C311333 Amal HRSG-1 Project

Petroleum Development Oman LLC

Contract Number C311333
Amal Heat Recovery System Generator (HRSG)-1 Project
C7, Local Content

Section C7, Local Content, Rev 2.6 Jun 2010

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C311333 Amal HRSG-1 Project

Contents
1.

POLICY ................................................................................................................................ 3
1.1.

2.

OPAL COMPLIANCE VERIFICATION .................................................................................... 3

2.1.
2.2.
2.3.

3.

POLICY............................................................................................................................................................ 3
CVC COMPLIANCE ........................................................................................................................................... 3
SUBCONTRACTOR EXEMPTION FROM CVC COMPLIANCE .................................................................................... 3
PENALTIES FOR NON-COMPLIANCE ................................................................................................................... 3

LOCAL COMMUNITY COMPANIES (LCCS) ........................................................................... 3

3.1.
3.2.
3.3.
3.4.
3.5.
3.6.
3.7.

GENERAL ......................................................................................................................................................... 3
SUBCONTRACT WITH LCC ................................................................................................................................ 4
FAILURE TO ENGAGE LCCS .............................................................................................................................. 4
FAILURE OF LCC TO PERFORM ........................................................................................................................ 4
LCC RETURN................................................................................................................................................... 4
AUDIT REQUIREMENT ...................................................................................................................................... 5
YEARLY MINIMUM VALUE OF SCOPE OF WORK OR SERVICES OF LCC ............................................................... 5

4. NATIONAL PRODUCTS AND/OR PRODUCTS OF GCC ORIGIN .......... ERROR! BOOKMARK NOT
DEFINED.
5.

OMANISATION STARTING LEVEL ........................................................................................ 5

5.1.

STARTING LEVEL ............................................................................................................................................. 5

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C311333 Amal HRSG-1 Project

1.

Policy

1.1.

Policy

1.1.1.

Company is committed to supporting laws and regulations relating to Omanisation including,

but not limited to, OPALs Omanisation mandate and enforcing OPAL compliance verification for
all contractors in the Sultanate of Oman with which Company conducts business. Consequently
compliance with the obligations of this Section C7 is considered a fundamental condition of this
Contract.

2.

Opal Compliance Verification

2.1.

CVC Compliance

2.1.1.

Within ten (10) days of the Effective Date Contractor shall submit a copy of their current OPALCVC to Company. If Contractor does not already hold an OPAL-CVC, Contractor shall obtain an
OPAL-CVC and submit this to Company within one hundred and eighty (180) days of the
Commencement Date of the Contract.

2.1.2.

Thereafter Contractor shall at all times maintain a current OPAL-CVC.

2.1.3.

Contractor shall, no later than fourteen (14) days after the annual renewal of their OPAL-CVC or
at any other time during the term of the Contract as instructed by the Contract Holder, submit
to Company substantiation of such renewal of OPAL-CVC.

2.2.

Subcontractor Exemption from CVC Compliance

2.2.1.

Contractor shall ensure that its Subcontractors also adhere to the requirements outlined in
Articles 2.1.1 and 2.1.2 above and Contractor shall verify such relevant OPAL-CVC.

2.2.2.

Subcontractors which do not have a registered office in the Country of Operations and which
solely supply materials manufactured fully outside the Country of Operations or perform
Services in the Country of Operations for less than six (6) months are exempted from the
requirement outlined in Article 2.2.1 above.

2.2.3.

Contractors employment of a Subcontractor without OPAL-CVC will require written

authorisation from the Contract Holder, unless Article 2.2.2 applies. This relaxation of OPAL-CVC
requirements will only be granted for a temporary period or in the event that specialist
knowledge, technical expertise/equipment, restricted availability or manufacturers
recommendations require it.

2.3.

Penalties for Non-Compliance

2.3.1.

For every day that the Contract requires Contractor to maintain valid OPAL-CVC and Contractor
fails to maintain OPAL-CVC during the term of the Contract the amount of USD 500 shall
become due to Company. This amount shall continue to be due to Company until such time as
Contractor is verified by OPAL as compliant and the OPAL-CVC is (re-)established.

2.3.2.

For every day, and for each occasion, the Contract requires Contractor to employ a
Subcontractor with OPAL-CVC and Contractor employs a Subcontractor without valid OPAL-CVC,
without the prior written authorisation of the Contract Holder, the amount of USD 500 per day
for each day that a valid OPAL-CVC is not maintained, shall become due to Company.

3.

Local Community Companies (LCCs)

3.1.

General
Company is committed to encouraging development of communities within its concession area
by promoting the establishment and development of Local Community Contractors (LCCs). The
eventual aim is to ensure these LCCs acquire skills in oilfield core businesses and mature into
fully recognised contractors able to compete in the open market.

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C311333 Amal HRSG-1 Project

3.1.1.

Contractor shall include in its Contract Price, all costs associated with employing the LCC as a
Subcontractor.

3.1.2.

Contractor shall ensure that there is sufficient site area and space available within its facility for
the LCC to set up their own offices and workshops for their Personnel and Equipment to enable
them to perform their operations efficiently. In addition Contractor shall provide and maintain
utility services and shall be responsible for the overall supervision of the LCC.

3.1.3.

For Work which requires an up front investment from the LCC, Contractor shall endeavour to
award a Subcontract with a fixed scope for a duration that allows the LCC Subcontractor to
recover a reasonable amount of this investment.
In order to continuously develop the LCC, Contractor shall ensure Work is allocated to the LCC
in an uninterrupted manner, throughout the Contract duration (i.e. the LCC shall be kept
continuously working).

3.2.

Subcontract with LCC

3.2.1.

After award, Contractor and the LCC shall sign a Subcontract agreement. The Subcontract shall
include as a minimum the following:a.)

General information including the names of the parties, addresses, title of Subcontract
and other relevant information;

b.)

Rates that will be paid to the LCC by Contractor;

c.)

Payment terms;

d.)

Scope of Work/Services that will be subcontracted to the LCC

e.)

Yearly minimum value of Scope of Work to the LCC;

f.)

Penalties for the LCC due to non-performance;

g.)

Development plan for the LCC.

3.2.2.

A copy of this Subcontract (including all commercial information) shall be made available to
Company if so requested.

3.3.

Failure to Engage LCCs

3.3.1.

It is Contractors responsibility to establish the required Subcontract with the LCC for the
minimum scope of work. In any calendar year, where Contractor fails to provide the required
level of work to the LCC, the balance of the value stipulated in Section C7 [i.e. the remaining
value which has not been paid to the LCC] shall be deducted from payments due to Contractor.
In addition Company shall deduct as a penalty the amount of USD 20,000 per twelve (12)
month period where this failure occurs.

3.4.

Failure of LCC to Perform

3.4.1.

In the event that any LCC repeatedly fails to execute the guaranteed Work (or a proportion of
it) due to no fault of Contractor, then the entitlement for guaranteed Work (or a proportion of
it) may be removed from the LCC. Documentary evidence shall be furnished for Companys
approval prior to removal of this entitlement.

3.4.2.

Contractor shall meet the combined yearly target of Yearly minimum value of Scope of Work
as detailed in this Section C7.

3.5.

LCC Return

3.5.1.

Contractor should update Company with actual amount paid to each LCC. This should be
reported on a monthly basis, as agreed with the Contract Holder, by emailing details in format
provided by Company to LCCsupport@pdo.co.om.

3.5.2.

Update details that will be required shall include but not limited to the LCCss name, type of
work performed, amount paid to the LCC each period, Subcontract duration, physical area in
which the work is performed, and other details as requested by the Company.

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C311333 Amal HRSG-1 Project

3.5.3.

Contractor will be required to submit update details via Companys alternative updating system
when it is ready in due course.

3.6.

Audit Requirement

3.6.1.

Company reserve the right to audit work subcontracted and update details provided by
Contractor with regards to LCC.

3.7.

Yearly Minimum Value of Scope of Work or Services of LCC

3.7.1.

Contractor shall subcontract the following minimum value of Work to the LCC during each
twelve (12) month period of the Contract (all amounts in USD):
Minimum Value in (USD)
1st 12 Months

2nd 12 Months

200K

200K

Note: Due to the current undergoing process of review the LCCs setup, the Company will
advise the succeed Contractor the names of LCCs from the concession area to work with as
subcontractor. The allocated work to the LCCs shall have minimum value indicated above.

4.

Omanisation Starting Level

4.1.

Starting Level

4.1.1.

Skilled Personnel shall be defined as Personnel executing a task under the Contract which
requires generally accepted periods of experience and/ or education before the task can be
executed.

4.1.2.

Unskilled Personnel shall be defined as Personnel not covered by 5.1.1 above.

4.1.3.

Watchmen shall be defined as Personnel whose primary activity is to ensure security of the Site
and monitoring the movement of Personnel, Equipment and Materials in and around Site.

4.1.4.

Contractor shall have the following minimum number or percentage of Omani nationals
employed in the following positions at the Commencement Date. These numbers exclude
drivers and watchmen.

Description of Staff Categories/ Job Types

Number or Percentage of
Omanis (minimum)

Key Personnel as defined in Section C4

Non-Key Personnel but Skilled Personnel as below:
Journey Manager
Camp Admin Manager
Store Keeper
Document controller
HSE Advisor

50%

Chef (cooker)

50%

Unskilled Personnel

Section C7, Local Content, Rev 2.6 Jun 2010

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