initiative with Qalhat LNG, and the numerous organisations and individuals who have expressed their solidarity through general financial donations or other forms of support. The knowledge that Oman is a “true friend in need and in deed” has been a source of great pride to our organisation. It has been a privilege and a pleasure for Mitsubishi to work with the government and the people of Oman over the past decade, and we look forward to further strengthening of relations with Oman in the coming years. I express warmest greetings and best wishes for continued success.
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PICTORIAL GLIMPSE
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MILESTONES
Role model par excellence Oman LNG has established new standards of operational excellence winning plaudits both at the national and international level. A Report
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Oman LNG stands as a major contributor to the Sultanate’s revenue stream and has attracted numerous laurels since its establishment in 1994. Here is a look at Oman LNG and its various milestones over the years.
1994
Oman LNG and Osaka Gas signed a long- term SPA. Osaka Gas is a leading energy supplier with its core natural gas supply business serving seven million customers in the Kansai Region.
Oman LNG was established by a Royal Decree of His Majesty Sultan Qaboos bin Said. Realising the potential of liquefied natural gas (LNG) to contribute towards the economic diversification and growth of the Sultanate, thegovernment came forward to make use of this opportunity and set up Oman LNG.
First LNG production train was ready for start-up and it’s time to get down to business. The LNG plant boasts two 3.3 mtpa liquefaction trains, which were constructed by Chiyoda-Foster Wheeler. The total construction cost of the plant was $2bn.
1995
2000
After extensive study for an appropriate site which would meet world-class standards and be suitable geographically, the coastal village of Qalhat in Sur was selected as the site for the Oman LNG plant in 1995. The construction of the plant began in November 1996, and it was commissioned in September 1999.
1996
Korea Gas Corporation (KOGAS) and Oman LNG signed a long-term Sale and Purchase Agreement (SPA). KOGAS was incorporated by the Korean government in 1983. Since its founding, it has grown to become the world’s largest LNG importer.
1997
First Annual Oman LNG Day was set up to mark the formation of Oman LNG by Royal Decree in 1994.
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1998 1999
His Majesty Sultan Qaboos bin Said inaugurated the Oman LNG plant at Qalhat, Sur. This marked a major milestone in the Sultanate’s quest to be a major gas as well as oil player. The shareholders of the company were the Government of Oman (51 per cent) in cooperation with Royal Dutch Shell (30 per cent), Total S.A. (5.54 per cent), Korea LNG (5 per cent), Mitsubishi Corporation (2.77 per cent), Mitsui & Co. (2.77 per cent), Partex Oil & Gas (2 per cent), and Itochu Corporation (0.92 per cent).
2000
In April Oman LNG exported its first LNG cargo. The LNG plant was supplied from the gas gathering plant at Saih Rawl in the central Oman gas field complex through a 360 kms long and 48 inches (1,200 mm) pipeline with a
capacity of 12 billion cubic meters per annum of gas, operated by Petroleum Development Oman (PDO). The gas originated from Barik, Saih Nihayda and Saih Rawl gas fields.
2001
The ISO Certification of Key Business Process was awarded. This underscored the high technical and professional standards set by the company.
2002
The company achieved for the first time nine million manhours without LTI. A lost-time injury is defined as an occurrence that results in a fatality, permanent disability or time lost from work of one day/shift or more. This was a major achievement for the company as it reflected the high safety standards that guide its operations.
cent of Qalhat LNG, Oman LNG owns 36.80 per cent and Union Fenosa Gas of Spain owns 7.36 per cent of the company. Other shareholders are: Itochu Corporation (3 per cent), Mitsubishi Corporation (3 per cent) and Osaka Gas of Japan (3 per cent). Around $700mn was invested in the engineering, procurement and construction of this 3.30 mtpa liquefaction train.
2005
500th LNG cargo was exported, underscoring the strength and viability of Oman LNG in the global energy industry.
2006
The head office in Muscat was inaugurated and the senior management started working from its head quarters in Shatti al Qurum, Muscat.
His Highness Sayyid Shabib bin Taimur, the advisor to His Majesty Sultan Qaboos bin Said for environmental affairs inaugurated Qalhat LNG. The success of Qalhat LNG has been a proof of the high reputation and respect that the Government of Oman and its shareholders have in the international arena. The project has also strengthened existing economic relations between Oman and its strategic allies and nations.
2004
2007
2003
Oman LNG became a shareholder in Qalhat LNG. In 2002, the government decided to move forward with plans to develop a third gas liquefaction train and thus ‘Qalhat LNG’ was born and incorporated in 2003. The Government of Oman owns 46.84 per
Oman LNG funded the construction of a ladies centre at the Omani Women Association, Sur. Oman LNG works closely with the communities surrounding its plant. The company also takes its Corporate Social Responsibility seriously and works towards improving the quality of life of people living in its vicinity.
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MILESTONES
and Best Employer Award. By its actions, Oman LNG has become a reference point for other companies in the global LNG trade. It is also a role model for companies on how the corporate sector can work with the government in preserving Oman’s exquisite ecosystem for future generations.
2010
Oman LNG, one of the Sultanate’s most prominent companies, contributes to supporting many community projects across Oman in cooperation with the public and private sectors. The company has formed a committee for social investment programmes, with its members drawn from the public and private sectors, and from Shura Council.
2008
Oman LNG received the firstever Arabia Corporate Social Responsibility Award. The Award recognises and honours organisations in the Arab region that demonstrate outstanding leadership and commitment to corporate social responsibility.
2009
Oman LNG celebrated the export of its 1,000th cargo of liquefied natural gas from the Sultanate on January 8, 2009, under the auspices of HE Nasser bin Khamis al Jashmi, Undersecretary of the Ministry of Oil and Gas and Chairman of Oman LNG. The 1,000th cargo was shipped to South Korea by the Splendour vessel under a longterm agreement that was concluded between the two companies in October 1996 which came into force in April 2000 when the first cargo of LNG was shipped to South Korea by the Hanjin Sur vessel.
2009
Oman LNG won the coveted GCC Award for Best in Compliance with Environmental Standards
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Ten years of operational excellence was achieved: Since the export of its first cargo in 2000, Oman LNG has delivered over 10 years of consistent return on investment to its shareholders, uninterrupted supply of LNG to its customers, growth in professionalism, experience and recognition of its staff and maintained successful relationships with suppliers. It also has a unique partnership with the government and people of Oman in support of sustainable economic self-sufficiency and diversification. The company continues to build on what it has achieved, and to explore new opportunities in preparation for future business growth. It is also committed to achieving milestones and improvements that are specific, measurable, accurate, realistic and time-framed.
2010
Oman LNG was recognised by the Council of Ministers of Social Affairs for the Gulf Co-operation Council (GCC) as the Best Company in Corporate Social Responsibility (CSR) in Oman. The recognition to Oman LNG by the council was supported by Oman’s Ministry of Social Development and underlined the company’s many contributions to the spread of social infrastructure in Oman and the benefits the social programmes have had on the people.
2011
The Ministry of Social Development gives approval, after endorsement from the Cabinet of Ministers, for the establishment of the Oman LNG Development Foundation. The Foundation seeks to ensure the future sustainability of the social investment programmes of the company to which 1.5 per cent of Oman LNG’s post-tax profit is dedicated.
VIEWPOINT
Capacity building After over a decade of successful growth and milestone firsts, Oman LNG has evolved as a role model. We are now into the constantly maturing and optimising phase where our attention is firmly focused on the robustness of our systems and procedures and ensuring that our people are well-trained and alert to the risks and challenges facing us, says Dr Brian Buckley, General Manager & CEO, Oman LNG
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Profitability is the prerequisite of any enterprise and Oman LNG is no exception. The vision for a successful Oman LNG in the 90s was no different in that respect than it is today. Thanks however to external factors and that few had predicted the energy prices would climb into $40s, $60s and peak above $130 per barrel in 2008, Oman LNG’s success has been stellar. It was completely unanticipated and Oman LNG like the whole energy sector benefited from the demand driven increases in energy prices through the first ten years of its operations. But irrespective of whether the price is $25 or $125, Oman LNG became more significant to Oman than anyone had hoped, planned or predicted. Today, Oman LNG (OLNG) is the largest contributor to government revenues after oil and we are the largest single limited liability company in capital intensity and revenue generation in the Sultanate. This position, although a source of pride, has its responsibilities as well to all its stakeholders, but in particular to its largest shareholder, the government of Oman which holds a 51 per cent stake in the company.
Grow business and people We have two further key commitments as a public-private enterprise. Clearly we have to grow not only our business but we also have to grow our people. We have staff (direct and
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contract) to whom we are introducing new technologies, skills and new opportunities. Our commitment to Omanisation is terribly important and critical to our success and license to operate in Oman. We are transferring knowledge and skills and we are allowing our Omani staffs gain invaluable experience to allow them advance their careers and deploy their talents. We are already at 88.9 per cent Omanisation and I believe we are the industry leader for the sector. There are, of course, some companies with higher Omanisation percentage but they do not have the technical complexity and content of Oman LNG. The third key raison d’être of Oman LNG is to be a trusted partner in the sustainable development of the people and the country. In support of that commitment the shareholders agreed to contribute one and a half per cent of net income after tax (we are talking about tens of million dollars per year) towards social investments. Those investments have already had huge impacts across the country in terms of building infrastructure – low cost housing, museums, etc., education and health in Oman and in the preservation of communities’ traditions, culture, heritage and culture and environment. In the early years of Oman LNG we built the General Hospital in Sur and many roads that now link areas of Sur. We have also partnered the Ministry of Housing and the Oman Charitable Organisation
in the contraction and maintenance of low cost housing.
HRD programme The most important impact that any company’ social investments can have is in in creating employment. To date and completely outside those directly and indirectly employed by Oman LNG, we have placed more than 1,000 Omanis in employment through our human resource development programmes. These programmes are the most comprehensive of their kind in the country. Through the Ministry of Manpower skill gaps in the economy of Oman are identified. With the Ministy and others, for example OPAL, we establish tailored training programmes to prepare young Omanis from the unemployment register and the future employers who will offer the students employment once they graduate. So before we begin the training we have the commitment of the employers to absorb these people once they complete the training programmes. The students also receive stipends from the employees whilst they study as a sign of support. The students go through the training and once they graduate, they go straight into employment. We intend to build on this initiative given the increased focus and need for youth employment in Oman. We are evaluating how we can double or triple the number trained. So far our past graduates are gainfully employed as auto-mechanics, draughts men skilled in the use of AutoCAD, pharmacy assistants and so on. We have also trained people for self-employment as beauticians, hair stylists, etc. For those embarking on self-employment careers we provide them ‘starter packs’ to help them manage their way for the first 12 months or so. All in all, our HR-Development programmes are very comprehensive and highly successful. Our key partners, so far, have been the Ministry of Manpower in identifying gaps and opportunities and OPAL, in particular, in identifying courses and training institutes.
Retrospective The last 10 years have been transformational for Oman LNG and for so many people. We
have employees who remember not only the first days of production but also the four or so years of preparation – the construction of the plant and the negotiations and resulting contract agreements that set the bases for Oman LNG coming into being. What started off as a vision in the late 80s and early 90s when the country had few uses for its natural gas has mushroomed into a huge and critical revenue generator for the country and a significant developer of people around the core business and a platform for sustainable development more broadly across the country. We are very much a key player in economic diversification which is so essential for the country. When I arrived some five years ago, Oman LNG was a long way into its maturing process. The challenges in the second half of the last decade have been on how to grow the organisation in terms of its efficiency and its impact. The core purpose of Oman LNG remains to produce LNG safely, reliably and profitably. Today, we are identifying ways to do it better. That is to be even safer, more reliable
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VIEWPOINT
and more profitable. In safety, for example, as long as we continue to hurt even one person in a year, there is room for improvement. The business we are in has its inherent risks. We are charged with managing hydrocarbons that are flammable and potentially explosive. When preparing hydrocarbon gases for markets, it is important to ensure protection for people and our environment. This criticality applies across the entire oil and gas sector. After safety, comes reliability. Our customers expect us to deliver on time every time so that their commitments to their customers can be met with a high degree of confidence. Our reliability is critical not only to the credibility of Oman LNG but also of Oman as a country with whom others can and want to do business. Of course, our own reliability is dependent on our upstream gas supplier and on those other companies in Oman that provide for us the services and materials essential for running Oman LNG. Their relationships with us support our reliability and builds capacity and further opportunities in Oman.
unquestionably grow. An additional factor that will stimulate gas markets is the world’s need for cleaner energy and the strategic needs of countries to balance their energy portfolios. The advantage of gas is that it’s the cleanest non-renewable energy source available. It is also highly efficient as a higher percentage of its chemical energy can be converted to useful energy compared to any other non-renewable fuel.
Key role So, whichever short-term scenario evolves, gas is going to play an increasingly important role in the next 25-30 years in which energy demand will grow by 50 percent or more as world populations grow and the absolute number of people moving out of poverty and into the middle classes rocket. This is already happening in China, India and South American countries. Even in remote countries as Nepal and Bhutan populations and wealth are growing and the need for energy is growing faster. In this scenario the need for a diverse range of fuels is unavoidable and demand will continue to grow.
Quo vadis?
No matter which scenario, whether you are an optimist or pessimist, of how the world is going to go in the next ten years, nobody disagrees that the demand for energy is increasing 78
We can of course bank our successes and be proud of them; then what? We have moved into a new decade very different to the one that we just experienced. The global challenges are dramatically different and very daunting. We are having to keep a very close watch on developments in global markets and particularly the markets we sell to. We are also having to take stock of what is happening closer to home in the region and in Oman. We have to be alert as we can never be certain of what is coming next. In positioning ourselves we appreciate the value of our relationships with our buyers. We have to ensure that we maintain those relationships well, carefully and sensitively and listen to what their changing needs. So our adaptability and sensitivity to changes in the global LNG markets are very important for us going forward – particularly in the short term. Longer term, the outlook for gas in the global markets is bright and demand from developing countries and regions will
The need for gas will grow disproportionately faster, based on proven efficient technologies and its abundant availability. Bringing it to markets, however, remains a significant challenge and it is interesting to note that the demand remains stubbornly ahead of supply. Even in the Middle East, few had forecast that the regional demand for energy and water was going to grow rapidly. This has placed the whole region under enormous pressure to source more gas. Surprisingly for a region that sits on over 42% of proven global conventional gas reserves, the UAE, Bahrain and Kuwait have become or are in the process of becoming net importers of gas. Their own production is no longer sufficient for them to meet their domestic and export commitments. Today, there are only three Middle East exporters left: namely Yemen, Oman and Qatar. Qatar is by far the largest exporter – and will continue to be for the foreseeable future. Oman committed to export its abundant gas in the early 90s and began deliveries to Asia in 2000 as LNG. It
has seen its domestic demand grow strongly in the last six-eight years with the rapid growth of private dwellings and the expansion of its industrial base. Today over 50 per cent of Oman’s gas production meets domestic needs and the priority for the government is to meet the future domestic demand before it considers any expansion of exports. Oman has reached a challenging crossroad where that balance of priority between meeting domestic growth and very attractive revenues from exports has to be decided upon. More revenues are also a valid route to more growth and the choice of allocation between domestic and export remains a strategic one for the government in collaboration with industry. Whichever way the decision falls, there is need for more gas! The next tranches of Omani natural gas is most likely to be ‘tight gas’ from BP and ‘deep gas’ from PDO. The question is now of when these new reserves can be brought into production and allow Oman move to the next level of growth both domestically and for Oman LNG. The question of allocation will not be easy as the production costs of future gas will be higher in Oman and the region, where historically gas prices have been subsidized in order to moderate the cost of power to citizens and to encourage industrial investment. The government will be seeking
to balance the need for supporting domestic strategic needs with the attractive revenues possible in global gas markets.
~ Nursing Omani youth with job-required skills is a key aspect of Oman LNG’s comprehensive SIP
As an LNG exporter, the question I must answer is whether I can afford to pay more for feed gas? What does it mean for my business? Can I recoup some of any additional cost from the end buyers? Does it mean that my profitability will be challenged? My answers to all these questions are very positive. Already, Oman LNG pays the highest unit price to the Government of Oman of all the buyers of Oman’s gas. The contracts which Oman LNG negotiated in the 90s remain amongst the very best in the industry and provide assurance to the Government of a very high price for all the gas it has committed to these contracts. Furthermore, the forecasted growth in global demand for gas provides additional confidence that any future exports of gas from Oman will command premium prices. Of course, nothing in life is certain. There will be fierce completion from other gas producers for these lucrative markets in the region and the rest of the world. However, we have the advantage of world-class facilities at Sur with professional and very competent teams capable of producing and marketing Oman’s LNG exports in the future.
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10TH ANNIVERSARY CELEBRATIONS
On a responsible mission On the occasion of the tenth anniversary of its social responsibility programme, Oman LNG published a book on its Social Investment programmes, called ‘Empowering People, Building the Future’. It also announced the ‘Young scientist of the year competition’ which will be launched in partnership with the Ministry of Education in 2012
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Oman LNG has launched a new vision for pioneering social investment programmes across the Sultanate and announced its ‘Young scientist of the year competition’ to be initiated in 2012. The announcement was made at a special Oman LNG event to mark the 10th anniversary of the company’s social responsibility programme. HE Dr Mohammed bin Hamad al Rumhy, Minister of Oil and Gas, was the guest of honour at the event which was hosted by the former Chairman, HE Nasser Al Jashmi and Dr Brian Buckley, CEO, Oman LNG.
Dr Rumhy was presented with the first copy of ‘Empowering People, Building the Future’, a book that reflects on the successes of the company’s corporate social responsibility programmes in Oman over the last decade. Demonstrating the company’s commitment to the environment and the preservation of natural resources, the book was published on recycled paper using vegetable based ink. Outlining Oman LNG’s new vision for the coming years, Dr Buckley said the company’s social investment programme would focus on the three core areas of empowering communities, championing innovation and investing in people. The ‘Young Scientist of the year’ awards, a key initiative to be launched in 2012 in association with the Ministry of Education, is intended to encourage the creative application of science in secondary schools to meet the socio-economic and environmental
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challenges and opportunities in Oman today. The award also aims at recognising the contributions of individual students and schools to innovation in science at both the regional and national levels. Commenting on Oman LNG’s Social Investment Programme over the last ten years, Nasser bin Khamis al Jashmi, the then Chairman of Oman LNG and Under-Secretary of the Ministry of Oil and Gas, said, “Oman LNG has made a huge positive impact on the Omani economy and the development of the nation over the past 10 years and has become a role model for good corporate citizenship in Oman and a trusted partner for the development of the neighbouring communities where its operations are based and across the nation in partnership with the government.”
a better world
With natural gas as the world’s cleanest fossil fuel, Oman LNG’s operations are helping to make for a better planet. Since starting production in 2000, we have delivered over a thousand cargoes to our customers and through our deliberate Social Investment Programme, helped to create over a thousand employment opportunities for Omani nationals in various sectors of the Sultanate’s economy. Our activities are vital in preserving the earth’s environment and building a bright future for Oman and its people. OMAN LNG L.L.C P.O. Box 560, Mina Al-Fahal, P.C. 116, Sultanate of Oman Head Office - Tel: (+968) 24609999 • Fax: (+968) 24609900 Qalhat Complex Office - Tel: (+968) 25547777 • Fax: (+968) 25547700