$9.8bn PetroRabigh eyes year-end IPO

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1 A component of September 24-30, 2007 Vol. 24, No. 38 Reg No. 1 OGN 025 Saudi Aramco powers ahead OGN s mega annual feature includes in-depth reviews on the oil major s plans as well as extensive company profiles More than skill and technology Valve-maker Pibivesse rises to the challenges of meeting today s stringent demands in the oil and gas industry GPCA gears for Dubai forum GPCA secretary-general Abdullah Al Hagbani speaks to OGN ahead of the association s annual forum $9.8bn PetroRabigh eyes year-end IPO Flashback... Saudi Minister of Petroleum and Mineral Resources Ali Al Naimi (centre) and Saudi Aramco president and CEO Abdallah Jumah (right) at the PetroRabigh s groundbreaking ceremony in March last year RIYADH: PetroRabigh, a joint venture between Saudi Aramco and Japan s Sumitomo Chemicals, plans an initial public offering (IPO) before the end of this year, a source familiar with the matter said. PetroRabigh plans the IPO before the end of They have already applied to the Capital Market Authority, the source said. Saudi Aramco said last year the $9.8 billion petrochemical joint venture would float a 25 per cent stake once the complex started operations in 2008, which could make the IPO the biggest ever in GCC countries. PetroRabigh spokesman Eyad Al Ajaj declined immediate comment. The largest Gulf Arab IPO was in 2003, when the Saudi government sold a stake in Saudi Telecom Company for $2.72 billion. Aramco faced resistance from Sumitomo Chemicals over selling shares in the firm before it actually starts production next year. They seem to have overcome the differences, the source said. Aramco officials argue that an early float would help offset rising project costs. Soaring material and construction expenses have more than doubled the project s cost from an initial estimate of $4.3 billion. PetroRabigh has secured $5.8 billion in financing deals with Japan Bank for International Co-operation (JBIC), Public Investment Fund of Saudi Arabia (PIF) and 17 financial institutions. PetroRabigh is currently in the process of building the world-scale integrated refining and petrochemical complex. The new complex will produce 18.4 million tonnes of oil products, 1.3 million tonnes of ethylene and 900,000 tonnes of propylene a year. A company official said recently that PetroRabigh is mulling the building of an aromatics complex in the second phase of its petrochemicals expansion. We will be looking at building an aromatics complex (which would likely include benzene and phenol units) in the next phase (of expansion), said Ahmed Bashaweih, senior project manager of Rabigh Conversion Industrial Park (CIP), seconded from Saudi Aramco. Bashaweih was addressing the Rabigh CIP marketing seminar in London. IN BRIEF Chevron, Total submit study AMMAN: Total and Chevron have jointly submitted to the Iraqi Oil Ministry a study on the development of one of Iraq s biggest oil fields, Majnoon, in the south of the country, a ministry statement said. The ministry has set up a committee headed by South Oil Company director-general Abdul Jabbar Lauby, to study the possibility of signing a memorandum of understanding with the two companies, the statement said. Iran hints at Total rethink TEH R AN: Iran s Oil Minister Gholam-Hossein Nozari said the multi-billion-dollar liquefied natural gas agreement with Total of France to develop part of South Pars needed reconsideration because of differences over the price Tehran would be paid for its gas. Nozari said the rate quoted by the French energy group on marketing LNG was high, which would force Iran to study the feasibility of this plan once again. IPIC to buy Cosmo Oil stake TOKYO: An investment arm of the Abu Dhabi government will spend about $776 million to buy one-fifth of Cosmo Oil, becoming the top shareholder in Japan s fourth-largest oil company. The International Petroleum Investment Company (IPIC) was eying the growth potential of Cosmo s fuel product exports to the west coast of the US, a source said. OGN Yearbook on way MANAMA: The OGN Yearbook 2008 will be released in January, its publishers have announced. Produced by the GAP (Guides & Annual Publications) division of Al Hilal Group, the annual yearbook provides a unique chronicle of industry developments in a month-by-month summary, as well detailed country and sector reviews. For further editorial and advertising enquiries, contact matthew.kirkman@tradearabia.net. Opec may discuss output hike DUBAI: Opec will probably hold consultations about a further output increase if the price of oil stays above $80 a barrel for more than days, an Opec source said SEE PAGES 13-18

2 2007 Annual Review

3 Yokogawa invests millions to support Saudi growth Two new companies in the kingdom will spur the company s growth while offering easier access to its services 3 YOKOGAWA is investing millions of dollars in Saudi Arabia to effectively support the country s booming mega oil, gas and petrochemical projects. In a strategic move, Yokogawa recently set up two companies in Saudi Arabia: Yokogawa Saudi Arabia Limited and Yokogawa Services Saudi Arabia Limited. Yokogawa Saudi Arabia is engaged in engineering and manufacturing of process control solutions as well as research and development while Yokogawa Services Saudi Arabia provides after-sales services and training services of Yokogawa systems and products, construction and installation services related to instrumentation and life-cycle maintenance services. Representing a multi-million-dollar investment, Yokogawa Saudi Arabia opened last December in Khobar. It is located on a 10,000 sq m plot at the Science Park of King Fahd University of Petroleum and Minerals in Dhahran. Future expansion of facilities calls for 18,000 sq m with the built-up area going from 4,000 sq m to 7,000 sq m. Yokogawa Services Saudi Arabia is a joint venture of Yokogawa and Gas Arabian Services, a long-time partner of Yokogawa in the kingdom. The company, which began operations recently, is located in the Support Industries Area in Jubail with 50 employees and occupies a total area of 5,000 sq m and a built-up area of 2,000 sq m which is to be expanded to 3,000 sq m. More than 200 professionals will be employed by both companies, allowing Yokogawa to effectively support Saudi Arabia s booming mega oil, gas and petrochemical projects and to contribute to the Kingdom s development. Yokogawa, which has been in the kingdom for two decades, is spearheading a proactive Saudiisation policy and both contributing to the Saudi economy and providing high-quality local services for the company s largest market in the Middle East. Policy objectives include the employment and development of Saudi nationals, a technology transfer and procurement of local materials. Moreover, Yokogawa provides highquality local services, including oncall services on a 24/7 basis, system engineering, integration, start-up, commissioning, construction work, modernisation of process control systems and customer training. Akira Ogawa, as president and CEO of Yokogawa Middle East (YME), heads the two companies. Yokogawa s existing branch office in Yanbu is set for expansion while its network will be extended to Jeddah and Riyadh. Despite strong international competition, YME has succeeded in gaining the confidence of its customers thanks to the high reliability of Yokogawa products and the professionalism of its employees. Yokogawa established its Middle East headquarters at Bahrain in 1990 to facilitate easy access to its growing network of sales, engineering and service facilities throughout the region. YME has continued to strengthen its service and sales activities to meet increasing demand from the fastgrowing markets of the GCC and the wider Middle East. Significantly, YME became one of the regional headquarters and a key worldwide facility for global Yokogawa in early 2006 reflecting the growing importance of the Middle East. FOUR-FOLD GROWTH YME is now aligned with its European, American and South East Asian counterparts as a global facility in order to enhance and increase the scale and range of industrial automation (IA) solutions provided on a local basis throughout the Middle East. Yokogawa s growth in IA business has increased more than four-fold over the last five years in the Middle East. YME s regional headquarters has a multi-cultural professional workforce specialised in various functions. Currently, it employs over 476 staff in sales, engineering and technical support deployment in strategic locations throughout the region. Yokogawa has taken advantage of Bahrain s strategic location not only for its ease of access to the region but as a global centre of excellence in the provision of technology and service support. Moreover, Yokogawa is increasing its presence across the region from its Middle East headquarters in Bahrain and operational offices in Saudi Arabia, UAE (Abu Dhabi, Local presence... an artist s impression of the Dhahran facility (top) and the office in Bahrain (above) and Jebel Ali in Dubai), Oman (Muscat), Qatar (Doha) and Iran (Tehran). In April 2006, Yokogawa Engineering Middle East started operations in Jebel Ali Free Zone in April last year. From this location Yokogawa is executing seven projects: three in the UAE, and one each in Oman, Egypt, Yemen and Iran. Yokogawa s workforce comprises engineers specialised in various instrumentation fields. Most projects are locally managed and executed by its staff, including engineering, commissioning, start-up and training. The activities of YME cover sales and engineering Services embracing project management, supply, site services, training and maintenance of integrated process automation systems, process control instruments and test and measuring instruments. A major manufacturer and supplier of process control instrumentation and test and measuring instruments, Yokogawa s parent, Yokogawa Electric Corporation, was founded in Japan in Today, Yokogawa employs more than 19,000 people in a global network of 18 manufacturing facilities, 83 affiliate companies, and over 650 sales and engineering offices in 28 countries. With more than $3.83 billion in sales, Yokogawa is committed to applying state-of-the-art technology in its three main divisions of industrial automation, test and measurement and information systems, including aviation and industry support. Its commitment to innovation is reflected in its exceptionally high ration of investment in research and development, which enables the sustained development of pioneering new technologies, products and services. September 24-30, 2007

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5 Yokogawa playing key role in the Hawiyah gas project 5 Top-of-the-line process control systems from Yokogawa Middle East have been installed in a key project that will boost Saudi Aramco s gas prowess YOKOGAWA Middle East (YME) is partnering with Saudi Aramco to help the oil major achieve unparalleled levels of success in boosting the kingdom s energy stream. In addition to several other challenging initiatives in the regional energy sector, Yokogawa is playing a pioneering role in Saudi Aramco s Hawiyah Gas Plant expansion. Saudi Aramco is expanding the plant to process more volumes of non-associated gas, and it is also expanding its master gas network. EXPANSION PROJECT Saudi Aramco selected YME as the process control systems (PCS) supplier for Hawiyah Gas Plant expansion in April 2006 to work with its lumpsum turnkey (LSTK) contractor. This project calls for expanding the plant capacity by adding new process units and facilities. REPLACEMENT PROJECTS In addition, YME won two contracts to replace the plant s process control and emergency shutdown systems: The first, awarded in April 2006 involved replacing the existing distributed control system fully integrated testing and delivery to site. Soon after the project s kick-off meeting, YME engineers made several plant visits and site surveys to get the system design right. The plant is large, with DCS 12,000 hardwired DCS inputs/outputs and 5,000 hardwired ESD inputs/outputs). A large project team and facility was required to stage and test the entire system configuration in a fully integrated manner at the supplier s location. YME scaled up its infrastructure to meet the challenge locally, resulting in a satisfied and happy customer. YME s project team comprised 40 people and the testing area allocated for the project was 1,600 sq m. YME is providing critical systems and services for the expansion of the Hawiyah plant. All the equipment has been shipped to the site and Yokogawa Middle East is currently involved in the installation of the equipment in preparation for the site acceptance test (SAT). CONSTRUCTION PROJECT Subsequently, Yokogawa was awarded a procurement and construction contract for carrying out All the equipment has been shipped to the site and Yokogawa Middle East is currently involved in the installation of the equipment in preparation for the site acceptance test (SAT) (DCS) with the state-of-the-art CENTUM CS3000 DCS; and The second, in October 2006, comprised replacing the existing emergency shutdown system (ESD) with the cutting-edge ProSafe-RS ESD system. YME was given a challenging delivery date the new DCS/ESD systems had to be delivered to the site by August This was in consideration of the window available for cut-over to new DCS/ESD systems from October 2007 to end of January Another pre-requisite was that the cut-over to new DCS/ESD systems had to be coordinated and completed in time for the Hawiyah gas expansion project. YME s scope of work included site surveys, extracting design data from the plant archives and existing control systems, system design, design reviews, manufacturing, the site work for DCS/ESD replacement projects on a lumpsum procurement and build (LSPB) basis. The scope of work included supply of fibre-optic and multi-core cables, various construction materials, control room renovation, installation of new control systems, cutover (cold and hot), demolition of existing hardware, documentation and hand-over. YME executed these projects from its regional headquarters in Bahrain. This facilitated ease of interaction with all the project stakeholders during the initial critical phase, including Saudi Aramco s project management team, plant engineers, Saudi Aramco s P&CSD and other subsystem suppliers. YME received good support from Saudi Aramco team members who were keen on enhancing the present plant operation by deploying the latest technology available. Yokogawa s solution of CS3000 and ProSafe-RS being integrated at the control network level meant significant advantages to the customer. Yokogawa s involvement will provide key benefits in: control system optimisation, operator s productivity improvement, safety enhancement, performance and reliability enhancement, maintainability enhancement, knowledge transfer, and improvement of plant documentation. As Yokogawa s involvement in the Hawiyah project enters a crucial phase, YME is now ready to handle bigger challenges as part of its continuous growth in the Saudi Aramco... Yokogawa is a key partner in the oil major s expansion plans Middle East, a spokesman comments, adding that the Hawiyah project is another example of the trust and confidence placed on YME by a major customer. Construction work on the Hawiyah plant expansion is ahead of schedule and the project will come on stream in YME customers have praised the company for the following reasons: simplified logistics, close co-ordination with end-user engineers, the ability to relocate most of the project s activities to YME s office, and factory acceptance testing of various systems at one location. Through the successful execution of these contracts at Hawiyah Key advantage... factory acceptance testing at Yokogawa s Bahrain office gas plant from its base in Bahrain, Yokogawa Middle East has proven its capability to execute large-scale projects locally in the Middle East, to the fullest satisfaction of its customers, the spokesman adds. September 24-30, 2007