Case Study

Liwa Plastics
Industries Complex

Solution:
project risk, potential impact and mitigants
 Review of project risk, their potential impact and available mitigants
Risk Categories & Sub-categories Strong Satisfactory Weak Comments
1. Technical, tecnological, operational
Land availability, land use rights, availability of utilities during construction X Industrial zone - dedicated facility
Experience of Contractor in similar projects X JV 50-50 Daelim & Petrofac (Daelim global leader)
Technology and techniques employed (proven or not) X Very complex technology proven
Congruity and certainty of price, LDs, bonds, completion date X Consultant positive feedback
FM & Political risk X Oman
2. Resources
Availability, accessibility, vicinity X Ministry of Oil provides all feedback via pipeline
Technical criticalities (standards,) X Oman exports blend API 31 but deteriorating
Experience of suppliers X Already supplies the refinery through a dedicate pipeline
Robustness of contractual arragements X 15 years take or pay/supply or pay contract
FM & Political risk X Oman
3. Operations
Experience of operator X Brownfield refinery already operating since 2006
Robustness of O&M arrangements X Already operating
Technological criticalities in operation X Already operating
FM & Political risk X Oman
4. Downstream/Delivery
Existence and adequacy of delivery facilities X Existing facilities next door
Company's access to control over such facilities X Same shareholder/Government
Robustness of transportation/delivery arrangements if any X Integrated with downstream petchem company
FM & Political risk X Oman
5. Market
Product internationally/regionally/locally traded X 70% local market - 30% export
Company's market position and competitiveness of the market X Monopoly markey position
Risk due to demand cyclicality X Import substitution project
Risk due to price cyclicality (price risk inclusive of products substitution) X Minimum product substitution risk due to state subsidized prices
Strength of the sale arrangement (LT, spot contracts, no contracts) X Local long term contracts
FM & Political risk X Oman
 Review of project risk, their potential impact and available mitigants

Risk Categories & Sub-categories Strong Satisfactory Weak Comments

6. Financial structure & Financial Risk
Sponsor's/borrower's commitment & financial strength X Oman government
Supplier's commitment & financial strength X Ministry of Oil
Offtaker's commitment & financial strength X Local distributors
Breakeven of Company (inluding transportation cost) vs market prices X Net refining margin equal to 10,8 bbl USD
debt service cover ratio levels (in line with industry standards) X ADSCR 2X
Existence and adequacy of contingency lines X DSRA = one installment + CORA equal to 100 mln USD
Value and liquidity of securities, including insurance X Standard
Offshorization of project revenues (transfer regime) X Offoshore account for revenues and disbursement
Macroeconomic environment (foreign exchange conversion) X The Omani rial is pegged to the USD
Currency regulation track record X The Omani rial is pegged to the USD
7. Legal & Regulatory Risk
Project strategic importance for local government X Strategic
Project and finance docs governed by offshore, proven law X Agreement between Omani state companies governed by local law
Track record of country's legal enviroment X Local law
Regulatory environment & Material adverse Govermental action risk X Favourable approach to investemtn and state owned company
Institutional environment of the country X No clear political successio scenarios
Rights and limitations under Intercreditor arrangements or statutory provisions X Standard