MOVING AHEAD WITHCONFIDENCEAfter a tough 2012, AI Hassan Engineering Co. (AHEC) is all set to turn the tidewith an impressive order book in 2013, says the company's Chief Executive Officer(CEO) Peter Hall in a conversation with OGR. Excerpts of the chat:

YOU HAD A CHALLENGING 2012.WHAT FACTORS PLAYED A PARTIN THAT?Various factors that impacted ourperformance in 2012. The phasing of

the order intake which we anticipatedwas delayed with commitments notbeing made by customers unti11ate2012 and into 2013. In addition, 2-3of our contracts both here in Oman

and in Abu Dhabi didn't perform asper our expectations and lesson werelearnt from this. However, strong orderintake in 2012 has presented us withan extremely robust 2013 order book

of around ROIOO million. In 2013,we are all driving very hard and doingeverything possible to achieve a recordyear for us. We are very confident thatwe will meet our objective.

WHAT'S YOUR OPINION ONTHE CHANGING BUSINESSENVIRONMENT IN THECOUNTRY, WITH POLICIES ANDREGULATIONS CHANGING ATAN INCREASED FREQUENCYAND EVEN THE LARGEE&P (EXPLORATION ANDPRODUCTION) COMPANIESINTRODUCING NEW MEASURESFOR CONTRACTORS?In the last two years, the marketenvironment has changed quitesignificantly. As a contractor, wehave had to adapt to these changes tobetter interface with the way this newenvironment requires us to operate.This meant that we had to take a closerlook at all of our business processesincluding engineering, supply chainmanagement and project managementfunctions. VarIous measures andinitiatives have accordingly been takento further strengthen and improve theorganisation.

RECENTLY, THE MINIMUMSALARY FOR OMANI NATIONALSIN THE PRIVATE SECTOR HASBEEN INCREASED. HOW IS ITEXPECTED TO IMPACT YOURBUSINESS?It certainly impacts our business plansas our cost goes Up.

HOW MUCH IMPACT WILL BETHERE ON YOUR EXPENDITURETOWARDS WAGES?There is a distinction between the oiland gas sectors, and the non-oil & gassectors. In the case of former, there hasbeen a little change in the salary andbenefit structure since March 2011, butin the case of non-O&G sector, there

has been a step change. The minimumsalary has been increased significantlyto RO 325 per month from 1 Julyonwards.In our existing projects, we have toaddress this through the commercialvehicles that are in place within thespecific contracts. In the case of new

contracts currently being tendered, wehave to price them in accordance withthe revised cost structure. This shouldnot affect new business as we expectthe same-level playing field to operatefor everyone as we will all have toadhere to the Ministry of Manpowerguidelines. Whether it is the minimum

KAUTHER DEPLETIONCOMPRESSION PROJECT - JI -196The original Kauther gas plant was designed to process 20 million standard cubicmetres per day of gas (c. 706 million standard cubic feet per day). Comprising a singlegas conditioning and dehydration train, the plant exports gas into the Government gasgrid and the unsterilized condensate and water are exported as a mixed stream to aslugcatcher and degassing vessels within the existing Saih Rawl facility.

As the Kauther field depletes, the depletion compression facilities will ensurelonger term sustainability of the field. These new facilities comprise; two depletioncompression trains, an inlet separation system, a condensate handling system, newcontrol system, upgraded utilities and a complete electrical infrastructure to handlethe compressors' variable frequency drives, with the requisite filters to address thegenerated harmonics.

The entire project was executed under brown field conditions warranting stringentsafety measures towards H2S exposures and other hoVcold works in the vicinityof operating plant. The major commodities executed included OSS Piping Works(100,00010), Static Equipment (2,600 MT), Concreting (30,000 Cum), Cabling (600km), Structural Erection (5,000 MT) and major buildings (2 nos - one of footballground size 126m X 26m).

salary requirement or the Omanisationrate, all companies including thosecoming from other countries mustmeet these regulatory requirementsand our customers must ensure that thecontractors adhere to the rules.

RECENTL~PETROLEUMDEVELOPMENT OMAN (PDO) MDTALKED ABOUT INCREASINGTHE MINIMUM SKILLEDOMANISATION RATE AMONGTHEIR CONTRACTORS FROM 15PER CENT TO 30 PER CENT BYTHE THIRD QUARTER OF THISYEAR. EFFECTIVELY, IT IS A 100PER CENT INCREASE IN TERMSOF SKILLED OMANIS. DO YOUTHINK THE CONTRACTINGCOMMUNITY IS IN A POSITIONTO MEET THIS REQUIREMENT?

Al Hassan has always had its owninitiatives in respect of the developmentand upgrading of the skills of all ofour employees. In addition to our own'in house' training and developmentfacilities, we constantly engage withother training centres, colleges anduniversities to meet this objectiveand to improve the industry/academicinterface. We are indeed also workingdirectly with PD~ the training initiativefor Omanis that they have recentlystarted working on.

CAN YOU INCREASE YOURSKILLED OMANI WORKFORCEBY 100 PER CENT IN JUST FEWQUARTERS?It is certainly a challenging objective.Significant improvements can howeverbe made and we will be taking all

ENVIRONMENT FRIENDLY APPROACH

AI Hassan Engineering's Saih NihayadaGas Depletion Compression (SNDC)project has given special importance topreserve the environment and preventpollution. The project site of Saih NihayadaGas Depletion Compression (SNDC) of

AI Hassan Engineering Co. was set upwith a special emphasis on environmentprotection and prevention of pollution. Thecompany has accorded great importanceto maintain all equipment in the plant tokeep them in good working condition

possible steps to support the initiative.One concern however is whether thelocal labour market is currently deepenough to enable us to up-skill froml5to 30 per cent within the timeframe.

Nevertheless, we are actively workingwith various people and organisationsincluding PD~ to try and fill thatgap. We initiated our managementdevelopment centre few years agoand we take in between three and fourbatches of graduates and diplomaholders each year. We give them anintensive and structured three-monthtraining programme with the intentionof absorbing those that qualify and wantto stay with us into our organisation.

We generally have a high retention rate,out of26 trainees we took last time, we

so that emissions from the plant canbe controlled. The company could alsoreduce its water wastage considerablyby properly conserving and managing thewater. The entire water distribution systemis being done through pipes starting fromRO Plant to the end user, thereby avoidingtransportation through trucks. It helps tosave fuel and reduce air pollution. Thewaste water is recycled through MembraneBio Reactor Type STP. The water thusproduced is of good quality and is beingused for irrigation, borrow pits, and dustcontrol. Almost 100 per cent of the waterproduced is used effectively without beingdisposing in the evaporation pond.

As the temporary facilities required 4MVA (4,000 KVA) of power during theconstruction phase of the project (twoyears), the company has taken a uniqueinitiative in getting temporary power bytapping the power from nearby overheadline which is 3.2 km away, therebyavoiding the usage of diesel gensets toproduce power and reducing pollution andcarbon emissions.

have retained 18-19, which is a verygood number.

HOW DO YOU LOOK AT THEADOPTION OF ICV (IN-COU TRYVALUE) STRATEGY IN AMOREORGANISED AND AGGRESSIVEMANNER?As an organisation, we fully embracethe principles of ICV and we will do allthat we can to promote the objective.We are ourselves a local companyand a preferred contractor for localcustomers and international EPCcontractors. Within our Group, we havemultiple manufacturing and productionfacilities at various locations in Omanwhich range from electrical switchgearmanufacture to the production of paint.We have a fabrication unit that canproduce pressure vessels, pipework

Other initiatives to reduce the carbonfootprint include reduction of the usage ofplastic cups and plates and encouragingthe usage of glass or porcelain cups, andother environmentally friendly cups andplates. The company also encouragestwo side printing, electronic mail sending/receiving which also contributed to avoidwastage of papers.

In order to reduce the usage of bottledwater, the company supplies waterproduced from Reverse Osmosis Plantto the water coolers through pipelinewithout storing in ·the plastic cans. Testsare carried on the water samples collectedfrom the farthest point regularly to checkthe quality of water through approvedlaboratory .

The company has also used interlockingtiles instead of concrete for walkwaysin camps. Though the initial cost ofconstruction is more, considering therepeated use of materials for other sites,it works out to be economical. This in turnleads to reduction in carbon emission and

systems and structural steel. We willcontinue to build and improve, and willget bigger and better.

We have various strategies in place totry and maximise what we can do, theservices we offer and add more value tothe country economically and socially.

DO YOU THINK THE NEW ICVSTRATEGY WILL BE BENEFICIALFOR YOU?The bid evaluation process needs tobe better understood including theevaluation criteria that will be adopted.However, in principle the initiativeshould be of benefit to local companiessuch as ours who are able to demonstratesignificant local added value.One particular issue that must howeverbe addressed is that our major customers

also elimination of disposal of concretedebris.

Besides, trees were planted in the staffcamp as a part of environment protectionprogramme at SNDC site. The companyclosely monitors the emissions releasedby the plant and will take steps to controlthe emissions from time to time.

AI Hassan Group of Companies won thespecial commendation in Green FootprintAward in the coveted Oman Green Awardsfor effectively implementing the principlesof 'Reduce, Reuse and Recycle' in its dailybusiness processes.

The Group was able not only to improvethe surrounding environment but also tosimultaneously streamline the company'sbusiness processes and translate them intosignificant savings. To implement the greeninitiatives, a special energy conservationgroup was formed by volunteers fromvarious group companies and projectsites consisting of top, middle and juniormanagement which met on a regular basis

generally have their own approvedvendors lists. Gaining acceptanceonto this list for any locally proposedequipment or services will be animportant factor to the success of thisICV initiative.

IS CONTRACTING COMMUNITYPLAYING A ROLE IN THEFORMULATION OF THE ICVSTRATEGY?Through our membership andparticipation in the Oman Society ofContractors we are hoping to have acollective and constructive input to thedecision taking process in the variousministries and government bodies sothat we may arrive at a set of policiesand guidelines for the industry that willbe mutually acceptable to the countryand the industry.

every two months. All 5,000 employeesof AI Hassan Group were involved in theSafety Week Celebration last year whichincluded energy, water and environmentconservation initiatives. By creatingawareness across various departments,the group was able to achieve reduction inelectricity charges, savings in water billsand fleet fuel charges as well as vehiclerepair and maintenance charges. Thelandmark achievement is the reduction incarbon footprint to the tune of 2555 metrictonnes on an annual basis.

As part of its tree plantation efforts, morethan 3200 plants/trees are being nourishedfor plantation at A'Seeb STP project to givean environment friendly sewage treatmentplant. Some of the carbon footprintand carbon emissions reducing stepsincluded pumping of water instead oftrucking through water tanks. This reducedcarbon footprint by 752 metric tonnes. Areduction in carbon emission was seenowing to virtualisation initiative taken byData Centre which is equivalent to plantingof 197 trees.

TELL US ABOUT THE PROJECTSWHICH YOU ARE CURRENTLYWORKING ON IN THE OIL & GASINDUSTRY?We are currently working on a numberof projects with PD~ and many otherclients. PD~ selected GS E&C ofSouth Korea as their EPC contractor forexecuting the Depletion Compressionproject at Saih Nihayda. In turn, GSE&C awarded major portion of itsconstruction work to AHEC, includingcivil & building works, electrical &instrumentation erection work as well asthe execution of a 132 kV overhead lineon an EPC basis.

We directly secured the EPCcontract for Phase III Zauliyah GasCompression Project from PDO. The

project commenced in the last quarterof2011 and is in advanced stage. It isexpected to be commissioned by thirdquarter of the year.

As the leading partner in a joint venturewith Tecnicas Reunidas, we are the EPCcontractor for PD~ for the ZauliyahGas Plant Project. The N is undertakingthe engineering, procurement,construction and commissioning of agas production facility.

We are also working on the installationof a Heat Recovery Steam Generator(HRSG) project at PDO's Arnal PowerPlant which was originally build by us.The project commenced in first quarter of2012 and is progressing as per schedule.We expect the substantial completion by

As part of its major expansion plans,Occidental Mukhaizna LLC awardeda contract to AHEC for executing itsLong Term Power Supply (LTPS)Project on EPC basis. This is the firstmajor award from this client which wassecured against stiff global competition.The facility involves the constructionof a complex power transmission anddistribution system for Occidental'sproduction facility at Mukhaizna.

Work is ongoing on for the ExportPipelines project awarded to AHECby Oman Oil Company Exploration& Production (OOCEP). The Projectcommenced at the end of last yearand we are busy in the trenching

and pipeline works. For HyundaiEngineering we are undertakingElectrical and Instrumentation works forthe OOCEP Musandam Gas plant.

In our DAE operations, we are workingon a number ofprojects including:

• The Al Hosn Gas Shah GasDevelopment Project, for SamsungEngineering where we areundertaking piping prefabrication anderection works.

• Takreer Inter Refineries PipelineProject where we are working withGS Engineering and ConstructionSouth Korea undertaking Electricaland Instrumentation works. forTerminal B.

• The GASCO NGL 4 for Petrofac, weare undertaking pipework installation.

• Takreer Sharjah Oil Terminal wherefor Sinopac we are executing civil sitedevelopment and tank foundationalworks.

In addition we are also undertakiga small number of lower value EPCprojects directly with GASCO.

Elsewhere, in the Sultanate, we areactive on a number of non Oil &Gas projects such as the Barka 3Independent Power Project (IPP) forOman Power and Water ProcurementCompany (OPWP) where we areworking with GS E&C from SouthKorea in undertaking civil, building

works associated with the new powerplant, our fifth contract with GS E&C.For Haya Water we undertook civil,building and electrical works forthe main contractor Hyundai Rotemfrom South Korea on the Seeb WaterTreatment Plant.

. For the Public Authority for Electricityand Water'(PAEW) we are currentlytmdertaking a contract to extend the waterstorage capacity of four reservoirs inWatayah, Ruwi, Qurum and Wadi Kabir.

In line with our strategy, we continueto further build on our past and recentsuccesses by developing our businesswith a structured approach looking intonew areas and markets for growth.