A DECADE OF EXCELLENCE - nogaholding€¦ · 02 Portfolio Companies nogaholding Annual Review 2016 The Oil & Gas Holding Company B.S.C. (closed) GBCorp Tower, 18th Floor, Financial

Portfolio Companiesnogaholding Annual Report 2017 01

A DECADE OF EXCELLENCEANNUAL REPORT 2017

Portfolio Companies nogaholding Annual Review 201602

The Oil & Gas Holding Company B.S.C. (closed)GBCorp Tower, 18th Floor, Financial HarbourP.O. Box 1426, Manama, Kingdom of BahrainT: +973 17 111 900, F: +973 17 111 908Email: [email protected] Registration No. 66088

His Royal Highness Prince Khalifa bin Salman Al Khalifa

The Prime Minister,of the Kingdom of Bahrain

His Majesty King Hamadbin Isa Al Khalifa

The King,of the Kingdom of Bahrain

His Royal Highness Prince Salman bin Hamad Al Khalifa

The Crown Prince,Deputy Supreme Commander and First

Deputy Prime Minister

Portfolio Companies nogaholding Annual Report 201704

CONTENTSOverview Portfolio Companies

Chairman’s Statement 06

Board of Directors 08

Executive Management 09

Milestones 10

Vision, Mission, Values & Roles 12

Profile 14

Portfolio Growth 16

Corporate Governance 18

Portfolio Companies 20

Financial Statements 78

The Bahrain Petroleum Company (BAPCO) 22

The Bahrain National Gas Company (BANAGAS) & Bahrain National Gas Expansion Company (TAWSEAH) 34

Gulf Petrochemical Industries Company (GPIC) 42

Bahrain Aviation Fuelling Company (BAFCO) 52

Bahrain Lube Base Oil Company (BLBOC) 56

Tatweer Petroleum Company (TATWEER) 60

Bahrain LNG WLL (BLNG) 66

Bahrain Gasoline Blending (BGB) 70

BAC Jet Fuel Company (BJFCO) 74


Overview nogaholding Annual Report 201706

On behalf of the Board of Directors, it is with great pleasure that I present the 2017 annual review for The Oil and Gas Holding Company B.S.C. (c) (nogaholding).”

H.E. Shaikh Mohamed bin Khalifa bin Ahmed Al Khalifa

“

CHAIRMAN’S STATEMENT

Overviewnogaholding Annual Report 2017 07

The Bahrain Gas Plant Project (BGP) project is progressing well and once BGP is completed by end of 2018, the combined capacity of Tawseah and Banagas will increase to 653 million standard cubic feet per day, which will provide a significant long-term contribution to Bahrain’s economy.

The strategic Bahrain LNG Import Terminal project is progressing as planned with expected completion in the first half of 2019. This is another major milestone that will ultimately give the country the security of supply that it needs to meet the growth in demand for natural gas for large industrial projects, power and water generation and for enhanced oil recovery.

nogaholding also continued to play a vital role in promoting best practice and encouraging operational excellence and benchmarking, risk management, business continuity management and business resilience within its portfolio companies. The portfolio companies were operated with high reliability and an exceptional level of safety performance was delivered. This was demonstrated by a number of awards for safety, health and environmental performance that were presented to the companies during the year.

I would like to thank the Board for their diligence, and the management and employees of nogaholding for their creative and hard work throughout 2017 and I wish the company another successful year in 2018.

In closing, I would like to express my sincere thanks and appreciation to the political leadership and the Government of the Kingdom of Bahrain for their continued support and encouragement which enables nogaholding to deliver sustainable earnings and achieve its long term strategic objectives.

Mohamed bin Khalifa Al KhalifaChairman

2017 was also a milestone year as nogaholding debuted into the international debt capital markets and announced the establishment of its US$ 3 billion Global Medium-Term Note (GMTN) Programme. The inaugural issuance of USD $1 billion notes successfully closed with the order book reaching US$ 3.8 billion. This bond issuance allows nogaholding to continue its ambitious plans to expand its portfolio across the oil and gas value chain and to fund the ongoing and future projects and potential ventures in the coming years.

The performance of the nogaholding group of companies was robust over the past 12 months and the financial results of nogaholding were in line with the stakeholders’ expectations.

Several project milestones were met during 2017 for the multi-billion-dollar Bapco Modernisation Programme (BMP). The resulting larger and more complex refinery, with increased exports of higher value products, will generate positive cash flow for the Kingdom of Bahrain while providing new jobs and business opportunities for Bahrainis. Bapco will also benefit from a more competitive, resilient and energy efficient facility, and one better equipped to meet future stringent environmental compliance regulatory standards and goals.

nogaholding celebrated its tenth anniversary in 2017 and, along with its portfolio companies, continued to deliver a strong performance

2017 was also a milestone year as nogaholding debuted into the international debt capital markets and announced the establishment of its US$ 3 billion Global Medium-Term Note (GMTN) Programme.”

“


BOARD OF DIRECTORS

H.E. Shaikh Mohamed bin Khalifa bin Ahmed Al KhlaifaChairman

H.E. Mr. Rasheed Mohammed Al-Mearaj

Dr. Fayez Hashim A. Latif Al-Sadah

Shaikh Tariq bin Mohammedbin Mubarak Al Khalifa

Mr. Yusuf Abdulla Humood

Mr. Yousif Abdul Hussain Khalaf



EXECUTIVE MANAGEMENT

Dr. Dafer Rashed Al JalahmaActing Chief Executive

Mr. Qaisar ZamanGeneral Manager - Investments

Dr. Hassan Al MullaManager - Investments

Mr. Hassan Al-AlawiManagerPortfolio Management

Mr. Farhaz FaroukAdvisor

Mrs. Afaf ZainalabedinGeneral Manager - Finance & Admin

Mr. Joseph HuseGroup General Counsel



THE ENERGY TOPERFORM FORTHE LONG TERM

0720 20

20 20

20 20

08

09

10

11

12

- nogaholding established on 15th August 2007 as the strategic investment and development arm of NOGA

- Stewardship of two wholly owned and six partly owned JVs

- Continued strong performance despite economic downturn

- Increased portfolio with addition of JV in Skaugen Gulf Petchem Carriers

- Exceptional operational performance across portfolio

- Development of Vision 2030 - Bahrain National Gas Expansion Company

(Tawseah) incorporated - Deal signed with Bapco for Lube Oil Plant

- Advancement despite difficult economic environment

- Increased portfolio with addition of Tatweer and BLBOC JVs

- Exploration of international investment opportunities

- Increase in oil field production by 33.3% - Inauguration of Vision Bahrain - Start up of Bahrain base oils plant

- An exceptional operational performance by portfolio companies

- Outstanding level of safety performance achieved

- Gas sales second highest since formation of plants


1320 20

20

20

14

15

16

17A YEARIN FOCUS

- Bapco exceeded all time high of 48.9 million barrels - Tatweer successfully invested in oil recovery

strategies - GPIC Exceeded previous highest level of

production

- Encouraging results despite strategic challenges

- Bapco refinery processed highest bpd in its history

- GPIC achieved highest production level in its history

- Bapco refinery produced record crude throughput

- Bafco fuelled over 41,000 aircraft - Bahrain LNG Import Terminal awarded to

international consortium

- Plans to further expand portfolio over next 5-years - Signing of US$ 570 MM Murabaha Facility to meet

expansion targets - Bapco Modernisation Programme (BMP) on schedule - Middle East LNG Deal of the Year for Bahrain LNG

Project

- US$ 1 BN Note issuance - Bapco completed front-end engineering

design for BMP and awarded EPC - Awarded best sub-sovereign bond in EMEA

Finance Achievement Awards

20


VISION, MISSION, VALUES & ROLES

Mission

To build, develop and manage a profitable portfolio of oil and gas industry related companies by investing effectively and promoting excellence

Vision

nogaholding aspires to contribute to profitable national economic diversification and growth by achieving sustained performance


Values

- Integrity - Ingenuity - Entrepreneurship - Commitment - Accountability

Roles

- Governance - Portfolio Management & Growth - Promotion of Operational

Excellence and Best Practice - Provision of Professional Service - Develop Intellectual Capital


The Oil & Gas Holding Company B.S.C. (c) (nogaholding) was established by Royal Decree No. 77 for the year of 2007, promulgated on August 15, 2007.

Formation ofnogaholding

Addition ofTAWSEAH

Addition ofTatweer &

BLBOC

Addition ofSGPC

PROFILE

MILESTONES

2007 2008 2009 2010


Addition ofBahrain LNG

Addition ofBGB

Addition of BJFCO

Exit of SGPC

Inaugural US$ 3 Billion Global Medium-Term Note (GMTN)

Programme

The company is the investment and development arm of the National Oil & Gas Authority (NOGA) and plays a fundamental role in the execution of the strategic plans of the authority and stewardship of the government’s investment in oil, gas and petrochemical sector in Bahrain.

2015 2016 2017


Investment Strategy

nogaholding adheres to investment policies which it believes are disciplined and prudent in order to develop its investment portfolio and enable the growth of other Bahraini industries and sectors. The principal components of nogaholding investment policies are its well-defined and focused strategy, approved and regularly reviewed with its board of directors, and its investment process. Investment generally focuses on investments, both strategic to the country in order to provide meaningful employment, and economic to provide at least industry average overall return.

nogaholding continuously evaluates opportunities for partial or complete exits of direct investments within its portfolio when it makes commercial sense to do so, and exited from its 35% interest in SGPC in 2017. In certain strategic assets, nogaholding may continue to hold a majority interest for the foreseeable future. It may also increase its equity stake, when it considers it appropriate, as was the case in the area of upstream crude oil production with Tatweer in which nogaholding increased its equity stake from 51% to 100% in 2016.

Investment process

Identification01

02

03

04

06

05

07

08

Origination and Opportunity Sourcing

Screening and Preliminary Evaluation

Board Approval to Incur Expenses

Negotiation with Target or Potential Project Partner(if necessary)

Due Diligence

Availability of Funds and Leveraging

Board of Directors’ Final Approval

nogaholding continued the planning of long-term, strategic, major investment that would address the vision 2030 guiding principles of sustainability, competitiveness and fairness.

On the downstream side, advancement was made in the area of planning for the future refinery configuration. The objective is to increase the complexity of the refinery by 2022 such that the competitiveness of the refinery will be world-class, and the profitability will be immune from business cycle troughs.

The Bahrain LNG Company reflects long-term energy strategy set by The National Oil & Gas Authority (NOGA) to import Liquefied Natural Gas (LNG) to supplement domestic production and ensure gas demand is met.

As part of refuelling infrastructure projects in Bahrain, nogaholding has invested jointly with Bahrain Airport Company in BAC Jet Fuel project, expected to complete in 2020, for the purpose of construction and owing the new refuelling infrastructure at Bahrain International Airport following the relocation of the existing refuelling facilities.

PORTFOLIO GROWTH

Overview16 nogaholding Annual Report 2017

Overviewnogaholding Annual Report 2017 17Overview 17

Year

33.3%33.3%33.3%

nogaholdingSabic, KSAPIC, Kuwait

Ownership

1979

33.3%

Year

27.5%27.5%45%

nogaholdingBapco

Neste Oil, Finland

Ownership

2009

55%

Year

50%50%

nogaholdingBahrain Airport Company

Ownership

2017

50%Year

100% nogaholding

Ownership

2008

100%

Year

85%15%

nogaholding & BapcoGreenergy, UK

Ownership

2016

85%

Year

60%27%13%

nogaholdingChevron, Bahrain

BP, Middle East

Ownership

1985

60%

Year

30%30%24%16%

nogaholdingTeekay, Canada

GIC, KuwaitSamsung C&T, South Korea

Ownership

2015

30%

Year

75%12.5%33.3%

nogaholdingChevron, BahrainBoubyan, Kuwait

Ownership

1979

75%

Year

100% nogaholding

Ownership

1929

100%

Year

100% nogaholding

Ownership

2009

100%

nogaholding Annual Report 2017


Governance

nogaholding has well-established governance standards with clearly defined policies, processes and systems that have been developed to ensure robust accountability.

nogaholding’s Board of Directors comprise a Chairman and five Board members who are appointed by His Royal Highness Prince Khalifa bin Salman Al-Khalifa, The Prime Minister, and His Royal Highness Prince Salman bin Hamad Al- Khalifa, The Crown Prince, Deputy Supreme Commander and First Deputy Prime Minister.

The Board holds primary responsibility for the implementation of nogaholding’s strategy and oversees nogaholding’s financial performance and management.

nogaholding does not seek to micro manage portfolio companies, but is represented on the boards of directors and influences through the Chief Executives and the managements of the companies in which it invests.

nogaholding acknowledges that good governance is essential for sustaining and enhancing company value and for maintaining stakeholder confidence. nogaholding aspires to the highest standards of ethical conduct and to complement its corporate mission, nogaholding has adopted a robust and pragmatic corporate governance framework founded upon integrity, transparency, competence and accountability.

nogaholding acknowledges that good governance is essential for sustaining and enhancing company value and maintaining stakeholder confidence.

Transparency

nogaholding recognises the importance of building a clear understanding of who we are, what we invest in, and why we invest, in order to build trusted relationships with joint venture partners, the banking community, government bodies, and regulators in Bahrain and throughout the world.

nogaholding has in place a transparent and sound governance structure that provides for adequate operational controls, risk management and accountability.

CORPORATE GOVERNANCE

Overview18 nogaholding Annual Report 2017

Overviewnogaholding Annual Report 2017 19Overview 19nogaholding Annual Report 2017


PORTFOLIOCOMPANIESOverview

The Bahrain Petroleum Company (BAPCO) 22

The Bahrain National Gas Company (BANAGAS) & Bahrain National Gas Expansion Company (TAWSEAH) 34

Gulf Petrochemical Industries Company (GPIC) 42

Bahrain Aviation Fuelling Company (BAFCO) 52

Bahrain Lube Base Oil Company (BLBOC) 56

Tatweer Petroleum Company (TATWEER) 60

Bahrain LNG WLL (BLNG) 66

Bahrain Gasoline Blending (BGB) 70

BAC Jet Fuel Company (BJFCO) 74


Portfolio Companies22

THE BAHRAIN PETROLEUMCOMPANY (BAPCO)


Year of Establishment

Shareholding

Business/Sector

Capacity

Accreditation

1929

100% nogaholding

Oil exploration, refining, marketing and distribution of petroleum products

262,000 barrels per day

ISO 9001 QMS,ISO 14001 EMS,IS 18001 OHSASISO 22301 BCM, OEMS(Operational ExcellenceManagement Systemdesigned to PAS 99)



Bapco’s Investment in Business and Operational Excellence, Reliability Engineering and Personnel Development Returns Year on Year Performance Improvements

261,614BPCDCRUDE REFINED

57.1 vol%MIDDLE DISTILLATESPRODUCED

Double WinnerHEALTH & SAFETY

WINNERENVIRONMENTALMANAGEMENT

14.8 MillionHoursWITHOUT LOSTTIME INJURY

406SHIPSLOADED

Portfolio Companies 23nogaholding Annual Report 2017


Operational Performance

The refinery Operational Availability (Solomon rolling average) was 96.51%, the highest in 5 years. This achievement enabled Bapco to profitably refine 1.6 millon barrels more crude than planned.

Volumes in million barrels

Note: Imports/stockdraws of blending components & intermediate feedstocks are excluded from the refinery production above

REFINERY PRODUCTIONON CRUDE PROCESSED

98 MILLION BBLS

INTERNATIONAL EXPORT SALESBapco share of Joint Ventureproduction

84 MILLION BBLS

1 1

18

28

136

17

30

22

212

21

13

24


SULPHUR

GASOIL/DIESEL

LPG

ASPHALT

GASOLINE

BASE OILS

NAPHTHA

KERO/JETFUEL OIL

Stable outlets for refined products were successfully secured in a challenging International Market that was over-supplied with middle distillates, contributing an additional circa $130 million above the benchmarked standard.

LOCAL MARKET CONSUMPTION

11 MILLION BBLS

DOMESTIC EXPORT SALESJetA1 to Bahrain InternationalAirport & Gasoil Bunkers

4 MILLION BBLS

0.3

6.8

0.8

3.5

20.5

0.4



Major Projects

Fire Water System ReplacementCost: $83.4 million EPC ContractContractor: JGC Gulf International CompanyCompletion: 2019

Crude Unit heaters’ replacementCost: $26.5 millionCompletion: 2019

Refinery Process Cooling Water System upgradingCompleted

Bapco Command CentreCompleted

100%

100%

24%

25%


Portfolio Companies 27Portfolio Companies 27

The Oil and Gas Academy

A Learning and Development Center preparing employees and trainees to meet the future needs of Bahrain’s Oil & Gas industries.

Accreditation: Institute of Leadership and Management (ILM) and City & Guilds of UK.

The Learning & Development is a strategic business

partner delivering value to the business and to society by:

Satisfying customersby being a recognised centre of

excellence for world class learning.

Being an enterprising team comitted to growth through learning

and trusted by all stakeholders.

Empowering team membersto create a dynamic performance - oriented environment to meet

changing business needs.



Learning & Development2017 highlights

2,252INDIVIDUALEMPLOYEESTRAINED

946TRAINING PROGRAMME

97,797LEARNING HOURS


Total learning hours by Topics

English 13,692

50,845

15,64817,603

HSEMgt & LeadershipTechnical



617PROGRAMME

329PROGRAMME

2,199CONTRACTORSATTENDED BAPCO TRAINING PROGRAMMES

75GRADUATESCHOLARSHIPS

2,855*EMPLOYEES

638*EMPLOYEES

20TRAINEES SELECTED FOR THE DIPLOMA IN OIL & GAS ACADEMY

270INDUSTRIALTRAINING

7,376ATTENDEES

1,061ATTENDEES

304CHILDREN OF BAPCO EMPLOYEE SCHOLARSHIPS

12INJAZ BAHRAIN STUDENTMENTORSHIPPROGRAMME

Internal Training(Excluding Fire School & Contractor Industries)

* Represents individual employees for each training type

* Represents individual employees for each training type

External Training

Contractor, Scholarship, Diploma & Student Training


Portfolio Companies30 Portfolio Companies30

The Bapco Modernisation Programme (BMP)

The BMP is a major refining and development project, which will be the Company’s single largest investment in its long history, and consists of a group of related projects that are expected to be managed in a coordinated way to maximise benefits.

The BMP will involve the installation of new units such as crude and vacuum units, a new reside hydrocracker, a HVGO hydrocracker, a diesel hydrotreater and several other process units with associated utilities.

The capacity of the Refinery will be increased from 267,000 bpd to 380,000 bpd after completion of the BMP.

BMP 2017 Highlights

Bid evaluations

Package A

Package B

Environmental & Social Due Diligence (ESDD)

Front EndLoading (FEL)

Zero Lost Time Incidents

To select the preferred Engineering, Procurement and Construction (EPC) Consortium

Site Works awarded to DownTown in Feb 2017. Cliff edge work measuring 2 km completed

Site Works awarded to Al Hassanain in Feb 2017, with work completed in Sep 2017.

Established ESDD with an action plan, independent auditing and monitoring across BMP’s life cycle.

refers to organized and progressively detailed project definition and execution development. Independent Project Anal-ysis Inc. (IPA) concluded that the project FEL was Good to Best.

2.2 million continuous hours

100%

85%

100%

100%

100%


Portfolio Companies 31Portfolio Companies 31nogaholding Annual Report 2017

Portfolio Companies32 Portfolio Companies32

AB Pipeline Project

The Bapco refinery receives Arabian Light crude from Saudi Arabia via an overland and subsea pipeline built in 1940s. A new pipeline is replacing the existing 235,000 bpd pipeline.

A new 118km long, 30-inch pipeline with a maximum nameplate capacity of 400,000 bpd.

Will link the Sitra Refinery to Saudi Arabia’s plant at Abqaiq, eastern Saudi Arabia. Abqaiq Plant is Saudi’s Aramco’s largest oil processing facility the largest crude oil Stabilisation Plant in the world.

Contracts for the 43km long onshore Saudi Arabia stretch of the pipeline and the 41km offshore stretch were awarded to Al Robaya Holding Company of Saudi Arabia and UAE’s National Petroleum Construction Company, respectively.

The Construction contract for the 28km onshore Bahrain stretch was awarded to Ramsis Engineering Company of Bahrain.

Construction is expected to complete by Q4 2018.

118KMLENGTH

SITRAREFINERY

ABQAIQ, EASTERN SAUDI ARABIA

30 INCHPIPELINE

NAMEPLATE CAPACITY OF 400,000 BPD


Portfolio Companies 33Portfolio Companies 33nogaholding Annual Report 2017


BAHRAIN NATIONAL GAS COMPANY B.S.C. (BANAGAS)

BAHRAIN NATIONAL GASEXPANSION COMPANY S.P.C.(TAWSEAH)



Shareholding

Business/Sector

Capacity

Accreditation

BANAGAS TAWSEAH

1979

75% nogaholding12.5% Chevron Bahrain12.5% Boubyan, Kuwait

Gas processing Unit

303 MMSCFD (Combined)

ISO 9001 QMS, ISO 14001 EMS, ISO 18001 OHSAS, ISO 2000, IT

2008

100% nogaholding

Gas processing Unit

303 MMSCFD (Combined)

ISO 9001 QMS, ISO 14001 EMS, ISO 18001 OHSAS, ISO 2000, IT



During the year the Audit, Risk, Governance and Compliance (“ARGC”) Committee continue meeting to review progress on implementing recommendations from various parties including its Enterprise Risk & Business Continuity Management Committee.

Developed a few business continuity plans for strategic scenarios.

72,141metric tonnes BUTANE PRODUCED

81,242metric tonnes PROPANE PRODUCED

82,110metric tonnesOF PRODUCT WAS RECOVERED FROM REFINERY OFF GAS (ROG) ON BEHALF OF BAPCO.

15 VESSELSLOADED WITH LPG

7 VESSELSLOADED WITH NAPHTHA

182,414metric tonnes NAPHTHA PRODUCED

114LOADING OPERATIONS WERE CARRIED OUT FOR LOCAL SALES OF PROPANE.

$148.28 MILLIONNET SALES REVENUE

$11.7 MILLIONCONSOLIDATED PROFIT




Major projects

Bahrain Gas Plant Project (CCP-III)

CGP-III

Pipeline and Sitra StorageExpansion

Comprises building additional Gas Processing Train (CGP-III) and Storage expansion at Sitra.

Successfully achieved Financial Close (FC) for the $515 million syndicated loan facility with 7 participating banks.

107 employees recruited including 39 under the Bahrainisation programme approved by Tamkeen.

Commissioning and start up scheduled for 4th Quarter 2018.

Overall progress is 86.7%.

Erection of all heavy equipment completed as well as piping prefabrication.

Civil works on the 66kV Primary Substation completed. Commissioning and testing in progress. Energizing planned in Q1 2018 and completion is by Q2 2018.

Overall progress is 71.7%.

Construction works in progress including foundation for pipe rack, compressors and other key equipment. Mechanical works on the new Butane and Propane product storage tanks are in progress.



Plant Gas Throughput and ProductionTrain I & II

FEED GAS

113,000109,900113,100102,000 107,400

2013 2014 2015 2016 2017

Production volume in Metric Tonnes.



NAPHTHA

195,600195,300202,200182,100 183,700

Production volume in Metric Tonnes.

Plant Gas Throughput and ProductionTrain I & II

PROPANE

BUTANE

89,400 95,200 117,000 118,800

137,700137,500108,600115,000

2013 2014 2015 2016 2017

110,200

124,000


Production volume in Metric Tonnes. Product Export

PROPANE

BUTANE

NAPHTHA

2013

2013

2013

2014

2014

2014

2015

2015

2015

2016

2016

2016

2017

2017

2017

81,700

99,200

179,500

91,600

102,000

202,200

109,300

113,500

202,900

124,600

118,900

199,600

98,500

99,300

182,000



Training and Development

821TRAINEES

195 COURSES

18,623TOTALTRAINING HOURS

1051TRAINEES

286 COURSES


836TRAINEES

301 COURSES


971 TRAINEES

273 COURSES


1222TRAINEES

191 COURSES


2013

2014

2015

2016

2017



Awards and Achievements

The Company’s commitment to highest standards of occupational health, safety and environment protection was recognised by the receipt of

“Industry Sector Winner Award (Oil & Gas Industry)” from the Royal Society for the Prevention of Accidents (RoSPA) - UK.

“International Safety Award with Distinction” from British Safety Council (BSC) - UK.

“International Safety Sector Award Winner” from British Safety Council (BSC) - UK.

“First Place, Division II classification, International Safety Award” from Gas Processors Association (GPA) - USA.

“Occupational Excellence Award” from the National Safety Council - USA.


3,120,999MAN-HOURSSUCCESSFULLY WORKED WITHOUT ALOST- TIME ACCIDENT SINCE AUGUST 2014

32,694HOURS TRAINING PROVIDED TO EMPLOYEES WITH 191 COURSES ATTENDED BY 1,222PARTICIPANTS

“Combined OHSAS 18001:2007 and ISO 14001: 2004 Re-Certification from Bureau Veritas Certification (BVC)

The Company successfully recertified to the environmental standards ISO: 14001 and OSHA : 18001 in Feb 2017.

BSI confirmed continued accreditation to Quality Management System (ISO 9001:2015) to 2020.

Successfully completed the first surveillance for the ISO20000 certification.



GULF PETROCHEMICAL INDUSTRIES COMPANY (GPIC)



Shareholding

Business/Sector

Capacity

Accreditation

1979

33.3% nogaholding33.3% Sabic, KSA33.3% PIC, Kuwait

Petrochemical Plant

Ammonia 1,200 MTPD Methanol 1,200 MTPDUrea 1,700 MTPD

ISO 9001 QMS, ISO 14001 EMS, ISO 18001 OHSAS, ISO 27001 ISMS, PAS 99 IMS, ISO 31000 RM, ISO 22301 BCM RC14001, EMS 50001, ISO 17020, ISO 17025, IFA P&Sdesigned to PAS 99)




1.2 million metric tonnesTOTAL PRODUCTS WERE SHIPPED

1,604,725 metric tonnesTOTAL PRODUCTION OF AMMONIA, UREA AND METHANOL

> 99% UTILISATION FACTOR AND ON-STREAM FACTOR

73VESSELSLOADED



UREA METHANOL AMMONIA

Monthly Urea production of 62,300 tonnes for January 2017 was the highest ever achieved

Daily production of 2,055 MT on 12th of December was the highest ever

The Urea Plant completed 933 days of continuous production run.

The Methanol Plant completed 576 days of continuous production run.

Plant completed 804 days of continuous production run.


20.2821.88

23.3524.97

26.57

Cumulative Total Production,2013 to 2017

2013 2014 2015 2016 2017



Onstream factor 2013 to 2017

Utilisation factor 2013 to 2017

METHANOL

METHANOL

AMMONIA

AMMONIA

UREA

UREA

99.81

105.40

99.94

103.64

91.55

103.67

99.55

106.96

100

106.07

98.92

103.00

99.93

103.44

90.02

102.58

99.08

102.21

99.60

101.35

96.81

114.50

100

111.86

92.82

112.07

99.65

112.87

99.02

113.60

2013 2014 2015 2016 2017


Portfolio Companies46 nogaholding Annual Report 2017


45SHIPSLOADED

57%

METHANOL

METHANOL

UREA

UREA

AMMONIA

AMMONIA

21SHIPSLOADED

37%

7SHIPSLOADED

6%

Methanol tanker loading was initiated by end-December 2016 for local sale. This progressed very well during 2017 resulting in a total of 1,196 MT Methanol being sold in that year. The Methanol sold in Bahrain is used in downstream industry thus boosting the sustainable development of the country.

Export in 2017 (Products)

No. of Ships loaded in 2017



Exports by Country

India China Turkey

Taiwan China Korea Thailand USAUAE

Total QuantityExported (MT)


76%15%9%

45%21%11%9%8%6%

AMMONIA EXPORTS

METHANOL EXPORTS


73,494.497

454,200



BrazilCanadaUSAIndiaAustraliaTurkeyThailandSouth AfricaUruguay Argentina Tanzania Mozambique

BrazilCanadaUSAIndiaTaiwanAustraliaTurkeyThailandSouth AfricaKoreaUruguayArgentina TanzaniaChinaMozambique



18%18%17%17%16%7%7%6%4%3%3%2%

18%18%17%17%17%16%7%7%6%4% 4%3%3%2%2%

UREA EXPORTS

CUMULATIVE EXPORTS (AMMONIA, METHANOL & UREA)


676,791

1,204,485




UF85 Project

New Nitrogen Plant

The contract for 22 metric tonnes per day (mtpd) Urea Formaldehyde (UF85) unit was awarded to JGC Gulf International Company for a lump sum cost of $13 million.

The project will contribute to securing GPIC’s chemicals requirements for the manufacturing process of Granular Urea. The unit will manufacture Urea Formaldehyde, a necessary and key component in the production and manufacture of Urea granules. GPIC currently imports this from other countries.

Actual production is expected to start Q3 2018.

A new Cryogenic Nitrogen unit with a capacity of 950 Nm3/hr is being installed to meet the additional demand of Nitrogen on normal operations and during plant turnarounds.

The plant is supplied by ‘Air Liquid, Global E & C solutions’.

Start production of Nitrogen is expected by Q1 2018.

Major Projects



Awards and Achievements

> 24.5 millionACCIDENT FREE MAN-HOURS SINCE 2015

NO LOST TIME ACCIDENT DAYS REACHING 5,400 TO DATE

GPIC was recognised with:

The ‘Mohamed Bin Rashid Al Maktoum’Business Innovation Award (1st cycle) and its Business Excellence Award (9th cycle) in 2017.

‘Her Majesty QueenElizabeth II’ GoldCategory (RoSPA) Award

The Saudi Arabia Award for Environment Management in the Private Sector by the Rabat, Morocco-based Agricultural Management Islamic Educational, Scientific and Cultural Organisation (ISESCO).



BAHRAIN AVIATION FUELLINGCOMPANY (BAFCO)



Shareholding

Business/Sector

Accreditation

1985

60% nogaholding27% Chevron, Bahrain13% BP, Middle East

Operate and maintainaviation fuel storage andhandling and into-planedelivery services.

ISO 9001 QMS, ISO 18001 OHSAS



39,223NUMBER OF AIRCRAFT REFUELLED IN 2017


148MILLION US GALLONTOTAL VOLUME UPLIFT IN 2017

1,620,828BAFCO LTI FREE

411,100CONTRACTOR LTI FREE HOURS



Operational Performance:

- The total volume uplift at Bahrain International Airport has increased over the last 4 years with a total of 148 Million US gallons of fuel from January to December 2017

- BAFCO recertified to ISO 9001: 2015

- BAFCO (and its contractors) have achieved over 2.0 million manhours without any Lost Time Incident, by end of December 2017

NO. OF AIRCRAFT REFUELLED

TOTAL VOLUME UPLIFT (MILLIONS USG)

39,223

148

2017

39,475

133

2013

40,836

131

2014

41,623

143

2015

40,946

144

2016


BAFCO AND CONTRACTOR LTI-FREE HOURS

880,680

266,779

1,069,978

278,710

1,228,157

290,083

1,450,056

354,105

1,450,056

411,100

BAFCO LTI FREE

CONTRACTOR LTI FREE HOURS

2013 2014 2015 2016 2017


BAHRAIN LUBE BASE OILCOMPANY (BLBOC)


Year of Establishment 2009

Shareholding 27.5% nogaholding 27.5% Bapco 45% Neste Oil, Finland

Business/Sector Group III Very High Viscosity Index (VHVI) Lubricant Base Oils

Capacity 400,000 MTPY

Accreditation ISO 9001 QMS, ISO 14001 EMS, ISO 18001 OHSAS, ISO 22301 BCM OEMS (Operational Excellence Management System designed to PAS 99)




Lube Base Oils

- Bapco operates and maintains the Lube Base Oil Plant at Sitra on behalf of the Bahrain Lube Base Oil Company (BLBOC) joint venture

- Neste used to lift and market all BLBOC products, however, from early Q4 2017, each shareholder has commenced marketing and selling its own equity share of product. Bapco markets Bahrain share with its registered brand BAPbase® that is now in the market

Finished Lubricants

- Bapco’s Finished Lubricants product range, officially launched in December 2014, uses BAPbase® base oils in some of its formulations

- Bapco’s domestic lubricant sales doubled over the last couple of years. A range of industrial lubricants, especially Turbine Oils and Industrial Gear Oils, are being developed for use at Refineries

- The domestic and export business continues to expand, with new customers and distributors in other GCC countries, as well as internationally



TOTAL LUBE BASE OIL LIFTED IN (MT)

FEEDSTOCK COST ($/MT)

WEIGHTED AVERAGE PRODUCT PRICE ($/MT)

20172016201520142013

515.00416.00498.00855.00925.00

631.00 753.00728.00982.001,043.00

363,000.00331,000.00353,000.00319,000.00325,000.00




TATWEERPETROLEUM



Shareholding

Business/Sector

Accreditation

2009

100% nogaholding

Redevelopment and growth of Bahrain field

ISO 9001 QMS,ISO 9001:2008,Drilling Fluid Lab



672ACTIVE BEAM PUMP UNITSBY YEAR END

653,412MAINTENANCEMAN-HOURSCOMPLETED

202STIMULATION JOBS WERE CARRIED OUT TO INCREASE OIL PRODUCTION

366WORKOVERS





50,00225,80050,412128,80067,273

2017

2016

2015

20142013

Training & Development Hours

Gas Delivered (MMSCFD)

2,048

2,100

2,1922,283

2,339

20172016201520142013


20172016201520142013

949

883845

783651

Black Oil Production(MBOPD)

No. of wells (cumulative)


20172016201520142013

43.3 44.446.244.1 40.2



CONSTRUCTION OF THE NEW 500 MILLION SCFFD CAPACITY CENTRAL GAS DEHYDRATION UNITPROGRESSED

Major Projects

97%



4.4 millionMAN HOURS WITHOUT LOST TIME INJURY

Achievements



BAHRAIN LNG W.L.L. (BLNG)



Shareholding 30% nogaholding 30% Teekay, Canada 24% GIC, Kuwait 16% Samsung C&T, South Korea

Business/Sector Receiving terminal for regasification of Liquified Natural Gas (LNG)

Capacity 800 MMSCFD




Bahrain LNG construction commenced mid-Q4 2016 with GS Engineering & Construction (South Korea) as main contractor, MCSC as the main onshore construction contractor and Six Construct as the main offshore construction contractor.

At December 31st 2017:

- The offshore loading platform and jetty are nearing civil works completion ready for mechanical erection works to start in early 2018. Breakwater construction and dredging of the terminal area and approach channel are near completion;

- The Onshore Receiving Facility (ORF) at Khalifa bin Salman Port (KBSP) has all building and plant foundation erection works approaching completion;

- The Nitrogen Production Facility pipe rack erection is in progress, and a number of equipment packages have been installed;

- Part of the onshore pipeline construction running from the ORF to the tie-in point at the Hidd Metering Station is nearing completion, including the boring of the inner port crossing with horizontal direct drilling technology;

- Fabrication of the Regasification Platform (Thailand) and the Jacket (South Korea) is progressing;

- The overall project design, engineering and construction progress is at 57%.



812,828TONNES OF ROCK

Placed 812,828 tonnes of rock (total to complete was 836 066 tonnes)

98,500 CUBIC METRES

Dredged 98,500 cubic metres out of 116,000 cubic metres total

134 PILES

Completed piling of 134 piles out of a total of 215

Achievements

- No Lost Time Incidents (LTI) with over 4.6 million manhours worked to end of 2017

- Successful mobilisation and commencement of EPC phase.

- Successful financing and funding of project:

• The deal was awarded LNG Deal of Year by Project Finance International (PFI) – London (UK)

• The deal was awarded Middle Eastern ECA Finance Deal of the Year (TXF) – Venice (Italy)

4.4 millionMAN HOURS WITHOUT LOST TIME INJURY

1,912ACCROPODES

Placed 1,912 Accropodes out of 9,334

7,734ACCROPODES

Fabricated 7734 Accropodes out of 9 334



BAHRAIN GASOLINE BLENDING (BGB)



Shareholding 85% nogaholding & Bapco 15% Greenergy, UK

Business/Sector Gasoline Blending Facility

Capacity Understudy




The joint venture is developing dedicated blending facilities in Bahrain that will allow it to process a wider variety of gasoline components and position Bahrain as leading participants in gasoline markets in the Middle East

- BGB started “Go Live” operations on 20th Feb 2017 as planned

- It is a fully functional independent entity capable of trading, blending, risk management and financing

- BGB blended more than 6 million barrels of gasoline for Bahrain & export markets

- The Joint Venture is adding value to the Bahrain’s gasoline pool in terms of better blend margins, trading and risk management by hedging

- BGB has trading relationships with most of the major refineries & traders in the region

- BGB completed its first operational year successfully



MAJOR INJURY

0

MINORINJURY

0

INCIDENTS(NEAR MISS)

0

Achievements

Active gasoline trading from Bahrain:BGB exported finished gasoline cargo from Bahrain. It also actively seeks trading opportunities in the market.

Risk management: BGB manages price risk by hedging its exposure via trading in the financial derivatives market.


2017 Turnaround from Inception to Operations

Feb’17

Mar’17 Apr’17

May’17 Jul’17

Sep’17 Nov’17‘Go Live’ Daily Mark-to-

Market & stock reports

Switched blending tool to ‘What’s Best’

BGB introduced in MPGC conference

Trade Finance & Derivative clearing line in place

1st Export Cargo

Import & export

1st Annual Shareholders’ meeting in Bahrain



BAC JET FUELCOMPANY (BJFCO)



Shareholding

Business/Sector

2017

50% nogaholding,50% Bahrain AirportCompany

Construction and owning the new refuelinginfrastructure at BIA



BAC Jet Fuel Company is in the process of expanding (1) the hydrant system and (2) construction a new fuel storage facility (Fuel Farm) at the Bahrain International Airport.

Project Fuel Hydrant System Fuel Farm

Main Contractor Amana Pipeline Construction L.L.G Arabtech TAV JV

Start Date 40 Months 24 Months

Completion date Q2 2020 Q1 2019

Overall Progress 38% 16%

Total Man-Hours to end-Dec 2017

64,573 81,703

Lost Time Incident (LTI) 0 0

Accomplished Activities - 18” fuel hydrant header along with all risers completed & hydrant pit boxes installed

- 20” fuel hydrant header along with all spur lines and hydrant pit boxes completed

- Hydrotesting, pigging and drying successfully completed

- 18” interconnecting headers completed

- Main Storage Tank T01: Concerting of foundation & ring beam completed

- Main Storage Tank T02: Excavation, levelling and compaction completed

- Main Storage Tank T03: Blinding completed

- Main Storage Tank T04: Formwork and rebar installation completed

- First 3D Model Review completed


Consolidated Financial Statements nogaholding Annual Report 201776

FINANCIALSTATEMENTSConsolidated Statement of Financial Position 78

Consolidated Statement of Profit or Loss and Other Comprehensive Income 79

Consolidated Statement of Cash Flows 80

Consolidated Statement of Changes in Equity 82

Consolidated Financial Statementsnogaholding Annual Report 2017 77


2017 BD ‘000

2016BD ‘000

ASSETS Non-current assetsProperty, plant and equipment 944,198 980,916 Capital work-in-progress 430,607 226,280 Investments in associates 62,822 50,763 Long-term assets 24,207 23,564 Derivative financial instruments 1,697 - Restricted cash 10,598 10,089

1,474,129 1,291,612

Current assetsInventories 203,688 198,349 Trade and other receivables 366,527 283,990 Due from a related party 590,351 344,591 Cash and bank balances 458,649 106,213

1,619,215 933,143 TOTAL ASSETS 3,093,344 2,224,755

EQUITY AND LIABILITIESEquityShare capital 1,184,400 1,184,400 Capital adjustment account (421,609) (421,609)Contribution from shareholder 346,762 318,960 Sinking fund reserve 160,125 160,125 Statutory reserve 323,915 300,294 Cash flow hedge reserve 2,540 - Retained earnings 288,098 132,063 Equity attributable to the shareholder of the Parent 1,884,231 1,674,233 Non-controlling interests 8,115 7,643 Total equity 1,892,346 1,681,876

LiabilitiesNon-current liabilitiesBorrowings 609,340 75,777 Employees’ end of service benefits 17,241 16,159 Retention payable 6,848 2,723 Abandonment and restoration costs obligations 182,609 174,317

816,038 268,976

Current liabilitiesBorrowings 5,655 5,655 Dividend payable 56,400 56,400 Trade and other payables 321,978 211,848 Income taxes payable 927 -

384,960 273,903 Total liabilities 1,200,998 542,879 TOTAL EQUITY AND LIABILITIES 3,093,344 2,224,755

CONSOLIDATED STATEMENT OF FINANCIAL POSITIONAt 31 December 2017


2017 BD ‘000

2016BD ‘000

Sales 2,307,255 1,790,670 Cost of sales (1,697,830) (1,255,179)Gross profit 609,425 535,491 Other income 63,063 35,163 Staff costs (79,667) (64,072)Maintenance and other expenses (93,289) (90,933)Other expenses (122,112) (118,953)Depreciation (137,627) (134,296)Operating profit 239,793 162,400 Finance income 8,651 2,574 Finance costs (12,353) (5,881)Share of profit from associates - net 2,388 371 Loss on disposal of an associate (952) - Profit before income tax 237,527 159,464 Income tax expense (927) - Net profit for the year 236,600 159,464

Other comprehensive income Other comprehensive income to be reclassified to profit or loss in subsequent periods:Gain on cash flow hedge reserve 1,697 - Share of gain on cash flow hedge from an associate 843 -

Other comprehensive income not to be reclassified to profit or loss in subsequent periods:Actuarial gain (loss) 191 (202)Share of actuarial loss from associates (195) (202)TOTAL COMPREHENSIVE INCOME FOR THE YEAR 239,136 159,060

Net profit for the year attributable to:Shareholder of the parent 236,210 159,782 Non-controlling interests 390 (318)

236,600 159,464

Total comprehensive income attributable to:Shareholder of the parent 238,746 159,378 Non-controlling interests 390 (318)

239,136 159,060

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHERCOMPREHENSIVE INCOMEFor the year ended 31 December 2017


2017 BD ‘000

2016BD ‘000

OPERATING ACTIVITIESNet profit before tax for the year 237,527 159,464 Adjustments for: Depreciation 137,627 134,296 Bahrain crude oil purchases 4,797 4,743 Fees from gas field operations (1,283) (1,218) Finance income (8,651) (2,574) Finance costs 12,353 5,881 Share of profit from associates - net (2,388) (371) Loss on disposal of an associate 952 - Fair valuation gains on derivatives - (423) Loss on disposals of property, plant and equipment - 5 Property, plant and equipment written-off 4 523 Capital work-in-progress written-off 474 338 Provision for slow-moving inventories 600 755 Provision for doubtful trade and other receivables 11,723 42,839 Provision for employees' end of service benefits 2,593 2,783 Working capital changes: Inventories (5,691) (80,379) Trade and other receivables (97,905) (51,331) Trade and other payables 102,509 71,038 Retention payable 4,125 -

Net cash flows from operations 399,366 286,369 Employees' end of service benefits paid (1,320) (1,008)Income tax paid - (272)Net cash flows from operating activities 398,046 285,089

CONSOLIDATED STATEMENT OF CASH FLOWSFor the year ended 31 December 2017


2017 BD ‘000

2016BD ‘000

INVESTING ACTIVITIESPurchase of property, plant and equipment (55,742) (31,624)Additions to capital work-in-progress (247,534) (129,289)Additions in associate (10,717) - Consideration received on disposal of an associate 1,743 - Dividends received from associates - 124 Movement in long-term assets (643) 267 Movement in restricted cash (509) 13,436 Finance income received 8,651 2,574 Investment in a subsidiary (964) - Net cash used in investing activities (305,715) (144,512)

FINANCING ACTIVITIESNet movements in amounts due from a related party (211,093) (260,438)Proceeds from borrowings 539,218 64,467 Repayment of borrowings (5,655) (31,083)Finance costs paid (5,726) (5,942)Movement in shareholders current accounts of Bafco (89) (22)Dividends paid (56,550) - Net cash flows from (used in) financing activities 260,105 (233,018)

NET INCREASE (DECREASE) IN CASH AND BANK BALANCES 352,436 (92,441)Cash and bank balances at 1 January 106,213 198,654 CASH AND BANK BALANCES AT 31 DECEMBER 458,649 106,213

CONSOLIDATED STATEMENT OF CASH FLOWS (continued)For the year ended 31 December 2017


Equity attributable to equity shareholder of the parent

Sharecapital

BD ‘000

Capitaladjustment

accountBD ‘000

Contributionfrom

shareholderBD ‘000

Sinkingfund

reserveBD ‘000

StatutoryreserveBD ‘000

Cash flow

hedgereserveBD ‘000

Retainedearnings*

BD ‘000Total

BD ‘000

Non-controlling

interestsBD ‘000

TotalBD ‘000

At 1 January 2017 1,184,400 (421,609) 318,960 160,125 300,294 - 132,063 1,674,233 7,643 1,681,876

Net profit for the year - - - - - - 236,210 236,210 390 236,600

Other comprehensive income (loss) - - - - - 2,540 (4) 2,536 - 2,536

Total comprehensive income - - - - - 2,540 236,206 238,746 390 239,136

Dividends proposed and paid - - - - - - (56,550) (56,550) - (56,550)

Movement in non-controlling interest: shareholders current accounts of Bafco - - - - - - - - (89) (89)

Acquisition of non-controlling interest - - - - - - - - 171 171

Transfer to statutory reserve - - - - 23,621 - (23,621) - - -

Contribution in kind - - 27,802 - - - - 27,802 - 27,802

At 31 December 2017 1,184,400 (421,609) 346,762 160,125 323,915 2,540 288,098 1,884,231 8,115 1,892,346

At 1 January 2016 1,184,400 (421,609) - 160,125 284,356 - 45,023 1,252,295 7,983 1,260,278

Net profit for the year - - - - - - 159,782 159,782 (318) 159,464

Other comprehensive income (loss) - - - - - - (404) (404) - (404)

Total comprehensive income - - - - - - 159,378 159,378 (318) 159,060

Dividends proposed - - - - - - (56,400) (56,400) - (56,400)

Movement in non-controlling interest shareholders current accounts of Bafco - - - - - - - - (22) (22)

Transfer to statutory reserve - - - - 15,938 - (15,938) - - -

Contribution in kind - - 318,960 - - - - 318,960 - 318,960

At 31 December 2016 1,184,400 (421,609) 318,960 160,125 300,294 - 132,063 1,674,233 7,643 1,681,876

* Retained earnings include non-distributable reserves arising from consolidation of subsidiaries amounting to BD 144,207 thousand (2016: BD 144,207 thousand).

CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFor the year ended 31 December 2017



Documents

A DECADE OF EXCELLENCE - nogaholding€¦ · 02 Portfolio Companies nogaholding Annual Review 2016 The Oil & Gas Holding Company B.S.C. (closed) GBCorp Tower, 18th Floor, Financial