investor trip investor presentation november 2008 sharjah 2008 · – work to world-class standards...

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Investor presentationSharjah 2008

Investor TripNovember 2008

Day 2 Engineering & Construction

Introduction

Objectives of investor presentation

– communicate our vision and strategy

– communicate the extent of our service capabilities and our market opportunities

– communicate how we are building a platform for sustainable growth

– provide an opportunity to meet senior management of our Engineering & Construction and Operations Services divisions

Vision & values

Our vision is for Petrofac to become the global oil & gas industry’s premier facilities and infrastructure provider, admired by customers and employees for consistently delivering and rewarding excellence

Achieving this demands that we:

– work to world-class standards

– focus always on customer satisfaction

– respect the environment and sensitive to the communities in which we work

– promote and reward on merit

United by shared values - safe, ethical, innovative, cost-conscious, responsive to customers and focus relentlessly on delivering results

Petrofac today

Petrofac is a successful business that has enjoyed tremendous growth

– doubling of our employee headcount in three years

– significant increase in our operational capability through organic development and acquisition

– strong year-on-year growth in our financial performance

Whilst current conditions create uncertainty, industry fundamentals remain compelling and support long-term growth in demand for our services

Petrofac is well placed:

– focused on geographies with lower capital costs/conventional developments

– significant exposure to National Oil Companies, who may be better able to meet short-term challenges

– strong balance sheet and well-funded

– low operational gearing and cost-effective capability

Industry fundamentals: demand, positive trend

OECD and non-OECD oil demand, 1960-2005

Total World Demand OECD Non OECD

0

10

20

30

40

50

60

70

80

90

1962 1967 1972 1977 1982 1987 1992 1997 2002 2007E

Dem

and

(mbb

ls/d

)

Recessions:4Q'69-1Q'703Q'74-1Q'752Q'80-3Q'801Q'81-2Q'814Q'90-1Q'911Q'01-3Q'01

Source: IEA

Global demand for oil followed positive trend throughout successive recessions

Industry fundamentals: demand led by China, India, ME

105405,200Europe

11,1301,000India

21,3202,600China

121902,200Middle East

151,19017,300OECD

204509,100North America

Oil Consumption Per Capita (bbls)

Population (millions)

2006 Oil Demand (mbbls/year)

Disparity in consumption per capita expected to decreaseTo overtake OECD in terms of total demand for oil, India and China combined need only consume at the rate of 7 bbls per capita, which is less than half of the OECD level

Disparity in consumption per capita expected to decreaseTo overtake OECD in terms of total demand for oil, India and China combined need only consume at the rate of 7 bbls per capita, which is less than half of the OECD level

Source: based on IEA data, World Energy Outlook 2008

Oil consumption per capita in China and India is currently less than 15% of the average level in OECD states

— this disparity is clearly not sustainable

Domestic demand for oil & gas in Middle East also driving growth

Source: Energy Information Administration, 2008

Recent sharp decline in oil price and uncertainty over near term levels has led to general expectation that some marginal projects will be deferred

Industry’s current investment plans in oil sands, challenging deep water and potentially North Sea may be uneconomic in current environment

However, Petrofac’s Engineering & Construction division focused on lower cost markets

0

20

40

60

80

100

120

0 10 20 30 40 50 60 70 80 90 100

Hydrocarbon liquids-millions of barrels per day

16%

RO

CE W

TI p

rice

$ p

er b

oe

Major oils today

Traditional reinvestment (Deep Water & some oil sands)

Persian Gulf OPEC

Unconventional reinvestment(w ith subsidies)

Marginal cost of supply- less efficient oil sands

Oil price-cost curve schematicSource: Credit Suisse research, 2008, arrow, oval and italicised text added

Industry fundamentals: supply/cost curve

Gulf OPEC

Curve likely to move to left as mature fields deplete

Core Petrofac markets

Souce: Norwegian Petroleum Directorate

0

500

1,000

1,500

2,000

2,500

3,000

1967-1971

1972-1976

1977-1981

1982-1986

1987-1991

1997-2001

2002-2006

Discoveries <5 mm Sm3

Discoveries 5-10 mm Sm3



Discoveries >100 mm Sm3

1992-1996

Million standard m3 oil equivalent (mm Sm3)

Industry fundamentals: supply, easy oil discovered

Industry fundamentals: substantial capex spend required

To satisfy world hydrocarbon demand by 2030 the industry will need to boost reservoir recovery rates, find significant new reserves and invest approximately US$10 trillion

2008 2030

0

20

40

60

80

100

120

Oil

Prod

uctio

n &

Dem

and

(mbb

ls/d

)

Existing Production New Production

Existing production base declining at around 8% per yearExisting production base declining at around 8% per year

Demand expected to grow 1.6% per yearDemand expected to grow 1.6% per year

By 2030, new production capacity of more than 70% of the existing base will be required to meet demand

By 2030, new production capacity of more than 70% of the existing base will be required to meet demand

Source: based on IEA data, World Outlook 2008

Our 2009 reorganisation

Maroun Semaan

Engineering services (W

oking and lower cost

engineering centres)

Offshore Engineering

& O

perations (Facilities M

anagement, Brow

nfield)

Training

Production Solutions (SPD

, Caltec, Eclipse, Dubai)

New

ventures (M

ubadala, Saudi Arabia, IKPT etc)

Sharjah-based

Lump-sum EPC

Energy Developm

ents

Amjad Bseisu

Our 2009 reorganisation

Principal benefits of new reorganisation structure are:

– deliver revenue synergies through greater integration and deployment of multiple services to customers and projects

– deliver differentiated returns through innovative commercial structures that provide for an appropriate share of risk and reward

– deliver consistently through common systems and processes that are both scalable and sustainable

– share knowledge and best practices across the group, avoiding duplication of effort and costs

Our growth, Engineering & Construction

Previous investor trip to United Arab Emirates in November 2006

Engineering & Construction division has grown significantly since that time

Key awards during the year included Kashagan third oil train, Ebla gas plant, Jihar gas plant, KOC gas pipeline

2,116*

1,081

2006 2008

Revenue (US$m)40% CAGR

* Analysts’ consensus estimate for 2008

4,800**

2,700

2006 2008

Headcount33% CAGR

** At October 2008

Our growth, Engineering & Construction

Division now capable of undertaking much larger scale contracts

Strong growth in headcount and revenue, and even stronger growth in net profit

Engineering & Construction remains leveraged to the strong fundamentals of the oil & gas industry

201*

95

2006 2008

Net profit (US$m)46% CAGR

* Analysts’ consensus estimate for 2008

9.5%*8.8%

2006 2008

Net margin

Our growth, Engineering & Construction, personnel

Current employee strength ~ 5,0002008Sharjah 1,771 37%Sites 1,518 31%Mumbai 521 11%Woking 556 11%Chennai 433 9%Moscow 40 1%

(rounded) 4,800

By location

2008Engineering 2,027 42%Construction 2,079 43%Procurement 204 4%Support & others 529 11%

(rounded) 4,800

By class

Manpower Growth

2600

4000

4800

2006 2007 2008

Our growth, Engineering & Construction, personnel

Recruited approximately 1,000 personnel in 2008

Brand reputation and awareness in universities and market place

Employee referral programme implemented

Organisation and Development team fully established focused on competency and career development/progression and succession planning

Identified backup for most key positions

Robust graduate development, 2 year structured programme, leading to “graduation”

E-learning programme being rolled out

Best in class employer, compensation and benefits programme being continually improved

Annualised attrition rate reduced to < 9%

Our growth, Engineering & Construction, infrastructure

Infrastructure – major IT projects

Unified global computer network and e-mail infrastructure under one umbrella (Petrofac.com)

Group wide enterprise business software solution (Oracle ERP)

Business continuity plan, IT disaster recovery

Our growth, the way forward

Consolidate position in current core markets

– Maintain cost competitiveness

– Maintain relations with customers, subcontractors and service providers

Well focused push into:

– Abu Dhabi and Saudi Arabia for EPC opportunities

– LNG

– Offshore engineering and construction

Opportunistic approach to new markets eg. Nigeria, Libya, Iraq

Continued investment in human talent

Future growth drivers and initiatives


Overview

In spite of global economic events, outlook is optimistic

International oil companies and national oil companies remain focused on investment although a slowing down in some areas (downstream)

Core markets – Middle East and Africa remain strong

Human capital less of a challenge


Strategies for growth and risk management

Geography - diversification by region

– portfolio of risk: security, political/legal, economic

– five/six core country markets with numerous opportunistic countries

– local presence continues to be a strong differentiator

Customers and product diversification

– diverse: international oil companies, national oil companies and smaller independent operators

Well established and transparent execution model

– FEED / EPC / Operations & Maintenance / Training

Added value, cost and delivery optimisation from synergies across the total business offering, Engineering & Construction, Operations Services, Energy Developments


Geographic diversification, sales and development focus

Middle East

– Qatar, Saudi Arabia, Kuwait, Oman, UAE

– Iraq (medium term)

– Iran (medium to long term)

Africa

– Algeria, Egypt, Tunisia, Nigeria, Libya

CIS

– Kazakhstan, Turkmenistan, Russia


Geographic diversification

Objective is to maintain a balanced portfolio by target region

– 2005 Middle East order intake

– 2006 Africa and CIS order intake

– 2007 Africa and CIS order intake

– 2008 Middle East order intake

– 2009 Middle East and Africa

Increased participation in long term initiatives and partnerships

– Petrofac / IKPT (partnership), LNG projects

– Petrofac Emirates (partnership)

– Petrofac Saudi Arabia


Customer and product diversification

Focus on strong relationships with international oil companies and national oil companies

Mitigate cyclical industry trends by

– LNG, refinery, petrochemical

– balance services over offshore/onshore

Ability to offer differentiated commercial models

Ability to build cost effectively on existing expertise eg. sour gas

Utilities and offsites experience – transcends oil & gas, refinery and petrochemicals


Customer and product diversification

LNG / GTL

Selective technology positions

– alliances, joint ventures with specialist contractors

Build on local presence

– UAE

– Oman

– Algeria

– Qatar

– Kuwait

– Kazakhstan


Competition

With the Tier 1 contractors, limited peer competition, increasing Korean competition

Development of differentiated position

– through execution model, services to EPC, operations and training

– through reliability and delivery leading to repeat business, negotiated awards and word of mouth recommendations thereby introducing new customers

– value associated with strong brand

– competitive cost structure


Petrofac Emirates - new venture in the UAE

Joint venture between Petrofac and Mubadala

Scope of work, EPC in UAE and where Mubadala has participating interest

Major short-term bidding activity

– ADCO, SAS, BAB Compression

– ADGAS, Das Island

– GASCO, Habshan utilities and offsites

Short-medium term

– ADCO, 1.8 expansion

– Conoco Phillips, Shah development, multiple EPC contracts

– Takreer refinery


Saudi Arabia

Actively bidding for projects eg. Karan utilities & offsites, Yanbu export refinery

Excellent visibility of opportunities 2009-2012 in core oil & gas, refinery and petrochemical

Local legal entity established – essential for in-country execution

Targeted growth plan to establish Petrofac as a major player in the Saudi market

Strong relationships and positioning with key subcontractors


LNG

Prequalified for Shell LNG projects worldwide, US$5-10 billion greenfield

Bid for world class LNG project, albeit unsuccessful (Algeria)

Currently bidding for other LNG opportunities

Good visibility of short/medium-term prospects

Pursuing strategic alliances with other major LNG contractors

Focused recruitment programme ongoing


The outlook

Target markets, outlook remains positive

Good visibility of 2009, 2010 prospects for EPC

Acquisitions on a selective basis

Securing and retention of resources is a primary focus

Risk management

Risk management

Risk management

processes

Risk management

processesCorporate support

and guidance

Contract/project risk management

and execution management

Executive risk

management strategy

Risk management strategy

Executive risk management strategy

Focus on areas of principal expertise, lump sum EPC and engineering services

Mitigation through a broad portfolio, countries and services

Strong management control and accountability

Heavy investment in proposal management and project controls

Focus on strengthening risk monitoring and assurance processes

Business continuity planning

Risk management approach

Corporate support and guidelines

Measurement and monitoring of corporate risk exposures, banks, countries, contracts, commodities, and other counter-party risk (vendors, subcontractors) etc

Use of guidelines to establish limits and parameters for risk taking

Common processes for reviewing and assessing corporate risk in new business

Contract risk in Engineering & Construction

CUSTOMER RISKS

PARTNER RISKS

VENDOR/SUPPLIER RISKSSUBCONTRACTOR RISKS

Contracts

Purchase orders

Join venture/Consortium agreement

Subcontracts

COUNTRY RISKS

PETROFAC

Petrofac’s contractual risk policy

Petrofac seeks balanced contractual risk allocation with customers, partners and subcontractors to:

– avoid disproportionate potential liabilities

– eliminate/minimise potential liabilities outside Petrofac control

– allow an equitable allocation of risks amongst parties involved

– contractual risks control and mitigation by party in best position to manage

– promote smooth contractual relationship among involved parties

Contract risk, prequalification cycle

Prequalification phase

Prequalification documents submission

Prequalification documents submission

Prospect identification

Prospect identification

High level execution strategy

High level execution strategy

Assessment of customer risk &

country risk

Assessment of customer risk &

country risk

Assessment & decision to pre-qualify

Assessment & decision to pre-qualify

Choose partnersChoose partners

Contract risk, proposal cycle

Bid/no bid decision phase Review and submission phase

Tender information

sheet distributed

Tender information

sheet distributed

Proposal submission

Proposal submissionBid/no bid

decision

Bid/no bid decision

Proposal preparation phase

Review ITT and key contract

terms

Review ITT and key contract

termsRevisions based on

DRRC, RRC and board directives

Revisions based on DRRC, RRC and board

directivesCheck for

deal-breakers

Check for deal-breakers

Receive ITB

Receive ITB

Technical and commercial

review

Technical and commercial

review

Identify and issue ITBs to vendors & subcontractors

Identify and issue ITBs to vendors & subcontractors

Decision to bid

Decision to bid

Detailed review ITT and key

contract terms

Detailed review ITT and key

contract terms

Divisional risk review committee

(DRRC) Review

Divisional risk review committee

(DRRC) Review

Proposal ready for review

Proposal ready for review

Risk review committee

(RRC) Review

Risk review committee

(RRC) Review

Board approvalBoard approval

Identification of risks & mitigation measures for

presentation to DRRC/RRC/board

Identification of risks & mitigation measures for

presentation to DRRC/RRC/board

Obtaining vendor & subcontractor

Prices

Obtaining vendor & subcontractor

Prices

1 week1st price review

2nd price review

2 - 3 weeks 1 week

Major contractual terms in EPC contracts

Rely upon information

Financial provisions and securities (payment terms, bank guarantees, etc)

Liquidated damages for delay & failure to achieve performance guarantees

Change in law

Maximum aggregate liability of contractor under the contract

Consequential losses/damages

Liabilities, indemnities and insurance

Warranty obligations

Suspension/termination

Force majeure

Contract risk, project cycle

EPC phase Warranty phase

Provisional acceptance


Commencement of EPC contract


Warranty period

Final acceptance

Final acceptance

Mechanical completion


Commissioning phase

EngineeringEngineering By Petrofac/

customer with support

from vendors

& subcontractors

By Petrofac/

customer with support

from vendors

& subcontractors

Vendors & subcontractors to

meet their

warranty obligations

Vendors & subcontractors to

meet their

warranty obligations

Construction through

subcontractor(s)

Construction through

subcontractor(s)

Subcontractor to achieve

mechanical completion

Subcontractor to achieve


Procurement

through vendors

Procurement

through vendors

Vendors to meet required

performance guarantee

for their equipment

Vendors to meet required

performance guarantee

for their equipment

CONTRACT RISKS

ProgressFinal acceptance

certificate

Effective Date

Provisional Acceptance Certificate

100%

0% 100%Mechanical completion RFSU

Assess and allow for proposal (perform

ance Tests, rely upon info etc)

Take up with vendors and subcontractors

Identify & align vendors w

ho can meet

requirements

Correct design/ performance test

procedures/ completions checklist

Vendor representatives at site

‘Back to back’vendor

guarantees

Mitigation measures

Proposal phase Execution phase Warranty phaseM

ake

good

Mak

e go

od

Pay

LDs

Pay

LDs

Contract risk, profile

Subcontracts, risk management

PETROFAC

CONSTRUCTION SUBCONTRACTORS

CONSTRUCTION SUBCONTRACTORS

MATERIAL VENDORS/SUPPLIERS

MATERIAL VENDORS/SUPPLIERS

Back-to-back basis with the EPC contract conditions (obligations, payment terms, bonds, liquidated damages, warranty etc)

Back-to-back basis with the EPC contract conditions (obligations, payment terms, bonds, liquidated damages, warranty etc)

a) Pass-through obligations

b) Warranty on a back-to-back basis with the EPC contract

c) Compliance with main contract requirement

a) Pass-through obligations

b) Warranty on a back-to-back basis with the EPC contract

c) Compliance with main contract requirement

Contract risk, large scale projects strategy (1)

CUSTOMER

Joint venture Petrofac – JV Partner

Joint venture Petrofac – JV Partner

PETROFAC JV PARTNER

EngineeringEngineering

Responsible for performance of its work scope




Commercial risks

Schedule risks

Technical risks

Commercial risks

Schedule risks

Technical risks

Commercial risks

Schedule risks

Technical risks

Commercial risks

Schedule risks

Technical risks

Joint & several liability towards customer

Sharing of risks

ProcurementProcurement ConstructionConstruction EngineeringEngineering ProcurementProcurement ConstructionConstruction

E, P & C Scope E, P & C Scope

CUSTOMER

Joint venture

Petrofac – Partner 1 – Partner 2

Joint venture

Petrofac – Partner 1 – Partner 2

PETROFAC PARTNER 1

EngineeringEngineering





Commercial risks

Schedule risks

Technical risks

Commercial risks

Schedule risks

Technical risks

Commercial risks

Schedule risks

Technical risks

Commercial risks

Schedule risks

Technical risks

Joint & several liability towards customer

Sharing of risks

ProcurementProcurement EngineeringEngineering ProcurementProcurement

PARTNER 2



Commercial risks

Schedule risks

Technical risks

Commercial risks

Schedule risks

Technical risks

ConstructionConstruction

Contract risk, large scale projects strategy (2)

Subcontractor risk management

Warranty phase

Commissioning phaseEPC phase


Provisional acceptanceCommencement of

EPC contract


Warranty period

Final acceptance

Final acceptanceMechanical

completion


Late

mobilisation

Late

mobilisation

Lack of

resources

Lack of

resources

Defective

workmanship

Defective

workmanship

Delay in

progress

Delay in

progress

Non-achievement of


Non-achievement of


Incentive

schemes to

subcontractor

Incentive

schemes to

subcontractor

Take out scope of work

and assign to other

subcontractor(s)

Take out scope of work

and assign to other

subcontractor(s)

Additional

resources

by Petrofac

Additional

resources

by Petrofac

Project sponsor, steering committee and executive management:

monitoring and intervention

Project sponsor, steering committee and executive management:

monitoring and intervention

Petrofac control of

subcontractor resources &

lower-tier subcontractor

Petrofac control of

subcontractor resources &

lower-tier subcontractor

Petrofac

construction management

Petrofac

construction managementDirect intervention

by Petrofac

Direct intervention

by PetrofacAcceleration & recovery

measures by subcontractor(s)

Acceleration & recovery

measures by subcontractor(s)

SUBCONTRACTOR RISKS

MITIGATION MEASURES

Warranty period

Vendor/supplier risk management

Commissioning phaseOrder execution phase


Provisional acceptancePlacement of

purchase order

Placement of

purchase order



VEN

DO

R

RISK

S

VEN

DO

R

RISK

SM

ITIG

ATI

ON

MEA

SURE

SM

ITIG

ATI

ON

MEA

SURE

S

Order of

raw materials/

sub-components

Order of

raw materials/

sub-components

Lack of

resources

Lack of

resources

Defective

workmanship

or material

Defective

workmanship

or material

Delay in

fabrication

Delay in

fabrication

Failure during

factory

acceptance

Failure during

factory

acceptance

Incentive

schemes to

sub-vendors

Incentive

schemes to

sub-vendors

Take out partial scope of work

and assign to other sub-vendors

Take out partial scope of work

and assign to other sub-vendors

Additional

resources

by Petrofac

Additional

resources

by Petrofac

Project sponsor and executive management: monitoring and interventionProject sponsor and executive management: monitoring and intervention

Shop load

status

Shop load

status

Placement

of resident

inspectors

Placement

of resident

inspectors

Outsourcing

test bench

facilities

Outsourcing

test bench

facilities

Lack of capable

site engineers

Lack of capable

site engineers

Slow response in

addressing warranty

issues

Slow response in

addressing warranty

issues

Use of high level pressure

from vendor management

Use of high level pressure

from vendor management

Warranty phase

Air freight/

charter flights

Air freight/

charter flights

Acceleration &

recovery measure

by vendor

Acceleration &

recovery measure

by vendor

Step-up

expediting

efforts

Step-up

expediting

efforts

Final acceptance

Final acceptance

Identification of critical contract

risks and mitigation measures

Careful selection of partners,

subcontractor and vendors

Identification of critical contract

risks and mitigation measures

Careful selection of partners,

subcontractor and vendors

The project cycle

Negotiations with customer to ensure fair and equitable contract

Negotiations with partners,

subcontractors and vendors to ensure a fair

and equitable contractual relationship

Negotiations with customer to ensure fair and equitable contract

Negotiations with partners,

subcontractors and vendors to ensure a fair

and equitable contractual relationship

Ensure strong support &

coordination from partners,

subcontractors and vendors for a goal-

driven unified-approach

Ensure strong support &

coordination from partners,

subcontractors and vendors for a goal-

driven unified-approach

PROPOSAL STAGE AWARD STAGE EXECUTION STAGE

Sound contractual policyDirect intervention by senior managementRegular reporting and reviews

Sound contractual policyDirect intervention by senior managementRegular reporting and reviews

Execution management

Execution management

Phases of a project

Basic components of each phase

Common drivers

Execution management, project phases

Bidding and proposals

Contract realisation

Custody handover

Warranty period

Bid start

Contract award COMM

complete

Performance test

complete

End of liabilities

Execution management, proposal & bidding

Customer

•Vendors

•Subcontractors

•Specialist services

•Technology/licensors

•Vendors

•Subcontractors

•Specialist services

•Technology/licensors

Proposal

Commercial

Technical

Contractual

Execution management, proposal approach

Proposals are the cornerstone of good execution

Manage the proposal as a project

Mobilise the task force for the proposal

Understand, analyse, dissect technical, contractual and commercial requirements

Engage with customer, in clarification

Identify third party involvement and engage them

Develop a good understanding of how the project will be executed


Technical

Prepare and submit technical proposal including clear representation of your understanding of requirements

Prepare preliminary execution plans for the realisation phase including organisation, schedule, specifications and data sheets and basis of bid

Detailed review of vendors and sub-contractors submission and engaging them in clarification process - zero on the critical

Prepare technical document register, procurement register, schedule

Align offers of vendors, subcontractors and third parties to the contract requirements where possible

Prepare risk matrix and proposed mitigations, including proposed actions to deal with non transferable risks or liabilities


Engineering

Verification and endorsement of the FEED – meets performance guarantees, material deliveries, alternatives, etc

Development of the FEED at the bid stage, as required, to support the detailed estimate, provide early start for all disciplines

Third party verification: for specialist technology domains

Introduction of specialist subcontractors/partners to add value to the bid and execution


Contractual

Prepare detailed list of contractual obligation and liabilities - assess criticality/ acceptability and risk associated with each submission

Prepare detailed clarifications and qualifications and engage the customer

Quantify cost where it is possible and prepare alternative proposals

Include clear basis of the proposal in the bid and include alternatives

Support in selection of subcontractors and finalise all contractual commercial issues related to major subcontractors and vendors

Review and analyse cash flow and propose alternative

Prepare risk matrix


Commercial proposal

Zero pricing principle (no rules of thumb, no estimation curves)

Issue enquiries and obtain quotations

Engage critical vendors in clarification and negotiations

Evaluate data obtained against in-house recent data from projects

Engage subcontractors and issue BOQ, for obtaining prices

Compare obtained quotes to in-house performed estimates

Review cycles for BOM, BOQ and prices

Comparison to historical data

Execution management, project realisation

Engineering

Project services

HSSE

QA/QC

Project controls

Commissioning

Construction

Procurement

Project management


Project management principles

Risk - early identification of risks and plans for mitigation

HSSE - safe execution saves time and money

Quality - the most cost effective scenario is do it right first time

Customer satisfaction - create win-win relation with the customer

Budget - set budget, control, report and improve

Target driven schedule – plan, identify risk, be flexible and responsive

Management of interfaces - early recognition of problems means early solutions

Commissioning and construction are the aim of the engineering and procurement


Project management approach

Task force, with full in-house capability and competence

QA and HSSE are an integral part of the project activities

Construction/commissioning driven schedule

Target driven schedules and plans

Decision making process based on technical and optimum cost solutions

Early procurement of critical material

Bulk orders in phases to meet site requirements

Continuous cost monitoring, reporting and control

Execution management, quality assurance & control

Quality management principles

Customer focused organisation

Leadership and standard setting

Involvement of right resources

Process approach (plan, do, check, act)

Continual improvement

Best practices, lessons learned

Factual approach to decision making

Mutually beneficial supplier relationships

Embedded within execution, not treated as a “bolt-on”

Execution management, HSSE

Management commitment to highest health, safety, security and environment standards

Risk based inherently safe approach

Exhaustive in-house HSSE technical capability for all project phases

Integration of home office and site HSSE organisations


Construction HSSE programmes including:

– emergency response procedures

– crisis management

– training

– security

– medical resources

Proven capability of world class HSSE performance on projects with

– extreme environments

– low competency manpower

– brownfield operations

– sour gas presence


Principles/approach

Identify project specifics and risk areas – early and remain focused

Develop programmes and specific plans

Set targets and KPIs across all levels of project staff

Develop plans, monitor, report and improve

Visible leadership

Ensure execution plans embody safety

Ensure method statements and risk assessments cover requirements to execute safely

All team members are responsible for safety

Constructability reviews early and include safety aspects

Execution management, engineering

Full in-house capability and control

Cover all aspects from studies to detailed engineering - Woking, Sharjah, Mumbai, Chennai & Indonesia

High value operation centres (Mumbai, Chennai and Indonesia)

Integrated data centric approach

In-built quality assurance process

Mature procedures and method statements

Schedule tailored to meet construction needs

Established material management system

Feedback through field engineering

Execution management, procurement

Integrated within project task force – buying, inspection and expediting

Worldwide capability - Europe, US, Middle East offices

Terms and conditions that cater for all potential risks and liabilities

Deep understanding of our market/vendors

Use of customer vendor lists

Integrated material management system

Early identification of misalignment and development of contingency plans

Win-win partnership approach with vendors

Execution management, construction and completions

Principles

Construction is generally sub-contracted

Early engagement of construction partner - bidding

Ensure relationship is governed by an equitable contract, that is almost ‘back to back’ with the main contract

Develop a complementary win-win relationship and deal with problems promptly

Mobilise supervision early in the project

Establishment of robust preservation and maintenance team

Integrate with commissioning plans

Execution management, construction

Construction approach

Experienced, hands-on construction management team

– supervision, planning, quality, HSSE, material management

– proper training and exposure

Construction partner (local)

– local materials, logistics, customs clearance, construction resources

– local authorities and regulations

– equitable win-win relation

– identify weakness and bottlenecks through open and frank relations

– minimal reference to contract by creating alignment

– more than one subcontractor per discipline

Execution management, completions

Completion principles

Use in-house resources

Mobilise early enough to involve them in the formal reviews

Input to engineering equipment, model reviews

Input to quality plans of vendors

Early definition of commissioning handover systems/schedule

Identification and alignment with customer start-up/early operations requirement

Include vendor requirements in the purchase inquiries

Identification of specialist equipment and tools early on

Mobilise to site early enough to act as customer for construction

Execution management, warranty

Obtain back-to-back warranties

Plan warranty period activities

Allow provisions

– in-house resources

– third party costs (involve vendors)

– materials

Assign warranty coordinator (continuity)

Responsiveness and problem solving

Develop relations with the plant custodians

Current projects

Current Sharjah projects

Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 Dec 10

Facilities upgrade, Kuwait

In Salah gas compression, Algeria

Harweel, Oman

Hasdrubal, Tunisia

Salam gas plant, Egypt

Ebla gas plant, Syria

Jihar gas plant, Syria

KOC 40” feed pipeline

Kashagan Train 3

Kashagan constructionmanagement

KOC facilities upgrade


Customer Kuwait Oil Company (KOC)

Project type Multi location Brownfield - EPCC- LSTK

Scope Oil processing capacity increase and relocation of all underground hydrocarbon service piping to above ground at sevengathering centres & two booster stations

Award May 2005

Schedule (revised) Progressive - 43 months for last station (GC3)

Value Approx $800 million

KOC facilities upgradeProject description

Project covers seven oil gathering centres (GCs’) and two gas booster stations (BSs’)

Section-I

Crude oil processing capacity increase by addition of HP/LP separators, hydro cyclones (de-oiler) in six GC’s and desalter trains in five GCs’. Capacity increase by about 250,000 barrels/day

New condensate recovery units (compressor systems) for associated gas in three GCs’

Upgrade of all control and shut down systems in six GCs’, and partial upgrade in the rest

Section-II

Relocation of all underground hydrocarbon piping to above ground in all seven GCs’ and two BSs’


Engineering from Sharjah

All procurement from Sharjah

Construction through single CMEI local subcontractor Kharafi National

Consistency check and change management across various stations maintained through project engineering management & discipline leads

Sequential shut down, tie-in and re-commissioning of all GC’s and BS’s

Sequential commissioning of new facilities in six GC’s

Harweel field development

Harweel field development

Customer Petroleum Development Oman (PDO)

Project description Harweel field development, enhanced oil recovery (EOR) project

Project type Oil & gas production/treatment

Grass roots/tie-ins

Scope Engineering, procurement, construction,

pre-commissioning, training

Award December 2005

Schedule 34 Months (original)

Ebla gas project surface facilities


Customer Petro-Canada Palmyra BV

Project Ebla gas project surface facilities

Location Palmyra, Syria


commissioning and start-up

Commenced March 2008

Completion April 2010

Contract value US$477 MM


Overview

The scope comprises engineering, procurement, construction, commissioning and start-up of:

– gas treatment plant producing 80 MMSCFD of sales gas

– gas gathering station

– flow lines and pipelines, connecting well sites and gas gathering stations with the gas treatment plant

– gas treatment plant consists of, gas dehydration unit, gas separation using turbo-expander/low temperature separator process, LPG recovery unit, LPG storage facilities and loading facilities, condensate stabilisation and storage

– associated offsites and utilities

Hasdrubal gas plant

Hasdrubal gas plant

Customer BG Tunisia/ETAP

Contractor Petrofac E&C

Project type Gas processing / LPG & Condensate Export

Location Hasdrubal, Tunisia

Scope Engineering, procurement, construction and commissioning

Award November 2006

Schedule Ready for hydrocarbon introduction, 29 months

Contract value US$460 MM

Hasdrubal gas plant, plant capacity

Input 120 MMSCFD of raw gas and gas condensate/oil

Product 15,000 BPD of stabilised condensate and oil

400 TPD butane and propane

98.6 MMSCFD of lean gas

Khalda gas processing plant


Customer Khalda Petroleum Company

Project type Gas production/treatment/grass roots

Scope Salam gas trains 3 &4 (SGT 3/4)

Engineering, procurement, construction, commissioning and initial operations

Award October 2006

Schedule 25 months (original)

Value Approx $400 million


Key features

Fast-track project, 25 months from award to gas in

Full PDMS plant modelling

Adjacent to existing operating facilities (SGT-1 & 2)

– construction safety

– SIMOPS / (O&M)

High pressure (separation) – 110 bar

Tie-ins from SGT-3 & 4 to existing plant – completed within plant shutdown schedule

In Salah gas compression


Customer ISG (joint venture), Sonatrach 35%, BP 33%, Statoil, 32%

Contractor Petrofac E&C

Project type Compression project

Location Three sites, Teg, Reg & Krechba

600 km from Hassi Messaoud, Algeria


utilities commissioning, process commissioning assistance,

operations support and training

Award October 2007

Durations 25 months Teg, 26 months Reg, 35.5 months Krechba

Value $600M


Reg and Teg

Addition of further field separation and cooling

Two parallel trains of gas turbine driven compression

Associated utilities, air compressor package, nitrogen package, HP flare system, 3.8MW GTUG)

Krechba

Addition of further field separation and cooling

Single train of VSD electric motor driven compression

Power requirements will be met by the addition of a third RB211 gas turbine generator

Engineering services

Engineering services

Successful delivery of

– consultancy

– FEEDs

– detailed engineering

– PMC/EPCM

A differentiated offering to Engineering Services customers based on Petrofac’s unique combination of LSTK EPC, operations management, training and asset management capabilities

Engineering Services, structure

>500 personnel

Consultancy

FEED

Detailed design

PMC/EPCM

Woking Mumbai Chennai

>500 personnel

Detailed engineering support to Sharjah

>400 personnel

Detailed engineering support to Sharjah, Wokingand Aberdeen

Engineering services, Woking

Currently occupying four office locations, allowing capacity for >800 personnel

Extend offering for engineering and project management services in other geographic regions such as Middle East, North Africa, West Africa, and CIS

Continued expansion into higher volume market areas eg. LNG, refinery

Continue to improve competitive position by maximising use of resources from lower cost centres

Engineering services, current project, Karachaganak

Project Karachaganak Phase III FEED, Kazakhstan

Customer KPDL

Duration October 2006 – December 2008

Scope Front end engineering design (FEED)

FEED for the construction of new facilities for the Phase III expansion project of the Karachaganak field. Particular challenges included location, transport and installation strategies taking into account the remote location and harsh, sour gas environment.

The largest FEED contract to date executed by Woking office - 1.1million hours over 2 years.

Engineering services, current project, Kharyaga

Project Kharyaga Phase III project

Customer Total E&P Russia

Duration December 2007 – December 2008

Scope Front end engineering design (FEED)

Basic Design (TEO-C)

The Phase III development will ensure the facilities maintain oil production at the present rate and provide de-mercaptinisation of the crude oil and gas sweetening and dew pointing to achieve the sales gas specification and remove the requirement for flaring. Execution of the project is across Woking, Chennai, Samara and Moscow.

Petrofac also executed the EPC contract for Phase II between 2000-2003 which increased oil production to 30,000 BOPD.

Engineering services, Mumbai and Chennai

Supports delivery of proposal and project work for Sharjah, Woking and Aberdeen

Centre of excellence for detailed engineering and 3D modelling

Operates with the same business management system as Sharjah andWoking – certified to ISO 9001

Strong resource bases with plans for continued growth

Offshore engineering

Offshore engineering, introduction

Enhanced service line offering for 2009

Market research and customer surveys indicate Petrofac can readily build on excellent E&C reputation to participate in $10billion pa offshore capex market

Based in Woking - synergies and resource share with existing E&C engineering

Currently recruiting additional specialist and offshore project management leaders from industry

Build on Petrofac’s brownfield, offshore operations and Energy Developments’ offshore projects experience

Offshore engineering, strategy

Leading offshore engineering team in Woking will be grown and supported by E&C engineering, offshore operations and brownfield engineering.

More intensive business development and marketing programme Q1 2009

Pursue reimbursable FEED engineering projects

Build capability and competence from Energy Developments and external IOC projects

Reimbursable low risk

Higher risk/reward

Concept/FEED EngineeringDetailed design

Programme managementCapital lump sum projects

Offshore engineering, strategy

We will consider cost effective strategic acquisition opportunities to accelerate growth and build competency/specialist expertise

Utilise Petrofac lower cost engineering centres

EPC projects effectively lead to additional negotiated business opportunities for Petrofac functions; commissioning, operations,maintenance and brownfield engineering plus training

Utilise E&C cost effective processes and existing full service capability

Market differentiation is our ability to optimise projects using our in-house offshore operations experience and access to E&C cost effective engineering and procurement systems as well as leveraging marketrelations

Offshore engineering, market

Focus is on international oil and gas companies and national oil companies

Major offshore projects

– brownfield (field development)

– greenfield (new build/conversion)

– abandonment/decommissioning

Specific regions

– North Sea

– Middle East

– South East Asia

– West Africa

Offshore engineering, projects

Petrofac Energy Developments offshore project, examples

– Cendor Phases I and II, Malaysia

– West Don and Don Southwest, UK North Sea


Acquisition date, 2004

Partners, Petronas Carigali, Kufpec, PetroVietnam

Petrofac working interest, 30% and operator

Field description:

– Location offshore Peninsular Malaysia (Block PM304)

– Formation, miocene

– Reservoir depth 1,600 metres TVD, average well depth 2,900 MD

– Reserves, 24.6 MMBO (P90)

Development concept:

– Rate, daily production 14,000 bpd declining over 8 years

– Sales, oil to FSO, marketed by Petronas

– Cost, US$52.5 million (capex only)

– Schedule, first oil achieved in September 2006

– Further development phases planned

West Don and Don Southwest


Offshore engineering – West Don and Don Southwest

Petrofac as licence holder and field operator has managed every element of the project delivery from subsurface evaluation and concept development, through regulatory engagement to detailed engineering, drilling, execution and ultimately operation of the field

The field development plans for both fields were sanctioned by BERR (now DECC) in May 2008

Northern Producer refurbishment completed, and unit installed in field November 2008

First production well on West Don drilled to target depth on prognosis

All pipelay and trenching and majority of subsea construction activities completed

Offshore engineering - summary

Natural market progression for Petrofac

Utilise extensive and differentiated in-house expertise

Market is ready for an innovative new participant

Build from low cost reimbursable business to full EPC project capability

Established Petrofac presence in target offshore regions

Enhance Petrofac Energy Developments’ offshore project opportunities

investor trip investor presentation november 2008 sharjah 2008 · – work to world-class standards...

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