Annual Report 2021-Eng

RESILIENCE REACHING OUT FOR NEW GOALS

Annual Report 2021 Gulf Petrochemical Industries Company Kingdom of Bahrain www.gpic.com

Gulf Petrochemical Industries Company Annual Report 2021 Kingdom of Bahrain

www.gpic.com

His Majesty

His Majesty

His Highness

King Salman bin Abdulaziz

King Hamad bin Isa

Sheikh Nawaf Al Ahmad

Al Saud

Al Khalifa

Al Jaber Al Sabah

Custodian of the Two Holy Mosques Kingdom of Saudi Arabia

The King of the Kingdom of Bahrain

Amir of the State of Kuwait

THE CHAIRMAN'S MESSAGE

Despite the many headwinds, GPIC’s demonstrated resolve has resulted in an excellent financial performance for the year.

H.E. DR. AHMED BIN ALI ALSHARYAN

On behalf of the Board of Directors, I would like to congratulate the company’s Shareholders, the President, members of the Executive Management and all employees for their remarkable commitment and contributions during an exceptional year.

The coronavirus pandemic was still the defining event of 2021. The adverse health, social and economic consequences have been overwhelming, while the challenges continue to evolve. For all of us in the industry, we have had to endure ongoing uncertainty as variants emerged and continued to fuel disruptions. However, I am proud that despite difficulties, GPIC has continually demonstrated strong operational resilience, with the plants in continuous production, operating efficiently and effectively, and adhering to the highest safety standards. The company achieved a cumulative total of safe working without a lost time accident, amounting to 35.3 Million man-hours for the company’s employees and contractors.

A global economic recovery has also taken hold and allowed demand for our product to recover and product prices to strengthen. In terms of production, GPIC produced a total of 1.6 Million tonnes of Ammonia, Urea and Methanol in 2021. Due to continued operations and favorable product prices, GPIC reached US$ 216 million by the end of the year.

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Gulf Petrochemical Industries Company Annual Report 2021

GPIC has also remained steadfast in its commitment to continue investing in human capital. During 2021, and despite the mandate to maintain social distancing, effective remote training sessions and courses were structured and rolled out to ensure the continued building of GPIC’s future leaders.

The company’s diligent efforts to adapt and evolve received praise and recognition from the Shareholders for the relentless and driven attitude to enhance financial performance, while also embracing and embedding sustainability and corporate social responsibility. The company also continued to build on the enhancement and streamlining of internal processes as well as focus on cost optimization and business continuity.

This outstanding performance, and continuous achievements, would not have been possible without the grace of God Almighty and the support and guidance of the Kingdom of Bahrain’s wise leadership, whose vision has steered it to create a fertile investment environment within which companies like GPIC have been able to thrive We express our eternal gratitude to His Majesty King Hamad bin Isa Al Khalifa, may God protect him; and HRH Prince Salman bin Hamad Al Khalifa, Crown Prince, Deputy Supreme Commander and Prime Minister, may God protect him. We ask God Almighty to make them an asset and a support for this country and the loyal people and to perpetuate the blessings of security and safety for all.

Our deepest appreciation is also extended to all the government institutions in the Kingdom of Bahrain and our honorable shareholders – the National Oil and Gas Holding Authority in Bahrain (nogaholding), SABIC Agri-Nutrients Investment Co and the Petrochemical Industries Company (PIC) of Kuwait for their continuous support and encouragement.

I would also like to acknowledge sincere appreciation to my fellow members of the Board of Directors for their wisdom, informed guidance, inspired opinions and high levels of professionalism that have had a significant impact on the company’s success and prosperity.

Finally, I would like to extend my deep gratitude the President of GPIC, members of the Executive Management and all our employees for their loyalty, dedication, and determination to navigate through the many challenges and headwinds. These are the ingredients that have turned the ambition of GPIC’s success into a reality, with the company poised for much more success ahead.

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PRESIDENT’S FOREWORD

At GPIC, resilience allowed the achievement of a strong business performance.

ENG. YASSER AL ABBASI

The incredible disruption driven by the COVID-19 pandemic continues to endure.

Yet, 2021 was also a year of resilience as immunization programs have allowed the world to live and work with the virus, and to navigate through the headwinds of its many variants. At GPIC, this resilience allowed the achievement of a strong business performance. The rebound and momentum in global economic growth energized demand across our product portfolio, with revenues and profitability further augmented by recovering product prices.

Our results are also an endorsement of the proactive and agile approach adopted since the onset of the pandemic, which has ensured safe and continuous plant operations and production. Comprehensive safety, security and work policies are being frequently refined as our priority is always on the health and well-being of our employees and the community at large. During the year, GPIC received awards and recognition in the areas of occupational safety, continuing our legacy as an exemplary beacon of best practice in this regard. Indeed, this operational excellence is attributed to the dedication and professionalism of our people. Their unwavering commitment to keep our business running with the highest safety standards has contributed to the robust financial performance.

Despite the improvement in activity across geographies and sectors during the year, the challenges have persisted. This has mandated discipline in our cost and operational efficiencies, while the uncertainty also dictated the maintenance turnaround to be temporarily deferred. During this time, we have been continuously embracing innovative ways of working and adjusting our plant operations to ensure the safety of our people, assets and business. Through this adaptive approach and emphasis on readiness, we are now able to embark on the turnaround, which is scheduled to commence in March 2022.

The pandemic has been pivotal in so many ways, with the vigorous call on sustainability at the forefront. The ferocity of the virus has made the addressing of climate change, the socioeconomic impacts it gives rise to, and the collective response it calls for,

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Gulf Petrochemical Industries Company Annual Report 2021

as imperatives for mankind and the planet’s survival. At GPIC, our commitment to integrating environmental, social and governance (ESG) considerations into our operations and business development strategies, are resolute and steadfast.

Since the company’s inception, and as a responsible member of the petrochemicals and agri-nutrients sectors, GPIC is consistently striving to improve energy efficiency and reduce its carbon footprint in the journey to a resilient net zero and low-carbon energy world. We are continually exerting tremendous efforts to transform our energy applications and usage towards reducing our carbon emissions. To date, we have reduced the total energy from 11 gigacalorie (GCal) per metric tonnes of product to 7.40 GCal per metric tonnes of product. All of us at GPIC are committed to ensuring that this trend is continuous and sharpens in pace.

Our intense actions and endeavours have allowed 2021 to be a very successful year in terms of profitability, safety, health, environmental protection and reliability of plants. The incredible GPIC team led by our world class Executive Management would not have been able to deliver such stellar achievements without the confidence, guidance and support of our shareholders and Board of Directors. Collectively, we have successfully navigated GPIC through the unprecedented shocks of the last few years, allowing the company to be well positioned to further build and expand on its illustrious four decades of continuous success.

As the new President of GPIC, it is a great honour for me to lead and serve this highly reputed and revered company. The successes over the years are deeply rooted in the solid foundation laid by my predecessor, Dr. Abdulrahman Jawahery, whose strategic vision guided GPIC for over the last 17 years. On behalf of the entire company, I extend my deepest gratitude and appreciation to Dr. Jawahery and hope to continue to build on his legacy.

As the world navigates through the still unfolding uncertainties of Covid-19, humankind is emerging stronger, more resilient, and increasingly capable of adapting. Greater awareness to health, social equality and sustainability is also mandating that our postpandemic recovery is both inclusive and sustainable. I look forward with expectation and hope to lead GPIC in new and exciting directions, anticipated by a continued economic recovery and the many opportunities gathering momentum in the “new normal”. These strategic aspirations are underpinned by an uncompromising vision to seek sustainability-driven growth, embed ESG initiatives and programs in all that we do, deliver strong operational safety and excellence, and continue to invest in our people to prepare the future leaders.

We ask Almighty God to guide and enable us towards the organization’s continued growth, prosperity and progress. We are also deeply grateful and thankful to the Kingdom of Bahrain and the wise Leadership, under which GPIC has thrived over the last four decades and much more success still ahead.

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THE BOARD OF DIRECTORS

1

H.E. Dr. Ahmed Bin Ali Alsharyan Chairman

5

H.E. Mr. Ahmed Mohammed Alumar Board Member

2

H.E. Mr. Hamad Dekheel Alsubaie Deputy Chairman

6

H.E. Mr. Shafi Taleb Alajmi Board Member

3

H.E. Mr. Samir bin Ali Al-Abdrabbuh Managing Director

7

H.E. Mr. Salem Ali Alazmi Board Member

4

H.E. Sheikh Fahad Bin Salman Al Khalifa Board Member

8

H.E. Ali Ahmed Alghamdi Board Member

7

8

5

4

2

1

3

6

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Gulf Petrochemical Industries Company Annual Report 2021

EXECUTIVE MANAGEMENT

10

1

Mr. Yasser Abdulrahim Alabbasi President (from October 2021)

5

Mr. Khalid Yusuf Al Bin Ali Plants Operation Manager

2

Mr. Fadhel Malalla Alansari Executive Advisor

6

Mr. Jassim Ahmed Darwish Maintenance Manager

3

Mr. Adnan Abdulrazzaq Al Mahmood General Manager Corporate Support

7

Mr. Bader Mohammed AlMansoori Technical Services Manager

4

Mrs. Najat Mohamed Sharif Human Resources and Corporate Communications Manager

8

Mr. Ahmed Mubarak Alarabi Procurement and Warehousing Manager

9

Mr. Jehad Ali Khalfan Finance and Marketing Manager

10

Mr. Jamal Ali Al Shawoosh Safety, Security, Health and Environment Manager

3

5

6

8 2

*

9

7 1

11 4

11

*

Mr. Omar Naser Al Bastaki

Secretary to the Board and Chief Internal Auditor

Dr. Adbulrahman Jawahery

President (upto October 2021)

9

VISION To be a world-class petrochemical and fertilizer company of choice, recognized for excellence.

MISSION

10

A

To produce high quality petrochemical and fertilizer products

A

To grow through successful partnerships and joint ventures

A

To optimize the business in a safe, sustainable and cost effective manner

A

To embrace knowledge, harness innovation and utilize best applicable technologies and practices

A

To boost Stakeholders share value

A

To train and develop the Human Capital to realize their full potential

Gulf Petrochemical Industries Company Annual Report 2021

CORPORATE VALUES Excellence Integrity Respect Transparency Safety Professionalism Social Responsibility Creativity Team Work

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GPIC BOARD OF DIRECTORS REPORT TO SHAREHOLDERS

Board of Directors congratulates its Shareholders, the company’s President, members of the Executive Management and all employees for their remarkable role during 2021, an exceptional year, with all the difficulties, challenges and complexities it brought about due to the outbreak of the Coronavirus pandemic.

However, due to the co-operation of all GPIC stakeholders and thanks to God Almighty, we were able to overcome all challenges and difficulties to achieve records at all levels despite of all indications and expectations pointing to negative effects and losses.

The year 2021, thanks to God Almighty, showcased various successes at the local and global levels. Among them was GPIC achieving a new record of 35 million hours without a lost time accident for its employees and contractors, and maintaining a clean record of no accidents since May 2002.

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Gulf Petrochemical Industries Company Annual Report 2021

In documenting this successful journey, The Board of Directors is pleased to present to the Shareholders its Annual Report for the year 2021, including achievements it made as well as activities related to occupational safety, health and the environment, in addition to financial, technical, administrative and marketing activities.

The company’s Board of Directors expresses its sincere thanks and gratitude to His Majesty the King, Hamad bin Isa Al Khalifa, may God protect him, and His Royal Highness Prince Salman bin Hamad Al Khalifa, Crown Prince, Deputy Supreme Commander and Prime Minister, May God protect him, for all their support and assistance.

Their Excellences the Board of Directors also extends its sincere thanks and gratitude to the shareholders – National Oil and Gas Authority, Saudi-based SABIC Agri-Nutrients Investment Company and Kuwait-based Petrochemical Industries Company, for their close cooperation, high professionalism, and unlimited eagerness to secure GPIC’s continuous success in operational and marketing operations.

Their Excellences the Board of Directors also commends the sincere efforts of the company’s President, members of the Executive Management and all employees who worked as a team and in the one-family spirit to preserve its status and gains.

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PERFORMANCE HIGHLIGHTS

45.5 MILLION

35.3 MILLION

Invested into Bahrain’s economy since inception

Man-hours without LTA as of 31 December 2021

43,700

US$9.89 MILLION

US$2.48 BILLION

+1 MILLION FISH

14%

2,543

Urea, Methanil, Ammonia

PRODUCTION

Metric tonnes of combined production of ammonia, methanol and urea since 1985

US$5.58 BILLION

Students from 574 schools have attended environmental awareness lectures given by GPIC employees since 2001

Released to Bahrain’s territorial waters from GPIC’s managed fishfarm since 1996

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Saved through in-house spare part manufacturing since 2001

Women employees at GPIC

Paid to shareholders as dividend

Cargo ships loaded and exported around the world since 1985

Gulf Petrochemical Industries Company Annual Report 2021

Achievements & Awards A Mohammed Bin Rashid AL Maktoum (MRM) Business Award A Mohammed Bin Rashid AL Maktoum (MRM) Business Innovation Award A International Safety Award from the British Safety Council A RoSPA’s Award, from the Royal Society for the Prevention of Accidents.

A Arabian Corporate Social Responsibility Award - Major Businesses Category AA rabian Corporate Social Responsibility Award - Community Partnership and Cooperation Categories.

A Best Contract Management Team Award - Middle East Procurement Conference.

AO ur resilience, adaptability and quick response to change and robust risk management measures enabled us to keep the COVID-19 related infection rate to as little as possible for our employees and contractors.

A Maintaining business continuity, uninterrupted operation and exports amidst the COVID-19 pandemic in 2020-2021.

A Our proactive digitalization strategy and implementation enabled virtual business including work from home, external audits, meetings, training and factory acceptance tests.

Challenges AT he COVID19- challenge: preserving our present and future A Deferring the turnaround 2020 to 2022 due to challenges in securing resources amidst the COVID-19 pandemic and operating the plants safely and reliably for 4 years since the last turnaround in 2018.

A Continuity of market uncertainty, instability and unpredictability, financial crunch and escalating energy costs.

A One of the highest ever seawater intake temperatures reaching 39.2°C affecting plant performance.

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CORPORATE GOVERNANCE

GPIC’s Corporate Governance system is based on three fundamental components namely; Principles, Code of Ethics and Policies. The system is based on our shareholders aspirations to conduct the company’s business within the acceptable international and local guidelines and standards to ensure full protection of the interest of the shareholders and various other stakeholders. The company’s Corporate Governance principles have been developed primarily from the company’s Memorandum and Articles of Association, the Bahrain Commercial Companies Law and Bahrain’s Code of Corporate Governance. These Corporate Governance Principles are responsible for providing a basis and a system of principled goal-setting, effective decision making and ethical actions, with the objectives of establishing a fundamental corporate entity that - on a long term basis - drives value creation to the company’s shareholders and promotes sustainable business conduct in line with the principles outlined in the company’s Articles of Association.

The Corporate Governance Policy of Gulf Petrochemical Industries Company and Bahrain’s Corporate Governance Code resulted in the formation of three high level Board committees: the Audit, Finance and Risk Committee, the Remuneration, Nomination and Governance Committee and the company’s Strategy Implementation Committee – 2030. These three committees are created to assist the Board of Directors in the effective performance of their governance and oversight responsibilities.

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Gulf Petrochemical Industries Company Annual Report 2021

Board Committee’s Composition

All Board Committees are comprised of at least three Directors. Each Director is nominated by The Oil and Gas Holding Company (nogaholding), SABIC Agri-Nutrients Investments Company and Petrochemical Industries Company (PIC), representing the three shareholders.

Role of the Remuneration, Nomination and Governance Committee

The Committee is responsible for overseeing the overall remuneration and nomination process, as well as ensuring the strength of the organization’s governance. The Committee’s main task is to ensure compliance with the Kingdom of Bahrain’s Corporate Governance Code regulations and mandates.

Role of the Audit, Finance and Risk Committee The purpose of the Committee is to assist the Board of Directors in independently ensuring and maintaining an overview of Gulf Petrochemical Industries Co. (GPIC) processes. The Committee is tasked with overseeing such responsibilities such as the integrity of the company’s financial statements and financial reporting, internal control and risk management process, internal audit function, independence and performance of the external auditors, compliance with ethics policies and legal and regulatory requirements, governance and other matters as enumerated in the Audit, Finance and Risk Committee Charter.

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CORPORATE GOVERNANCE

Role of The Company’s Strategy Implementation Committee – 2030 The purpose of The Company’s Strategy Implementation Committee – 2030 is to conduct a full review and studies of all major projects as well as reviews and studies of all investment opportunities. The creation of this committee will help ensure no major projects or investment opportunities have been overlooked and that the company has an optimum investment portfolio.

Internal Audit Function GPIC’s Internal Audit team is an independent, objective, assurance and consulting activity designed to add value and improve GPIC’s operations. The internal audit function helps the company accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, internal controls and governance processes. It contributes to a sound control environment through monitoring the prescribed control procedures. An effective internal audit function can assist all members of Management in effectively discharging their responsibilities by providing them with analysis, appraisals, recommendations and pertinent comments concerning the activities reviewed. In addition, it can provide constructive suggestions for improving systems.

The internal audit function can play a prominent role in enhancing the overall control environment within the Company. When an organization, such as GPIC, reaches a certain size or complexity, it becomes a challenge for Senior Management to ensure that all the sections within the business are being effectively managed to achieve the Company’s objectives and are performing economically, efficiently and effectively. The Internal Audit Section, effectively established and resourced, provides reasonable assurance to the Board of Directors and Management of GPIC on whether the controls to manage key risk areas are designed and operating effectively or identify important improvement opportunities where Management actions are necessary. The GPIC Internal Audit team reports directly to the Board’s Audit, Finance and Risk Committee. For logistical reasons, the Internal Auditor reports to the President for matters relating to time and attendance, leave, travel and other administrative requirements.

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Gulf Petrochemical Industries Company Annual Report 2021

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PRODUCTION

2021 was another successful year, all Plants operated in a safe, reliable and efficient manner whilst maintaining specified standards in terms of quality for all products.

All plants registered excellent records in regards to performance factors (On stream factor, Capacity Utilization and Utilization Factor).

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Gulf Petrochemical Industries Company Annual Report 2021

21

PRODUCTION

YEAR 2021

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Gulf Petrochemical Industries Company Annual Report 2021

MAIN HIGHLIGHTS: As a part of GPIC’s commitment towards encouraging and supporting Bahrain’s economy, GPIC continued sustainable supply of Methanol to local market with 951 MT of Methanol sold in 2021.

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PRODUCTION

PRODUCTION FIGURES VARIOUS BUDGETS VERSUS ACTUAL PRODUCTION FIGURES Product

24

Budget (tonnes)

Actual (tonnes)

Variance

Ammonia

429,080

459,788

7.1 % a

Methanol

414,510

445,757

7.5% a

Urea

650,880

706,544

8.6% a

Ammonia to Urea

371,002

402,441

8.4% a

Saleable production

1,118,945

1,208.841

8.0% a

Total production

1,494,470

1,612,089

7.9% a

Gulf Petrochemical Industries Company Annual Report 2021

1. The combined products was 7.9% higher than the budgeted figure.

2. Since 1985, cumulative total of 15.3 million tonnes of Ammonia and 15.1 million tonnes of Methanol production was achieved by end of December 2021.

3. Since 1998, 15.06 million tonnes of Granular Urea production was achieved by end of December 2021.

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PRODUCTION

*

*On Stream Factor: Operating days divided by calendar days multiplied by 100.

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Gulf Petrochemical Industries Company Annual Report 2021

*

*Capacity utilization: Monthly production divided by calander days, divided by the design capacity and multiplied by 100.

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PRODUCTION

PRODUCTION FIGURES

*

*Utilization factor: Monthly production divided by operating days, divided by the design capacity and multiplied by 100.

MANAGEMENT SYSTEMS:

Integrated Management system, Energy Management system, Enterprise Risk Management system and Process Safety Management system were followed rigorously throughout the year. They were audited by both internal and external auditors and the performance was judged highly satisfactory at all levels. The above charts reflect the same.

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Gulf Petrochemical Industries Company Annual Report 2021

EXPORTS:

•T he Product Handling & Export section provided uninterrupted support by loading cargo within the allocated time throughout the year.

•T hroughout the year Ammonia, Methanol and Granular Urea were produced to the highest quality specifications, for the premium market. A total of 1.2 million tonnes of product was exported during the year 2021. 61 ships were received and loaded 1208,841 MT during 2021, the ships distributed as follow:

Export 2021 (Tonnes) Ships loaded during 2021 800,000

59%

36%

434,956 MT

200,000

717,557 MT

400,000

56,328 MT

600,000

8

20

33

5%

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MAINTENANCE MAINTENANCE ACHIEVEMENTS DURING THE YEAR 2021 In 2021 the Maintenance team, in spite of the COVID-19 pandemic, continued its consistent efforts to enhance safety and reliability throughout the complex, placing special emphasis on the process plants. Accordingly, the Objectives and Key Performance Indicators were set and monitored closely on a quarterly basis, resulting in the achievement of nearly all objectives.

In addition, the team has completed part of the routine maintenance activities as follows:

PROCESS PERFORMANCE EFFECTIVENESS A 95% of CMRT Completed [Including Priority: 1, 2, 3] A 98% of PMRT & INRT Completed [Including BOPA] A 98% of PMRT & INRT Completed [Including BOPA] A 100% Execution of Emergency Orders [2021 Target: Zero (0) pending, Total attended: 100 % (Attended: 83) A 100% Execution of Urgent Orders [2021 Target: Zero (0) pending, Total attended: 100% (Attended: 572) A Maintenance Index [PM/CM ratio] achieved: [Target:70/30] - 79/21 A 67% Maintenance Orders completed during year 2021 (Order Type: PMRT/CMRT/INRT/EPRT/ANRT/GSRT/MDRT/CPRT/WKRT/RWRT).

A Received : 9,780

A Completed : 6,422

A PM Records Reviewed – 2,065 A Rework: Maintenance Orders – 9 A Slippage to Scheduled jobs – 41 Orders A Production Orders completed – 60 A Saving of In-House Spare Parts Manufacturing for GPIC Warehouse BD 64,522 up to 31 December 2021.

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Gulf Petrochemical Industries Company Annual Report 2021

31

MAINTENANCE

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Gulf Petrochemical Industries Company Annual Report 2021

Major Jobs Executed during 2021 A Maintenance of Desalination Plant I & II activities are completed.

A All PM maintenance activities are completed as per Winter Schedule.

A MD-3301A/B Diesel Engines replacement (Completed) A Power brushing & Painting of Transfer Tower, Export Conveyor & Ship Loader (In progress).

A Upgrade of GPIC Security Management System (Completed).

A Upgradation of Fire Alarm Control Panels (Completed).

A Catalyst Replacement of R-1102 & R-0102.

A Installation of Urea Reactor Hoist at Urea Plant.

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MAINTENANCE

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Gulf Petrochemical Industries Company Annual Report 2021

Turnaround Preparation Status A Number of Service Purchase Requisitions initiated – 107 A Number of Maintenance Orders raised – 4,088 A Number of Modifications - 97 A Number of Capex Packages – 46 A Number of Turnaround Audits Conducted to date - 12 Periodic Audits + 1 Readiness Assessment + 1 Management Audit.

A Cost of Materials Ordered for Turnaround (Eng./Maintenance) – BD 12,661,066 - including Capex items.

A Number of New Suggestions / Lessons Received – 138

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SALES AND EXPORTS

Global markets in 2021 showed a bullish sentiment since the beginning of the year with a gradual pick up in the prices, which further increased to a 13-year record during the second half of the year, particularly the fourth quarter, as a result of tight supply in the markets.

The year 2021 has seen unprecedented price hikes in the urea markets, which was highlighted in the last quarter of the year. The increase in the price was supported by strong demand, mainly with the return of India to purchase large volumes of urea, tight supply and several shutdowns of fertilizer plants in Europe through to China because of high production costs and sharp increase in the energy price (natural gas).

Similarly, the ammonia markets were impacted by the high natural gas prices which led to some capacity cuts, amid strong demand for ammonia product.

The prices continued to increase to a record level in a sustainable manner throughout the year.

As far as the petrochemical sector is concerned, methanol prices also picked up from the restart of several MTO units where methanol is used as a raw material, a new energy efficiency policy and high coal prices in China, which had a significant impact on the Asian markets price firming up. The price in the US market firmed up because of the effect of the Uri winter storm in USA, which forced most production offline in Texas, followed by Hurricane Ida, which affected production and tightened the supply further.

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Gulf Petrochemical Industries Company Annual Report 2021

All Exports (Methanol , Ammonia & Urea)

by Region 2021 8% 18%

3%

7%

64%

North America Africa

Asia Australia

South America

The company’s sales of ammonia, urea and methanol reached a total of 1,208,842 metric tonnes, which represents an increase of 8% over plan. A total of 56,328 metric tonnes of ammonia was sold, and a total of 434,958 metric tonnes of methanol was sold, an increase of 6.1% over plan. GPIC sold 717,556 metric tonnes of urea, an increase of 10.2% over plan. All of the company’s exports were shipped on 61 vessels.

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SALES AND EXPORTS

Total exports ~ 37M metric tonnes AMMONIA

6.9 M metric tons

Since 1985

METHANOL

15.1M metric tons

Since 1985

UREA

15.0 M metric tons

Since 1998

In addition, the local market in Bahrain was supplied with 951 metric tonnes of methanol and 691 metric tonnes of bagged urea.

The Indian market, which is known for its strategic importance to urea producers, had the largest share of the company’s exports at 21 per cent. This was followed by Thailand as the second largest importer of the urea product at 16 per cent and Taiwan as the largest importer of methanol product with 15 per cent. This is evidence of the Asian markets strategic importance for the company’s exports of ammonia, urea and methanol with 64% share among other international markets like Americas, Australia and Africa.

The company’s production and export operations continued unhindered through the commitment of its employees, the reliable marketing plans and goals, and the flexible strategies put in place by the Board of Directors for 2021 that were successfully achieved. In addition, the efforts of the Petrochemical Industry Company of Kuwait, the marketer of ammonia and urea, and Saudi Basic Industries Corporation (SABIC), the marketers of methanol, and their unlimited cooperation, also played a major role in GPIC’s success.

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Gulf Petrochemical Industries Company Annual Report 2021

UREA EXPORTS BY DESTINATION 2021 Total: 716,865.419 Metric Tonnes

AMMONIA EXPORTS BY DESTINATION 2021 Total: 56,327.557 Metric Tonnes 17%

30%

12%

4%

6%

4%

7%

10%

83%

3% India USA Argentina

24% Thailand Brazil South Africa

Mozambique Australia South Korea

South Africa

South Korea

METHANOL EXPORTS BY DESTINATION 2021 Total: 434,007.098 Metric Tonnes 10% 11% 33% 3%

951METRIC TONNES OF METHANOL

691METRIC TONNES

OF BAGGED UREA

43%

India Taiwan

Thailand UAE

South Korea

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SAFETY, HEALTH AND ENVIRONMENT

OUR NUMBER ONE PRIORITY IS THE HEALTH, SAFETY AND WELL-BEING OF OUR WORKFORCE The years of 2020 and 2021 have been a challenge for GPIC due to the uncertainty caused by the sudden onset of the COVID-19 pandemic. However, our primary focus has remained the health, safety and well-being of our work force. We are proud of how the teamwork and superb work ethic of our people has supported us in managing the complexities of safe and sustainable operations, including a robust risk management mindset, resilience and discipline. We are fortunate that most of our workforce were able to remain safe and productive throughout the pandemic and this has been reflected in the way our business has remained productive and profitable.

We are successful at GPIC because Safety, Health and Environmental (SHE) management systems are not just programmes; they are a way of life. As a forward-looking petrochemical and agri-nutrient company, GPIC recognises that our commitment to SHE is the foundation for building and maintaining trust and public confidence. It is part of being a good citizen, a good neighbour and a good partner. SHE excellence drives our commitment to sustainable business and defines whom we are and what we stand for. By instilling a culture that ensures the well-being and safety of our employees, we empower them to focus on the details and to do what is right first time, every time. This leads to improved performance and reliable, consistent and predictable delivery of our high-quality products.

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Gulf Petrochemical Industries Company Annual Report 2021

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SAFETY, HEALTH AND ENVIRONMENT

GPIC considers the safety of its employees and the neighbouring communities as one of its top priorities and responsibilities. We ensure the highest standards of health and safety at our manufacturing facilities, monitoring carefully every potential risk to our operations and our employees so that we can provide a safe working environment for our people and the community at large. We invest significantly into projects related to the safety, environmental care and the reliability of our equipment and facilities.

“Zero Harm” continues to be our vision. As we move forward, our resolve to achieve our goals has intensified. “Zero Harm” is not restricted to rates, statistics, numbers or metrics, although these are important ways to measure our progress. It is about our people, and keeping our people, facilities, environment and communities safe.

GPIC also has a well-developed health strategy focused on prevention, quality, health management systems and advocacy. Employees are provided with the tools and information they need to take action to invest in their personal health and the health of their families. The company also works to establish a “culture of health and well-being” through additional policies and practices.

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Gulf Petrochemical Industries Company Annual Report 2021

Maintaining the safety and health of our employees, their families and our contractors and continued business resilience during 2020 and 2021 amidst the ongoing COVID-19 pandemic was our biggest challenge and achievement.

We have so far successfully tackled the challenge of COVID- 19 through robust risk management, resilience discipline and team work. We proactively identified the pandemic outbreak caused by COVID-19 as one of the GPIC’s enterprise risks using the Bowtie methodology, setting a number of preventive and mitigating measures to deal with the risk. A Business Continuity Plan was developed to ensure the safety of the workforce and the continuity of the business. A Crisis Management Team (CMT) chaired by the President was established to manage the Pandemic outbreak.

So far, GPIC has been extremely successful in limiting the COVID-19 related infections to the minimum. This was made possible by the strict implementation of preventative measures, adherence to rules and regulations, company-wide awareness, robust inspections and auditing. 32,957 Random Rapid Test were conducted to ensure the workers entering GPIC are not infected with COVID-19 virus.

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SAFETY, HEALTH AND ENVIRONMENT These continual improvement efforts culminated in achieving a record +35.3 million working hours for its workforce and contractors without any lost time accident, exceeding 10,000 days of safe work. Additionally, we did not have any Tier 1 and Tier 2 process safety incidents, zero reportable environmental incidents and zero security breaches and incidents.

During such challenging times, GPIC won the RoSPA Chemical Industry sector award, the Arabia CSR Award for the 7th consecutive year in the large business category and also in the partnerships and collaboration category.

The following is a list of significant Safety, Health and Environment (SHE) achievements during 2021:

SAFETY, HEALTH AND ENVIRONMENT (SHE) ACHIEVEMENTS DURING 2021 A There were Zero reportable environmental incidents and Zero Tier 1 and Tier 2 process safety incidents and there were no security incidents or breaches.

A GPIC’s fire and safety operator saved the lives of a Bahraini family of six, trapped in a house fire. This is a true testament to GPIC’s effective training strategy.

A Capex project to replace fire panels has been completed successfully.

A Radiation License for the use of X-ray machines and radioactive sources obtained.

A GPIC, being a pioneer in environmental protection, has planted 1,000 mangrove trees during 2021 within the complex bird sanctuary at the shoreline.

A Waste recycling continued during 2021 and 9 tonnes of paper, cardboard, plastic and Aluminum was recycled.

A Energy efficient LEDs replacement project continued and in 2021 we installed 443 LEDs with an annual energy savings of 142.64 MWh and a yearly GHG reduction of 70 Tons CO2.

A As part of emergency plans 3 Fire Plans were prepared for high risk scenarios and 12 Fire & Safety and 10 Security Mock Drills were carried out as part of emergency response training.

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Gulf Petrochemical Industries Company Annual Report 2021

Mangrove trees plantation at GPIC

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TECHNICAL SERVICES

ENGINEERING The year 2021 was another challenging year for the Engineers, as it was a pre-shutdown year where all approved Capex Projects and modifications have to be processed to meet the target date for the scheduled Turnaround in 2022. Moreover, due to COVID-19 pandemic, most of the engineers had to work from home. Despite this, all out efforts were exerted in processing the approved Capex Projects and modifications. Due to the pandemic, engineering staff conducted kick-off meetings & FATs meetings with Third Party Inspectors virtually.

During 2021, 7 Capital Projects were approved.

CAPEX PROJECTS 2021 A Upgrade the existing four Fresh Cooling Water / Sea Water Plate Heat Exchangers (PHEXs) E-3202 A/B/C/D in Urea Plant A Replace Obsolete Analysers in AMM & MTH A Upgrading of existing CS channel of Surface Condenser [E-0202] to SS [S31254] A Replace PLC & Electrical control panels of Urea Emergency Diesel Generator MD-6102 A Replacement of Mobile Air Quality Monitoring Station A Replacement of Reformer Burners for Ammonia and Methanol Plants A Replacement of existing Ammonia Condenser [E-7101A] with upgraded material of construction A P rocurement of new 2nd Stage [EK-6302A] and Final Cooler [EK-6303B] A R eplacement of Wash Water Cooler E-1002

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Gulf Petrochemical Industries Company Annual Report 2021

In addition to the above, Engineering spearheaded the energy optimization/ production enhancement drive in the complex and the following actions / modifications were studied and have been implemented during the T/A 2022: A Increasing Urea production by bypassing the De-Hydro Reactor.

A Upgrade six sieve trays with Supercup trays in the Urea convertor.

Additionally, 125 modifications were processed by Engineering. All the modifications undergo a rigorous Process Hazards Assessment before being put into operation to ensure the safety and reliability of the plants.

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TECHNICAL SERVICES

Capital Expenditure (in Million USD) 60 M 50 M

Budgeted Figures

40 M 30 M 20 M 10 M 0

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Number of Completed Modifications 250

200

150

100

50

48

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

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Gulf Petrochemical Industries Company Annual Report 2021

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TECHNICAL SERVICES

LABORATORY

During 2021, the laboratory extended quality control services for reliable and smooth operation of the plants. To fulfill its commitment, the laboratory collected approximately 50,944 routine samples from various sections of the plant and analyzed for 172,832 parameters during the year. In addition to the routine samples, approximately 4,090 special samples were analyzed for 8,361 parameters, thereby fulfilling the total analytical requirement of the plant.

To ensure the quality of the products, regular monitoring at intermediate stages in the process is carried out and the product quality is checked before being shipped/loaded onto trucks. Around 164 product quality certificates were issued during the year. Regular monitoring of liquid effluents and gaseous emissions was carried out as per statutory requirements of the Supreme Council for Environment.

The Laboratory is regularly participating in Proficiency Tests conducted by world renowned agency M/s Laboratory Quality System International-USA (LQSi) for Urea product in line with ISO 17025 requirements. The performance of the laboratory in these tests has been ranked satisfactory by the agency mentioned above.

To strengthen analytical capabilities of the laboratory, laboratory procured number of new instruments/equipment and upgraded old instruments. All new instruments/equipment were commissioned and hands-on training was provided to the laboratory staff.

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Gulf Petrochemical Industries Company Annual Report 2021

INSPECTION GPIC Inspection Section continued with its proactive approach toward enhancing the reliability and mechanical integrity of its assets based on the industry best practices and as per latest revisions of international codes and standards.

During the year 2021, a total of 316 inspection reports have been issued addressing both periodic preventive and corrective inspections of equipment.

In addition to the above, a total number of 80 statutory equipment’s were examined and recertified to comply with statutory regulatory requirements. In addition, an independent database for Root Cause Failure Analysis Studies (RCFA) have been conducted, resulting in actions and recommendations towards improving the reliability of the plants.

The inspection section was again re-certified for ISO 17020:2012 accreditation conformity assessment with the requirements for operation of various types of bodies performing inspection.

In line with GPIC’s policy on enhancing and updating the skills of employees, two of the Inspection Engineers were certified & other recertified through the American Petroleum Institute (API) certification programme.

The Inspection Section continued its integrity program and engaged international inspection agencies for the follow up inspections of Capex items manufactured by internationally recognized workshop facilities in Italy, Spain, and Belgium to ensure compliance with quality assurance requirement.

At present, the Inspection Section is in the process of preparing for the upcoming turnaround 2022, which comprises of acquiring services from internationally recognized competent vendors / contractor from all around the globe to execute quality jobs and to ensure the enhancement of plant reliability.

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ERM & BUSINESS EXCELLENCE

Achievements

CERTIFICATES ISO 9001 ISO 45001 ISO 22301 ISO 27001 ISO 50001 RC 14001 ISO 17020 ISO 17025 ISO 31000

Lockdown restrictions and safety measures put in place to contain the spread of COVID-19 posed unprecedented challenges. Therefore, it was necessary for the industries related to oil and gas sector and all other industries to work hard and with extra effort to adopt new and different innovative processes and methodologies in order to maintain safe and sustainable operations.

In this regard, GPIC took number of steps to develop and improve alternative plans to achieve the corporate objectives and optimise cost and in the shortest possible time.

GPIC Business Resilience Committee, in coordination with the Executive Management Team, played a prominent role in managing the crisis pandemic since the Coronavirus outbreak at the beginning of 2020 to the present day.

The committee had carried out a thorough analysis of the pandemic outbreak risk caused by the COVID-19 in the early stages and identified the consequence of the risk and mitigation controls to prevent/reduce the impacts of the pandemic. Business continuity plans were prepared to ensure safe continuity of the business. This was in conjunction with closely following up and coordinating with the appropriate authorities. This included following all government guidelines and laws and to ensure GPIC’s conformity with the current COVID-19 situation. All the corporate enterprise risks have been reviewed it ensured its controls and mitigation plans are sound and effective to confirm the safe continual operation activities.

Over the years, GPIC have adopted and embraced number of international management system standards and accreditations which helped us in engaging and aligning all our stakeholders to continually improve the company’s processes, products, and culture. This is in order to achieve the long-term success that stems from customer satisfaction in a very systematic and consistent manner through optimum utilization of our resources and adaptation of a risk and opportunity approach in our activities.

In spite of the challenges brought on by the pandemic, GPIC was able to realise a new and distinguished achievement by obtaining an acknowledgment certificate from the external auditor that it had successfully implemented the guidelines for ISO 31000:2018 Risk Management System. This certificate confirms that GPIC had applied the Risk Management System

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Gulf Petrochemical Industries Company Annual Report 2021

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ERM & BUSINESS EXCELLENCE

in a systematic, transparent and credible manner within the scope and context described in the framework of Enterprise Risk Management (ERM) established in the company. The External Auditors praised the GPIC Executive Management’s commitment in implementing the standard requirements and the ongoing improvement of the Management System standards despite the crisis and the effect it had on the various systems and applications used.

GPIC’s Executive Management held remote and periodic Management meetings to regularly review and follow up on the performance and efficiency of its Integrated Management Systems PAS 99. This includes ISO 9001 Quality Management System, ISO 14001 Environment Management System, ISO 45001 Occupational Health and Safety Management System, RC 14001 Responsible Care Management System, ISO 27001 Information Security Management System, ISO 22301 Business Continuity Management System, and ISO 50001 Energy Management System. As a result, GPIC created a roadmap to further improve and continuously develop management systems, as well as ensuring there is a robust schedule to complete all internal reviews and external audits.

Although 2021 was challenging, it had positive effects on internal and external auditing systems. This was because the remote work methodology proved to be very effective and feasible. Four different external auditing processes, covering all of the company’s Management systems, were held – each over a working week – and all internal audits were completed. GPIC’s internal audit team was successfully able to complete all internal audits. The reviewing processes are among the most important tools the company uses to continue the process of improvement and development. All audits, external and internal, have concluded and it has emerged the GPIC is fully committed to implementing all specifications and Management systems requirements.

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Gulf Petrochemical Industries Company Annual Report 2021

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PROCUREMENT & WAREHOUSING

During 2021, GPIC received materials/equipment/services to support the maintenance activities and reliability of plants’ operation. Approximately, 1,102 Purchase Orders for materials/services were issued in 2021. The Warehouse service levels continued to remain at more than 99% throughout the year, indicating the ready availability of materials required by the plants. This is a reflection of the close and effective coordination with suppliers and contractors, both local and foreign to expedite procurement requests. Whilst keeping within the Company’s Cost Optimisation Strategy for 2021 and ensuring the reliability and safety of the Plants, emphasis was given to stronger commercial negotiation with vendors. This has led to a 10% saving of the total purchases negotiated value. Efforts were also made in consultation with the end users, to procure only essential spares. In addition, the Procurement & Warehousing team has finalized orders based on competitive offers from International Traders along with authorized local representatives for some OEM spares, which has resulted in further savings. In coordination with the Maintenance team and Engineering section, the Procurement & Warehousing team finalized procurement of all the materials and services for Turnaround TA2022, which is planned to commence in March 2022 despite the challenging global shipping schedules, and COVID-19 implications all major equipment has been successfully received on site.

To mitigate the effect of the economic downturn and impact of the COVID-19 crisis on GPIC, the Procurement & Warehousing team renegotiated all current existing contracts for 2022 and beyond with vendors. In light of the current COVID-19 situation, several counter measures were taken to reduce the impact on the Company’s business in line with GPIC’s Executive Management directives which included: Working from Home protocol during the first quarter of the year, conducting all meetings virtually, optimizing the procurement orders, and close follow up with vendors to expedite materials from highly affected zones worldwide.

In November 2021, The Procurement & Warehousing Department received the “Contract Management Team of The Year Award” during the Middle East Procurement Conference, which was awarded under the patronage of The Chairman of the Bahrain Tender Board. Such an award reflects GPIC Board of Directors’ level of commitment to continuously improving the strategies and processes to optimize the company’s performance to be among the leading companies in the industry in Bahrain and the region.

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Gulf Petrochemical Industries Company Annual Report 2021

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HUMAN RESOURCES AND DEVELOPMENT

The training and development of Bahraini employees is a major priority for GPIC’s management and 2021 marks 42 years of this commitment as the Academy of Leadership and Learning, previously the Training Centre, celebrated its 36th anniversary.

The Company’s training policy supports the full development of Bahraini employees, both new and existing, as its ultimate objective. To achieve this goal, employees undergo training courses arranged and designed by the Academy of Leadership and Learning as a part of their continuous training and development through in-house, local and overseas training events.

In addition to the awards in training and development GPIC has received in previous years, the Company has been awarded Outstanding Institution in Training and Human Resource Development several times from the Ministry of Labour in recognition of the Company’s role in the development of Bahraini capital. The Academy of Leadership and Learning also supports and encourages employee participation in relevant petrochemical industry workshops, forums and conferences in order to achieve the Company’s sustainable development objectives.

The Academy of Leadership and Learning utilises Competency-Based Training (CBT) in its approach to the training and development of staff. This methodology is considered a qualitative step in the development of training with a view to enhancing staff skills, boosting their capabilities, achieving equal training opportunities, improving productivity and developing skills to bridge any competency gaps. This pioneering project assists in the creation of individual training plans for company employees in addition to the annual training plan and leads to the development of each and every person in the company.

The Academy of Leadership and Learning is also overseeing the development of the employees so they are fully qualified to be promoted into their future important positions.

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Gulf Petrochemical Industries Company Annual Report 2021

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HUMAN RESOURCES DEVELOPMENT NUMBER OF TRAINEES ANNUALLY 100 90 80 70 60 50 40 30 20 10 2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

0

Apart from the training of new graduates, the Academy conducted a number of training and development courses to meet the requirements of both the Company and its employees. Due to the COVID-19 pandemic, the Academy utilized online and virtual training. There were many online courses offered during the pandemic at which employees attended as an alternative to the physical classroom training. This process involved the organisation of 84 virtual training attended by 462 employees, 65 training courses held in the Academy and GPIC Club, attended by a total of 306 employees. This is in addition to 9 training courses and conferences held in Bahrain with 46 employees in attendance and a total of 8 training courses outside Bahrain attended by 50 employees. These courses represented a total of 168 courses attended by 868 employees and trainees.

In 2021, GPIC trained 38 students from various local and overseas universities, institutes and schools in various departments of the Company under the supervision of qualified employees. This came as part of the management’s keenness to play its role towards the community and provide training opportunities for upgrading the technical, leadership, communication, planning and team work skills of young people engaged in their academic studies.

This is a part of GPIC’s commitment to the community and the development of a generation of young people who have enhanced skills and abilities to contribute to the country’s growth and development. During the COVID-19, students did their training online and interacted with the employees through virtual meetings.

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Gulf Petrochemical Industries Company Annual Report 2021

NUMBER OF E-LEARNING USERS

500 450 400 350 300 250 200 150 100 50

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2020

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2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

0

The eLearning Centre provides support to the training and development plans in GPIC as it offers 128 training programmes in a wide range of topics such as communication skills, self-development skills, computer applications, leadership skills and project management skills. There are 43 technical programmes on offer for the upgrading of technical skills and knowledge for workers in the technical teams. In addition, the Centre constitutes 107 comprehensive training courses in the areas of safety, health and the environment. More than 500 new eLearning courses in the area of cyber security were also launched in 2021. The eLearning facility was active during the pandemic and 801 courses were attended during 2021.

GPIC also provides the electronic library through the Company’s intranet.

The new library has numerous magazines, journals, periodicals and valuable publications. The Academy of Leadership and Learning Library has more than 1,800 titles covering a wide range of topics. In addition, the electronic library contains more than 190 e-books on different subjects, numerous magazines, journals, periodicals and valuable publications.

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SUSTAINABILITY

GPIC contributes across all 17 Sustainable Development Goals (SDGs) Sustainability is a journey and as GPIC progresses through various stages of development our strategies also evolve. We are focused not only on minimizing our footprint, and improving efficiency, but also leveraging sustainability as an opportunity for growth and innovation.

2021 was indeed another difficult and uncertain year amid the COVID-19 pandemic, posing challenges for sustainability in many respects, but there have also been exciting developments in the sustainability landscape. We look back at GPIC’s efforts in scaling up sustainability and mainstreaming the UN’s 17 SDGs into the Company’s Business Functions.

Our industry in particular has embraced these challenges, and found innovative and resourceful ways to work around, which is something we should all be immensely proud of.

Being ‘Resilient Adaptive Agile’, highlights the way GPIC operates, and emphasizes the ways in which sustainability can help realise our visions for the company’s future. Every day our approach is towards achieving operational excellence in a safe and sustainable way. Over 400 talented men and women of GPIC in Bahrain make our company successful and sustainable.

This year is special for GPIC as we celebrate 42 years of sustainable success and it also marks the 10th anniversary of our commitment to the United Nations Global Compact (UNGC) and also our 10th anniversary of sharing our sustainability performance globally through our GRI Sustainability Reports highlighting our transparency and accountability.

The urgent and compelling agenda set out by the United Nations Sustainable Development Goals (SDGs) aims to address formidable development challenges of ending poverty, protecting the planet, and ensuring equality and prosperity for all.

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Gulf Petrochemical Industries Company Annual Report 2021

To achieve these noble and ambitious visions, responsible leadership that engages stakeholders and mobilizes the power of purpose towards engendering a sense of shared responsibility is essential. This will be fundamental to driving and directing the transformative action needed to solve the challenges and establish systems that persistently ensure the pursuance of the SDGs. We at GPIC continue to contribute across all the 17 SDGs. As a contribution to SDG 2 – Zero Hunger and SDG 12- Responsible Consumption and Production, GPIC aspires to be a key enabler in ensuring access for all to safe, nutritious and sufficient food. Responsible resource and manufacturing stewardship, supported by sustainable consumption practices are fundamental to building equitable and better quality food systems globally.

To this end, we are committed to embedding sustainable practices into our day to day operations as well as working closely with our partners and peers to embrace business models, products and solutions that align and build greater ambition towards the achievement of these goals.

As a focus on SDG 17- Partnerships for the Goals, GPIC firmly believes that the Sustainable Development Goals can only be realized with strong partnerships and effective cooperation. Global, regional and national collaborations are an integral part of this - built on shared principles and values that will drive the success of an interconnected development agenda for the prosperity of the planet and its people.

As a committed member of the UN Global Compact, we have issued our Communication on Progress (COP) report 2021 and our 6th GRI Sustainability report in February 2022 qualifying at the advanced level criteria. This Report also serves UN’s signature issue platforms such as the Women’s Empowerment Principles and the Food and Agriculture Business Principles.

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