Table of Contents. About Petropars. Completed Projects Phase 12 Phase 19. Petropars Projects PPI POSCO POMC PRE PPI-FZE KCT. Petropars Subsidiaries

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2 Table of Contents Operating Highlights Our Business Board of Directors Organization Chart CEO Message Petropars at a Glance Petropars History Petropars in 2015 About Petropars Completed Projects Phase 12 Phase 19 Petropars Projects PPI POSCO POMC PRE PPI-FZE KCT Petropars Subsidiaries Petroleum Engineering HSE Our People Our Capabilities Consolidated Financial Statemants Financial Statements 44

3 Operating Highlights Start of Production from SPD12C Start of Operation in GTU06 Official opening ceremony of Phase 12 Phase 19 Outdoor substation Energizing Phase 1 Revamping Project 3rd stage Taking Over Certificate Completion of Drilling in SPD19B (DD6) Flare firing of Onshore refinery (Sweet gas from Phase 19) Completion of Drilling in SPD19A (SAHAR II)- Phase 19 Drilling Completion Lead-out and Installation of SPD19C Platform Start of Work over Project in Salman Field Award of the most splendid medal of excellence to the Public Relation of Petropars Group

4 Our Business G&G and Petroleum Engineering Petropars Company is one of the few Iranian companies active in the upstream section and undertakes upstream studies including reservoir engineering, geology and geophysics studies. Petropars is well aware that Petroleum engineering as the first step in reservoir development, positively influences the risk reduction of the projects and it plays an effective role in the projects success. Onshore Facilities Implementing mega projects for construction of onshore refineries (in upstream, midstream and downstream) which includes engineering, procurement, construction, installation and project management, is considered as a core business of Petropars which is usually managed by Petropars Iran. Offshore Facilities Offshore projects management in EPCI projects and also operation of the facility are existing Petropars capabilities. Also, considering Petropars domination on other sections of the value chain, it enables PPL to manage interfaces with other sections effectively. Drilling Operation Activities related to drilling management are one of the most important competitive advantages of Petropars compared to other competitors in the country which are undertaken by POSCO Finance Petropars Company is the only Iranian company which has been capable of taking responsibility of financing mega projects inside the country. Therefore, by financing projects from financial markets or its sole stakeholder (NICO), Petropars undertakes the execution of the projects. Operation and Maintenance Commissioning, startup and maintenance of onshore and offshore facilities are among Petropars capabilities that are being done by POMC and in fact it is the complimentary section sec of Petropars value chain in Oil & Gas projects. 4 5

5 Board of Directors Organization Chart 2015 NICO General Assembly Board of Directors & Assemblies Affairs Board of Directors CEO Mohammad Javad Shams CEO; Board Member Hamid Akbary Board Member Nematollah Alirezaei Board Member Seyed Saleh Hendi Board Member Legal Affairs Management Human Resources Management Finance Management Financial Affairs Management Public Relations & International Affairs HSEQ Management Internal Audit Management Planning Management Security Commercial & Contracts Management ICT Management Engineering & Development Management 2016 Farzad A Project Phase 19 Consortium SPIFON II & SPITN II, CMMS Project Phase 12 Project Petroleum Engineering Management Phase 1 Project General Engineering Management Phase 4 & 5 Project Ali Marvi Chairman Hamid Akbary CEO; Board Member Nematollah Alirezaei Board Member Share service providing in Holding Group Market Development Technical Knowledge Development Phase 6, 7 & 8 Project Overseas Projects Departments which provide policy & guideline for similar ones in subsidiaries 6 7

6 CEO Message Petropars at a Glance The year 2015 will always be remembered by Petropars Ltd. (PPL) as a very distinctive year as it marked the successful completion and handover of South Pars Gas Field Development Phase 12 to NIOC and thus bringing to an end the development of a mega project of massive scale through politically difficult and uneasy times. This could only have been achieved by each and every PPL employee s commitment and devotion to work and country s national interest. The inauguration of Phase 12 as the largest project undertaken in Iran s oil and gas industries coinciding with the 65th anniversary of nationalization of Iranian oil industry will be recorded in the history of Petropars as a major accomplishments to be challenged and paralleled by others and remembered for years to come. During the inauguration, HE the President, the Petroleum Minister and other government officials praised and commended Petropars for the successful development and completion of this mega project highlighting the significance and importance of Phase 12 Project to the Country s economy. Upon official inauguration of Phase 12, Petropars focused all its efforts and resources for the completion of South Pars Gas Field Development Phase 19 through its affiliates where the development of Phase 19 had been awarded to a consortium with the development of offshore wells being awarded to PPL s drilling affiliate POSCO and the development of onshore plant being awarded to PPL s EPC affiliate Petropars Iran (PPI) as consortium members, thus planning to start its operation and production in the upcoming year and setting pace for other consortium members to catch up and yet adding another source of pride for itself and holding companies. As a result of the efforts undertaken in the drilling section, all wells were successfully drilled and completed by POSCO setting a record of 55 days in the drilling of a cased well in South Pars field. In the onshore section, upon commissioning of different utility facilities, PPI managed the flare firing of onshore refinery as a major step taken in the path to commissioning of this national mega project. In 2015, in order to enter new markets and diversify activities, POSCO started the Work-over Project in Salman gas field. Simultaneously, POMC as the O&M subsidiary of Petropars focused all its planning and capabilities on commissioning of the onshore facilities of Phase19 and played a similar major role in the subsequent successful commissioning and startup Phase 19 Project. Upon easing of the restrictions and limitations imposed on international trade and commerce with the country and further eyeing the new Iranian Petroleum Contracts (IPC) and moreover having in mind the strategies developed by Petropars to turn into an international company specialized in Exploration and Production (E&P) activities, we have spared no efforts to improve and restructure our processes. Accordingly, upon NIOC evaluation and assessment of Iranian companies with potentials and capabilities to become Exploration and Production (E&P) Companies, Petropars managed to qualify and top the list unreservedly thus paving the way to become the first choice for international companies seeking future participations in the development and production of oil and gas fields in Iran. In line with this strategy, in 2015 extensive negotiations and efforts were made to identify and recognize possible opportunities for development and investment in oil and gas fields in joint cooperation with international companies. We shall hopefully manage to conclude contracts for Exploration and Production in cooperation with accredited international Oil & Gas companies soon in coming years. Petropars registered in Nevis Island was established in 1998; concurrent with development of Phase 1 of South Pars gas field development plan, promotion and applying domestic potentials, experience and expertise of Iranian contractors, and transferring the knowledge of managing mega-projects to the country. Now, Petropars is considered as the biggest general contractor in the country in oil & gas projects. Once the development of the SPGFD1 was successfully completed, development of phases 6, 7 & 8, Phase 12 and Phase 19 of South Pars gas field have been assigned to Petropars. Also, after all the efforts and glorious accomplishment of Petropars in South Pars gas field, the company could take the responsibility of other projects in other fields inside and outside of the country such as Farzad-A project. In order to become an international oil company, Petropars is making a huge effort to develop its activities in the oil and gas value chain. For this purpose, Petropars activities have been started with study of reservoirs at the top of the oil and gas value chain, and it is continued with drilling appraisal and development wells, developing the offshore and onshore facilities and finally commissioning, operation and maintenance of related facilities. Therefore, Petropars has expanded its capability in engineering, procurement, construction and management in different sections so it is among one of those rare companies in the country which has institutionalized management and execution of entire upstream activities without any need to an intermediary. Considering financing the projects of Phase 1 and Phases 6, 7 & 8 and Phases 4 & 5 and Phase 12 of South Pars Gas Field, Petropars is considered as the only Iranian contractor which is capable of financing the mega projects, relying on its sole stakeholder NICO. Now, Petropars as a biggest and most capable Iranian contractor in Oil & Gas industry, intended to become an Exploration & Production (E&P) Company in International level, seeking new opportunity for development in Iran and other countries in partnership with reputable International Oil Companies in the World. Vision Petropars is intended to: Become an international oil and gas company Absolutely concentrate on upstream section of Value Chain Manage and operate exploration, development and production of oil and gas field in Iran, Africa, South America and neighboring countries Diversify its business portfolio and looking for new opportunities in the oil and gas value chain. Mission Hamid Akbary Petopars CEO Value Creation in Oil and Gas Industry through Management and Execution of Exploration, Development, Operation and Production Activities. 8 9

7 2008 Petropars History Start of Drilling in Farzad-A by POSCO Start of Drilling in SPGFD Phase 19 by POSCO Start of ERP project in Petropars Boiler Firing and Start of Commissioning in SPGFD Phase 12 Farzad-A Drilling Completion Award of Farzad-A HOA to PPL Award of SPIFON II Contract Start of Production from SPGFD Phase 12 Start of O & M by POMC in SPGFD Phase 12 Refinery KCT Establishment Start of SPGFD Phase 12 Onshore Contracts Award of SPGFD Phase 19 to PPL and PPI 2010 Award of North Cabinda Contract to PPL 2009 SPGFD Phases 6, 7 & 8 Official Startup Start of Drilling in SPGFD Phase 12 by POSCO PPL Establishment Award of SPGFD Phase 1 to PPL Award of Dobokoubi Contract to PPL Award of SPGFD Phases 6, 7 & 8 to PPL Award of SPGFD Phases 4 & 5 to ENI & PPL SPGFD Phases 4 & 5 Official Startup Award of SPGFD Phase 12 to PPL 2004 SPGFD Phase 1 Start of Operation PPI Establishment PPI-FZE Establishment Handover of SPGFD Phase 1 Onshore Refinery 10 11

8 Petropars in 2015 JANUARY FEBRUARY MARCH 14 Start of Production from SPD12C 25 Start of U144 and production of Granulated sulfur in SPGFD Phase 12 6 Start of Operation in GTU06 in SPGFD Phase Official opening ceremony of in SPGFD Phase 12 APRIL MAY JUNE 2 Outdoor Substation energizing in SPGFD Phase SRU02 Startup in SPGFD Phase 12 1 SS#01 Energizing in SPGFD Phase SS#06 Energizing in SPGFD Phase 19 1 Start of Operation in U103 Train 3 in SPGFD Phase Completion of Drilling in SPD19B (DD6) 20 Start of work over Operation in SPD12A(DD6) 20 Flare firing of Onshore refinery (Sweet gas from SPGFD Phase 19) JULY AUGUST SEPTEMBER 10 Boiler A steam out in SPGFD Phase 19 4 Sea Water Intake Startup in SPGFD Phase 19 4 Boiler B steam out in SPGFD Phase Completion of Drilling in SPD19A (SA- HAR II)- Phase 19 Drilling Completion OCTOBER NOVEMBER DECEMBER 19 Load out SPD19C Platform 21 Air Compressor Startup in SPGFD Phase Nitrogen Package Startup in SPGFD Phase SPD19C Platform Installation 12 13

9 Petropars Projects Since its establishment, Petropars started as a project-oriented company which aimed at developing oil and gas fields in the country, along with foreign competitors. South Pars gas field, the largest gas reservoir in the world, is the company s main field of action, although it fulfills sporadic activities in other gas fields.

10 Petropars Projects Project Capital Expenditures (in Billion Dollars) Contract Type Developer Present Status SPGFD Phase 1 1 Buy-Back PPL Completed SPGFD Phase 4 & 5 2 Buy-Back ENI (Agip) Completed SPGFD Phase 6, 7 & Buy-Back PPL (Onshore) Statoil (Offshore) Completed SPGFD Phase Buy-Back PPL Completed SPGFD Phase EPC Consortium of PPL, IOEC & PPI Commissioning Farzad-A Gas Field - - PPL MDP prepared South Pars gas field (also called North Dome in Qatar side) is the world s largest known gas reservoir on joint maritime border with Iran and Qatar in the Persian Gulf and is one of the main sources of energy in the world. South Pars (Iranian share) total gas reserves is approximately 5.4% of the world s gas resources, and its Iranian section holds almost a 30% of the gas reserves of the country. South Pars (North Dome) area is 9,700 square kilometers and Iran owns 3,700 square kilometers. A gas reserve in this part of the field is 10 trillion cubic meters with more than estimated 19 billion barrels of gas condensates. Currently, it has been planned to develop 24 phases to produce 790 million cubic meters of gas per day in the Iranian part of South Pars gas field. Development of South Pars gas field is to supply the growing demand for natural gas, injection into oil fields, gas export and production of condensate and LPG for petrochemical units. Thus, Assaluyeh and Tombak cities located in the 270 and 220 km from southeast of Bushehr are coastal region which onshore facilities are meant to be built there. Projects Products Product Reservoir Fluids (MMSCFD) Sour Gas (MMSCFD) Sweet Gas (MMSCFD) Ethane Gas (MMSCFD) Liquid Ethane (T/D) Propane (T/D) Butane (T/D) Condensate (B/D) Sulfur (T/D) SPGFD 1 SPGFD 4 & 5 SPGFD 6, 7 & 8 SPGFD 12 SPGFD 19 1,000 2,000 3,900 3,000 2,000 11,900 Total 3,350 3, ,800 2,850 1,800 7, ,550 2,550 1,770 2,790 2,000 6,560 1,080 1,660 1,200 3,940 40,000 80, , ,000 80, , ,

11 Completed Projects Phases 6, 7 & 8 of South Pars Gas Field Development After successful completion of SPGFD Phase 1 and participation in the Phases 4&5 project, Petropars could rely on the knowledge and credibility gained from the implementation of mega-projects and took charge of the development of Phases 6,7&8. The project which at that time was considered the biggest project in Iran s oil industry, eventually came to fruition with the cooperation of all domestic and foreign contractors under management of Petropars. Phase 1 of South Pars Gas Field Development Starting Phase 1 of the development of gas fields in Iran, Petropars was established with the purpose of acquiring and transferring knowledge and management of mega projects in oil & gas industry and was given the responsibility of carrying out this mega project. As a result of this project, technical knowledge and management of infrastructural projects in onshore, offshore and drilling sections have been transferred to Iranian companies which resulted in a significant leap in Iranian contractors and suppliers capabilities. Management is the most sophisticated technology and with implementing of phases 6, 7& 8, Petropars showed that it achieved this technology at an international level. Phase 1 project manifests our faith capability and potency in the management of oil and gas mega projects. Farzad A Gas Field Development Phases 4 & 5 of South Pars Gas Field Development Concurrent with the implementation of SPGFD Phase 1, development of other phases of this huge field was put on the agenda. Meanwhile Petropars could also participate in the development of Phases 4, 5 along with the Italian company Eni and NICO as a non-operator partner in this mega project. The project includes the completion of exploration activities including acquisition; processing and interpretation of 3D seismic data, providing Master Development Plan (MDP) for development of the field. The Drilling of the appraisal well in this challenging field has been completed by POSCO and related tests has been done in order to prepare initial MDP for development of this field. At the end, Petropars prepared final MDP for development of this challenging gas field for final decision making. Farzad Gas Field Development will show Petropars capability in management of challenging and complex projects. Refinery construction in the period of 36 months, shows steps into the path of excellence along domestic and foreign contractors 18 19

12 Phase 12 Projects History South Pars Gas Field Development 2005 Signing the Contract 2011 Completion of sub-sea pipe lying 2006 Start the construction of jackets Completion of offshore basic engineering 2012 Installation of the first platform Commissioning of utility facilities In this complex mega project, Petropars for the first time as an Iranian company took over the financing and management of the project by his own and benefited from numerous foreign consultants, contractors and service companies in the engineering, procurement and construction. Due to its deep and accurate understanding of the capabilities of market and Iranian contractors, Petropars could manage Iranian contractors by applying local technical knowledge and capability. Therefore, the participation of Iranian contractors in development of Phase 12 reached a rate of about 66% while it was committed to be 51%. Meeting all environmental requirements was the most important principle of Phase 12 Development in engineering and construction stages. Therefore, from beginning of this mega project, the slogan of Development without Destruction was the main factor in various parts of the Project. In the engineering stage of the Project, due to environmental issues, 4 units of sulfur recovery and solidification were designed licensed to Lurgi and constructed with 99.6% of recovery factor. In addition to reducing air pollution and protecting the environment, it leads to daily production of 750 tons of sulfur as a byproduct of the refinery. Performance of the project On March 17, 2015, Phase 12 of South Pars Gas Field was officially inaugurated by the Iranian President. Considering capital investment, man-hours of work and value of the products, the Project is known as the biggest in Iran s Oil and Gas industry yet. Operating at its nominal capacity it will increase Iran s GDP at a rate of almost 2.2%. 2.2% increase in Iran GDP 15% increase in gas production in Iran 17% increase in gas condensate production in Iran Start the construction of offshore platform facilities Completion of onshore basic engineering Start the construction of tanks, non-industrial buildings and camps Start of drilling operations Awarding contracts of liquid processing and utility facilities Start the construction of liquid processing and utility facilities Commissioning the first offshore platform Production from all sweetening units Commissioning sulfur recovery unit and other processing units Official inauguration ceremony of Phase12 Commissioning of six gas sweetening units in less than one year Involvement of more than 145 million man-hour of work Drilling the longest well of South Pars Gas Field with 5,311 depth Employment of more than 560 domestic and foreign manufacturers Involvement of 17,000 people in operating sites at the work peaks Record of work without incident led to the death, up to 64 million man-hours Having more than 2,000 days without any incident in drilling operations Setting a record for drilling in 24 inches sections in South Pars Gas Field Sulfur Recovering factor of 99.6% in comparison with the standard factor of 97.5% Production of 27,840,527 barrels of condensate till end of 2015 Refining 85 million cubic meters of gas per day Producing 120 thousand barrels of stabilized condensate per day Project Specifications Drilling section: More than 155,000 meters of drilling Offshore section: Three sub-sea pipelines with a total length of 450 kilometers. Three offshore platforms weighing a total of 30 thousand tons Producing 750 tons of granulated sulfur per day Onshore section: Installing of 61 tons of steel structures Installing of 47 tons of stationary and rotating equipment Performing 3.1 million inches diameter piping Cabling more than 7,000 kilometers Constructing storage tanks for gas condensate with a capacity of 3 million barrels 20 21

13 Phase 19 South Pars Gas Field Development Phase19 History (2015) January February March Progress: 84.59% Progress: 85.18% Progress: 85.61% August Sea water intake startup Boiler B steam out Completion of drilling in SPD19A and Phase 19 drilling completion Progress: 87.81% April Outdoor substation energizing Progress: 85.89% September HVAC startup in different areas Progress: 88.82% Phase 19 of South Pars Gas Field Development was assigned to Petropars in June 2010 by the National Iranian Oil Company (NIOC) in which Petropars for the first time played the role of an EPC contractor in drilling operations and onshore refinery construction. Execution of a mega project with many complexities as an EPC contractor, required more intensification and concentration as well as project management down to the last details which had its own challenges. Thus, in order to maintain its agility in the successful execution of this project, Petropars assigned the onshore facilities construction to Petropars Iran. Drilling section also has been done by other subsidiary POSCO under supervision of PPL. The offshore facilities construction was separately assigned to the Iranian Offshore Engineering and Construction Company (IOEC), while the management and leadership of the project as consortium of Phase 19 was assigned to Petropars Ltd. Due to dramatic progressions in Phase 19 in the years 2013, 2014 and 2015, the Iranian Ministry of Petroleum has considered the project as the first priority for commissioning next years. The initial commissioning of the refinery is planned to be in early May June July Project Performance Indoor main substations energizing Progress:86.43% Completion of drilling in SPD19B Flare firing of onshore refinery Progress:86.84% Boiler A commissioning and steam out Progress: 87.39% October November December Lead-out of SPD19C platform Air compressor startup Progress: 89.18% Nitrogen package startup Sea water desalination startup SPD19C platform installation Progress: 89.63% Progress: 90.20% End of period End of 2015 Overall Progress 83.7% 6.5% 90.2% Onshore Facilities 82.0% 6.6% 88.6% Offshore Facilities 80.5% 8.7% 89.2% Drilling 96.7% 2.7% 99.4% Major Achievements Completing drilling operations of all wells Loading and installing the first platform (SPD19C) Commissioning utility facilities Completing installation of turbo-compressors in unit 106 Completing installation of major equipment (installation of 12,123 tons of equipment) Performing 2,696,347 ID piping by the end of 2015 Achieving LTIF of 1.42 in 2015 (in comparison with the standard less than 2) More than 38 million man-hours involved in 2015 More than 128 million man-hours involved till 2015 Overall Progress 2015, 6.5% 2014, 11.7% 2010, 2.1% 2011, 20.4% Iranian Content Non-Iranian, 48.97% More than 90% overall progress achieved till the end of , 17.1% 2012, 32.4% Iranian, 51.03% 6.5% overall progress achieved within 2014 Man - hour (million) About 96,000 man-hours of HSE training in

14 Petropars Subsidiaries In order to increase the pace of project execution and carrying out the assigned responsibilities, Petropars decided to create subsidiaries in the way of proceed and development of the business in oil and gas value chain; so that it could play the key leading role and the better it could manage the controlling and strategic processes. Therefore, Petropars started creating subsidiaries in the form of a holding structure. Considering the type and maturity level of the subsidiaries, Petropars management and leadership method is also differs for each subsidiary, but the major one in the group is based on Strategic Control.

15 Group Performance Companies Share in Revenue Excluding Inter-Company Transactions Companies Share in Revenue Considering Inter-Company Transactions POMC,2% POSCO, 4% PRE, 0% PPI, 63% PPI- FZE,0% POSCO, 4% POMC,7% PRE, 2% PPI-FZE, 1% PPL, 31% PPL, 29% PPI, 57% POSCO POMC PRE Number of Human Resources Net Profit (KUSD) 700 3,500 KCT ,000 2, , , , PPL PPI POMC POSCO PRE PPI-FZE - PPI POMC POSCO PRE PPI-FZE Comparative chart of the company s revenue, cost and gross profit 600, , ,000 PPI; 7.44% Cost (KUSD) 300, , ,000 PPI-FZE; 3.23% POSCO; 10.67% POMC; 16.10% - PRE; 4.57% (100,000) 100, , , , , ,000 Revenue (KUSD) While PPL gross and net profit is negative, it has not been shown in the relevant charts

16 Petropars Iran N. Alirezaei PPI CEO Petropars Iran was established in 2002 in Kish Island in order to develop the oil and gas and petrochemical process facilities. Today, as a leading domestic company, Petropars Iran plays a strategic role in value addition of Iran s gas resources through construction of gas refineries and related facilities. Petropars Iran has focused on becoming an active EPC contractor in the oil and gas industry of Iran and providing engineering, procurement and construction services in the assigned projects. It has achieved its goal by being assigned to develop the onshore refinery of Phase 19 of South Pars Gas Field project. Projects In 2010, Pars Oil and Gas Company (POGC) awarded the development of the onshore refinery of Phase 19 of South Pars Gas Field to Petropars Iran in form of a fixed price EPC contract. Based on the knowledge and available expertise within the Petropars group, Petropars Iran succeeded in organizing the execution team within a short period and accelerated its operations despite numerous difficulties. While organizing strong engineering teams and cooperating with the wellknown international engineering consultants, Petropars Iran has transferred knowledge and technology of gas refineries to the company and improved its abilities to implement future projects. By having focused on procurement of equipment, identifying and evaluating manufacturers and vendors and careful planning, Petropars Iran passed successfully the important stages of procurement in a limited time and with the lowest possible cost. Better than other Iranian competitors in similar projects, Petropars Iran also helped to nearly accomplish the project of Phase 19 refinery by proper management of construction contractors. Furthermore, along with successful development of the Phase 19 onshore refinery, Petropars Iran has committed to excel in Health, Safety and Environment. Outlook Commissioning and full operation of the of Phase 19 refinery is the most important target of Petropars Iran in In addition, by having proficient manpower, Petropars Iran has put a lot of effort into new oil and gas contracts and diversifying activities in order to increase company s profit share and to develop Iran s oil and gas industry. CEO Message Our efforts in Petropars Iran (PPI) within 2015 led to Phase 19 of project to be considered as a lead for other similar projects in South Pars and be given the top priority of startup among other projects. As a result, in order to meet demands and expectations of the Client, all personnel of Petropars Iran tried harder in 2015 to put the onshore refinery of Phase 19 on the eve of commissioning. Therefore, from the beginning of 2015, our works were focused on commissioning of utility units. As a result, almost all utility supply units were commissioned by the end of 2015 and conditions are ready to start early production in 2016, so that the Company will achieve another honor in the next year. In addition to implementation of Phase 19 of South Pars Gas Field Development as the most important operation of Petropars Iran, the issues of market development and the acquisition of new projects were put on the agenda. Therefore Company took every necessary action to be certified as EPC contractor by the Iran Management and Planning Organization. In this regard, Petropars Iran Company plans to: become a powerful EPC contractor in the upstream and downstream oil and gas industry expand its capabilities in various fields and to enter new markets organize its structure and processes more agile than before In this way, we need the ceaseless efforts of all personnel at all levels to create new horizons for activities of Petropars Iran, in addition to successful completion of Phase 19 project in the next year. 6.6% progress in the SPGFD 19 Onshore Facilities in 2015 More than 34 million man-hour involved in the SPGFD 19 Onshore Project in 2015 More than 113 million man-hour involved in the SPGFD 19 Onshore Project till end of % Decrease in Lost time Injury Frequency in 2015 SPGFD 19 Onshore Progress 2010, 1.4% 2015, 6.6% 2011, 23.7% 2014, 7.5% 2013, 15.8% 2012, 33.6% Human Resource by Degree PhD, 0.4% Diploma, 36% Human Resources 32% Decrease in Total Recordable Injury Rate in 2015 MSc, 16% % Decrease in Severity Rate in 2015 BSc, 48% Corporate Project 28 29

17 Projects Petropars Oilfield Services Company Project Number of Wells Before 2015 Drilling Area(mtr) In 2015 End of 2015 Latest Status (December 2015) Phase ,043 4, ,589 Completing 37 development wells, carrying out maintenance work and increasing production rates on the platforms A and B and drilling a new well in the location 12C Phase , ,639 Completing 15 wells and carrying out workover operation in the location 19A & 19B Phase 13B 8 12, ,513 Terminated M. Javadian POSCO CEO CEO Message As the drilling arm of Petropars and for expanding its activities in targeted markets, POSCO has defined its objectives clearly, challengingly, and in accordance with strategies of Petropars group. Our main objectives in POSCO are: to become an reputable company in the management of drilling operations in Persian Gulf region to utilize the latest technologies in drilling operations for increasing efficiency, reducing costs, and improving the efficiency of well production through interaction with top international companies to employ skilled human resources in upstream fields and improve their capabilities In order to become an international drilling company, POSCO has been seeking these important objectives through improving the organizational structure, upgrading systems and methods, developing the culture of responsibility, timely delivery of projects and achieving optimum performance in its projects. The more we extend the scope of our activities, the more risks are to be taken in our activities. Therefore, safety management is one of our priorities to which we have paid special attention and achieved remarkable success. Over the next year, we are going to focus on drilling projects in onshore and offshore, and have a more active presence in these areas according to more favorable international conditions in the markets of the Middle East. Timely delivery and optimal performance are two key factors in our success in the way of excellence. Due to the importance of drilling operations and the need for their optimal management in the assigned projects, Petropars Oilfield Services Company (POSCO) was registered in Kish Island in 2004 and henceforth the management of drilling projects of Petropars was assigned to it. Since 2008 and Concurrent with commencement of Phase 12, POSCO has taken Responsibility for management of Petropars drilling projects. The main goals of the establishment of POSCO were to transfer technical knowledge and technology in drilling and to transfer and localize the know-how of this field, centralized management of various drilling and support contractors, to reduce the duration of drilling operations, to allocate efficiently resources to drilling rigs and as a result to reduce the costs and risks of the projects. more then 248,000 meter of drilling till end of 2015 the record of 2,072 days without incident in rig Aban VIII the record of 953 days without incident in rig Sahar I 1,693 manifests transmittals Phase 23 Farzad A Salman wells Redrilling Project Outlook ,206 4,130 4,739 POSCO aims to be a symbol of a profitable and reliable company in drilling operations management due to its logistics bases and facilities for supporting the drilling rigs, skilled human resource, communication with internationally recognized vendors and service providers, experience of cooperation with international companies, and use of integrated management systems. POSCO s strategy in the next year is to focus on the domestic market and ongoing projects and to participate in tenders as follows: Drilling and operation of well C-05 on the main platform of Phase 12 Workover operation of Salman project (4 wells) Expansion of drilling engineering knowledge Drilling by Projects (mtr) SPGFD 23, 18,945 SPGFD 13B, 13,513 SPGFD 19, 56,639 Human Resource by Degree 4 0 Farzad A, 4, SPGFD 12, 155,589 18,945 4,130 0 Terminated The appraisal well has been completed. Rework Operation is under process Bilateral cooperation with international companies in order to gain the latest knowledge and technologies Participation in offshore and onshore drilling markets For successful implementation of the above projects, POSCO is deeply committed to excel in the field of Health, Safety and Environment (HSE). Internal changes in the organization are being done in order to evaluate and strengthen HSE processes. In this regard, in the last year we achieved the record of 2,072 days without incident in rig Aban VIII, 640 days without incident in rig DD6, 953 days without incident in rig Sahar I and 219 days without incident in rig Sahar II, which prove our activities in this field. Drilling by Year (mtr) 57,648 37,667 36,340 45,129 61,793 10, Diploma, 8% MSc, 37% BSc, 55% 30 31

18 Petropars Operation and Management Co. Projects A wide range of POMC services are provided in much of the development phases of South Pars gas field that have been completed or are in the final stages of operation: Phase Project Client Status SPGFD 1,2&3 HSE Services SPGC Completed SPGFD 6,7&8 CMMS/EDMS/RBI System implementation, data gathering & data entry SPGC Completed H. Salehi POMC CEO Petropars Aria Kish Operation and Management Company (POMC) was established in 2009 in Kish Island. Petropars Iran (PPI) and Petropars Resources Engineering (PRE) are shareholders of POMC. Despite being registered recently; POMC, by applying its local and expatriate experts who have been working long years in national oil & gas and petrochemical companies is able to offer the following services in the best possible way: All management and consultative services in oil, gas and petrochemical industries. Pre-commissioning, Commissioning, Start-up & Performance Test Services of Process Utilities Operation & Maintenance of Process Utilities Purchasing materials and spare parts related to Process Utilities equipment SPGFD 1 to 10(offshore) SPGFD 15,16 SPGFD 12 CMMS/EDMS/RBI System implementation, data gathering & data entry POGC Completed Commissioning engineering Aria Naft Shahab (ANS) Completed Pre commissioning supervision, Commissioning, Startup & Performance test Remaining Construction Pre commissioning supervision, Commissioning, Startup & Performance test (EPC3) Aria Naft Shahab (ANS) Aria Naft Shahab (ANS) Techno Energy Sepehr TNGD Consortium Completed Completed In progress Operation & Maintenance (O & M) POGC In progress CMMS/EDMS/RBI System implementation. data gathering & data entry POGC Future HSE Services Petropars Iran In progress Engineering Services & ICAPS Petropars Iran In progress SPGFD 19 Pre commissioning supervision, Commissioning, Startup & Performance test & Preservation Petropars Iran In progress Petropars Iran In progress CEO Message In 2013 & 2014, POMC Company not only fought for believing capabilities & self-sufficiency, but also induced that it is capable to do all commissioning activities in mega projects & operation of main Oil & Gas refineries even the biggest one in the country. This belief became a pattern & plan for other Iranian companies which are active in this filed. Commissioning, Start-up & Operation of utility units of Phase 19 under the safest conditions in 2015 inspires the completion of Commissioning & Operation of process units of this phase in Also for the first time in the country, the Commissioning of Tail Gas Treatment Unit (TGTU), as the last part of the Sulphur Recovery Unit (SRU) has been done by Iranian specialists of POMC in Phase 12. According to the previous achievements of POMC in Commissioning & Operation field, which lead to satisfaction of clients in recent years, POMC has plan not only for participating in operation of Phase 19 and other refineries for a long period, but also has step forward to enter in to Mega projects out of south pars zone and abroad. In the way of our organizational excellence, we do our best to keep the company s major achievement which is safety & health of our employees, besides completion of standard certifications of POMC in more specialized fields in Recruiting 212 manpower in ,571,556 man-hours with no LTI in (at least 37% increase) 23,369 people trained in HSE training courses in different projects (25% increase) The good performance of POMC in commissioning the refineries of different phases has made it be the pioneer company in South Pars Gas Field. Its turning point was to commission 5 gas sweetening units in Phase 12 refinery in less than a year which was an unrivaled record for POMC even in comparison with international companies. Outlook CMMS/EDMS/RBI System implementation, data gathering & data entry Petropars Iran Future POMC, with its considerable experience gained in various projects, plans to be an active company at the international stage in the future. It has always been crucial to POMC to diversify the clients, to have influence on domestic markets outside of South Pars Gas Field and on international markets, to diversify the offered services, to form effective and joint partnerships, to promote human resources and to develop infrastructure and systems. According to our strategy, POMC set the major plans for the next year: Operation and Maintenance services of SPGFD 12 and SPGFD 19 Performing pre-commissioning, commissioning and start-up of SPGFD 19 CMMS/EDMS/RBI System implementation, data gathering & data entry of SPGFD 12 and SPGFD 19 Pre commissioning, commissioning and start-up of persian Gulf Star oil refinery in Bandar Abass Operation and maintenance services of persian Gulf Star oil refinery in Bandar Abass Human Resources Human Resources Distribution Offices & Camp 11% SPGFD 19-Commissioning 34% 287 SPGFD 19-HSE 11% SPGFD 12-Commissioning 3% SPGFD 12-O & M 41% 32 33

19 Petropars Resources Engineering Petropars International-FZE Petropars International-FZE was established in October 2002 in Jebel Ali, United Arab Emirates with the aim of providing required material, equipment, tools and machineries for the projects in oil and gas industry. Considering its location in UAE, Petropars International-FZE was endowed with a wider and closer relation with reputable international and regional companies. Due to UAE potentials, the company was capable of providing various services needed in the oil and gas projects specifically in the field of providing machineries and equipment. M. Koliaei PRE CEO CEO Message Petropars Resources Engineering (PRE) was established in 2004 in Kish Island. Due to its potential capability, PRE is competent to provide a range of different services such as providing skilled human resources as well as technical and engineering services, logistics services and supplying materials for the projects in oil and gas industry and also for power plants. In 2015, PRE has started cooperation with the reputable Italian CSTI company in order to expand and diversify its engineering and logistic services. CEO Message PPI-FZE has demonstrated admirable efforts to provide offshore and onshore services for Petropars Group. Holding a remarkable resume in supplying materials and services since its establishment, the company has done a lot in order to make advantages. Considering all of its potential and latent abilities in international era, PPI-FZE attempts to provide required services across the borders to the Petropars group, so that it could perform more practical than ever. PPI-FZE s major goals and future plans classified in three important category which are as follows: Expand the market and get more focused on international markets via expanding geographically, create partnership and also diversify financial institutes and corresponding banks Be actively present in different projects via diversifying services and activities Organizational development through promoting the quality and quantity of skilled human resources Exercising principal policies, strengthening the belief in empowerment and efficiency, PPI-FZE hopes that it could take a step forward as a member of the country s industry towards the progress of Petropars goals. Kish Completion Technology (KCT) As a professional company in providing logistics and skilled human resources for different projects in oil and gas industry and also as a subsidiary of Petropars, PRE is honored to offer its highly qualified services to other companies in to Petropars group, partners, and shareholders. Our key point we intend to work out is providing services based on three principles of accuracy, speed and systematic approach in order to meet our clients requirements and needs. PRE offers several advantages and capabilities that are as follows: 1. The ability of sourcing, providing and managing required skilled human resources in oil and gas industry 2. The ability to identify and offer skilled international resources 3. Implementing required training courses for companies staff 4. Offering support and logistics projects including non-technical procurement, warehousing, transportation, maintenance, physical infrastructures, facilities, safety and environment In recent years, our performance evaluation has manifested the fact that our company has been successful in its path towards achieving goals and has always thought about a brighter future. No doubts, choosing a right path and picking a determined strategy would lead us to obtaining our final goals. In this path, our clients are always right and it is of grave importance having our clients satisfied all the time. We hope we could promote PRE credibility through bringing innovations and just like other Petropars group companies contribute to the value chain. Kish Completion Technology (KCT) workshop was inaugurated in The workshop is located in an area of 5,000 square meters, with 2,500 square meters of indoor space possessing industrial turning and CNC milling facilities in Kish Island in order to produce and provide requirements of drilling equipment with especial attention to down hole completion tools. In 2012 to 2013, the land was purchased and the company was equipped with industrial infrastructures such as industrial electricity and water and also required administrative and communication facilities all with POSCO s role as the investor. The company was equipped with precise production machineries such as milling CNC turning machines and necessary facilities for measurement. KCT prototype production was started in 2014, but due to international sanctions against Iran, cooperation with the current foreign partner has faced swings in the past year. Mission To provide localization and production of equipment for the wells completion, establishment of a production plant in partnership with a reputable technology s owner in Kish Island had been put on the shareholder agreement since Therefore, a deal had been signed between POSCO and an international technology s owner and KCT was established 40% Iranian and 60% foreign company. Major Achievements of KCT in 2015 Production and installation of 10 series of hydraulic actuators and installing them on the Phase 19 production well heads. Producing running parts and equipment related to the safety valve (SSSV) such as protection sleeve & PRS 7 Developing internal marketing activities Doing PR2 test to ensure of design and construction of the preliminary prototype and the positive outcome of the test Outlook Purchasing threading machinery and torque machine to assemble and cut the required threads in KCT factory Increasing the domestic production share of Mono Bore completion system to 20% by direct provision of required raw materials Developing technical and marketing knowledge in the completion projects Increase involvement in the production of hydraulic actuators parts 34 35

20 Our Capability Petropars is the biggest general contractor in Iran s oil and gas industry, so knowledge, technology and engineering management as well as the project management are the most important element of its business and its main capability to advancement and management of contractors. So, it is required to have strategic view to human resources as the most valuable asset to run the business. It has been done through promotion the effectiveness of sourcing, selecting and evaluation of human resources while improvement and development of their competencies.

21 Petroleum Engineering Projects Phase 12 of South Pars Gas Field Comprehensive study of the Phase 12 as the largest phase of characterization; all has been carried out by PED. South Pars is comprised of geological and geophysical studies and reservoir A careful modeling and precise simulation of South Pars Phase 12 reservoir was a significant achievement made by PED resulted in giving effective guidelines to Client and Drilling team with respect to the optimal position and completion of the wells, as well as rigorous estimation of the hydrocarbon in-place and production volume in different circumstances. This in return led to remarkable cost and time impacts. The PED experts regularly supervise and technically evaluate the drilling tenders and operations, well tests and completions and cooperate closely with Drilling section in evaluations and presenting new methods and procedures for the improvement of drilling operations. Moreover, PED s also kept close collaboration in development phase of the project with all related disciplines and sections. Petroleum Engineering and Oil and Gas upstream studies including geology, geophysics and petrophysics, reservoir engineering and production, as the first steps in reservoir development, positively influence the risk reduction of the projects and play an effective role in the projects success. In better words, the studies result of geoscientists and petroleum engineers throughout the life of a natural gas accumulation determine the way in which a reservoir is developed and depleted, and have the highest impact on field economics. Therefore Petroleum Engineering is one of the cores of Petropars business as an international E&P company. Lies at the heart of Petropars holding, Petroleum Engineering Department (PED) mission is to provide knowledge and know-how for company s current upstream projects and future developments. Having identified and then focused on core competencies, allowed PPL to establish a footprint while gaining a solid reputation and brand recognition in the area of upstream studies and technologies. Investing on the team s capabilities and leveraging their abilities provides the best chance for Company s continued growth and survival, and this is what differentiates the company from its competitors. The department consists of Geology, Geophysics, Petrophysics, Reservoir, Production and Drilling Engineering disciplines. PED s professional staff has worked with reputable domestic and International oil companies and are among the most experienced in Iran s oil and gas industry. This valuable team is capable of handling challenging problems of oil and gas fields and proved their competence in evaluations and studies of foreign exploration and production blocks as well as Iranians fields. Phase 19 of South Pars Gas Field Data Collection, Interpretation of 3D seismic data and well logs, reservoir characterization and building a precise static and dynamic model to predict the future performance of the field and to propose the best development plan were included among the activities done in phase 19. The quality of studies and reports made the client to express their appreciation in every milestone. Successful predictions made by mapping the different reservoir layers and related reservoir properties evidence the capabilities of PED in the field of upstream studies. Services Interpretation of 3D seismic data, supervising seismic data acquisition and processing, reservoir characterization, hydrocarbon in place estimation, well positioning, review and examining of different scenarios for field development and preparing the Master Development Plan (MDP), supervising well testing operation and production monitoring and optimizing, and technical & commercial field/block evaluation are among our different activities in PED. Farzad-A Gas Field The preliminary study and evaluation of the reservoir, presenting preliminary development plan, supervising the seismic acquisition and processing, Interpretation of 3D seismic data, reservoir characterization, hydrocarbon in place estimation, well positioning for development wells, review and examining of different scenarios for field development and preparing the master development plan (MDP) are included in the activities undertaken for development of Farzad-A field. The appreciation expressed by both Clients (NIOC Exploration Directorate and IOOC) for all has been done by PED in this rather challenging field highlights the fact that reliance on Iranian specialists guarantees success. Moreover, for the first time in Iran, the 3D Geomechanical study of Farzad-A is ongoing for the purpose of optimizing field development and well planning

22 Health, Safety and Environment Considering our Commitment to sustainable development and also inherent risk of oil and gas projects, Petropars has always aimed to promote its employees state of health and safety and also played an active role in protection of South Pars area Environment where its main projects are being executed. Considering international systems and standards and also cooperating with and benchmarking from the international oil & gas pioneers, Petropars has always been improving its projects HSE management system consequently. Currently, OGP rules and guidelines, as an internationally recognized association and as a valuable source of industry reference in HSE objectives and KPI s measures, are considered in Petropars HSE planning both in corporate and project sphere. Petropars has been nominated for being secretariat of the technical committee ISO/TC 262_ on risk management and continued its active cooperation with ISIRI and ISO so far. The company also has the honor of being the major secretariat of the technical committee ISO/TC 67 on material, equipments and offshore structures in oil and gas industries. Safety Being excellent in industrial safety in oil and gas industry as well as pursuance in fulfill operations thoroughly adhere to HSE principles along with promoting HSE culture, and also managing HSE risks, improving workplace safety and performing planned inspections Petropars has achieved brilliant results in 2015: 60% decrease in LTIF 31% decrease in SR Health Employees are one of the most valuable organization s capitals and play an essential role in successful completion of a project. Therefore employees health is of paramount importance and Petropars legally bound to provide and maintain a healthy work environment and improve it by doing activities such as: Medical examination upon employment Periodic medical examination Special health plans regarding healthy nutrition Measurement of workplace harmful agents Establishing and equipping sport facilities in office and Camps. Environment Environment protection in comply with sustainable development is our pivotal commitments and goals. To be ensured of having a safe and sound environment in and around our onshore and offshore facilities, Petropars managed and conducted following activities: Performing Environmental and Social Impacts Assessment studies Promoting the culture of preserving the environment Continual monitoring of environmental predefined indicators Performing waste management accurately Legally bound to develop greenbelts in and out of project sites and construction plants. HSE Training Training is one the prime elements on decreasing HSE-related incidents in projects in the oil and gas industry. Pre-planned HSE trainings based on Petropars training matrix will be conducted throughout a project s life in various stages, including basic (induction) courses and professional courses. In 2015, the company planned and performed 106,910 man-hours of HSE training courses. 60% decrease in the Lost Time Injury Frequency 31% decrease in the Severity Rate 3.2% increase in HSE training courses Record of work without incident led to the death up to 30 million man/ hour in SPGFD 19 Petropars Corporate Social Responsibilities (CSR) Valuable experiences and efforts of Petropars in planning and implementation of activities related to Corporate Social Responsibility (CSR) which are recorded in Petropars performance toward sustainable development and on different aspects such as the environment, workplace, market, industry, and society, led its HSEQ management to be recommended in 2014 as the representative and member of the CSR Leadership committee of oil industrysome of the implemented or being implementing subjects in Petropars are issues such as empowerment, health and safety of employees at work, honesty and transparency, green human resources, rising occupational occasions and fighting against unemployment, environmental stewardship, energy management & savings, social activities and charity. Brief examples of approaches and activities in line with Petropars social and corporate responsibilities are as follows: Spreading the culture of environmental protection Observing the limit for releasing toxic gases Trying to reduce any intentional or unintentional environmental pollution Supporting and creating green space around facilities Evaluating periodical actions related to the environment preservation Evaluating the long term effects of activities on the environment Providing basic and applied training in the management of oil and gas projects in universities and deprived educational centers (in deprived areas) Setting up Petropars educational and cultural centers in Assaluyeh and Kangan and running cultural and recreational programs in partnership with local communities Rebuilding and equipping some schools and welfare institutions in Tehran, Assaluyeh and Kangan Running specialized training courses in Industrial piping, welding and safety officer for indigenous people in Kangan Sending funding and needed equipment to hospitals and public schools or earthquake affected areas Running competitions and recreational, cultural, and sports tours mostly for local employees of contractors Lost Time Injury Frequency & Severity Rate LTIF Lost time lnjury Frequency Severity Rate SR 40 41

23 Our People In 2015, along with strategies of the company, we developed HR functional strategies for more efficient and more effective employee retention. These strategies were aligned with organization s vision and goals to boost the company s ability to handle projects more effectively. Our most important actions to fulfill the strategies are as mentioned hereafter: 1. Continuous Improvement in the Individual Performance Management The Performance Management System (PMS) in Petropars is designed and implemented in order to align individual and team goals with organizational ones and to help employees develop and improve their performance. With invaluable lessons learned, benchmarking and feedbacks on effectiveness and efficiency of the performance evaluation system in 2015, the process and the relevant behavioral criteria were reviewed in order to fit the Organizational Values and the Desirable Cultural Elements of Petropars Group. 2. Employee Retention achieving HRM goals, Petropars has understood the importance of continuous training and development of employee capabilities as one of its priorities. In this regard and based on training plans, more than 80 general and specialized training courses were held in Development of the Human Resources Information System After designing and development of dashboards in various fields of human resources management in Petropars Ltd., it was implemented in other Petropars subsidiaries i.e. Petropars Iran and POSCO. The human resources management dashboard has a critical role in supporting and optimizing relevant decision making. Because of the crucial importance of human resources, the employment of qualified employees, and in order to retention of them and increase in job security, Petropars has designed the internal employee transfer programs between its subsidiaries, and has implemented it in order to achieve the following objectives: Emphasis on skilled and committed employee retention Continuous improvement of employees in all departments and projects of Petropars group companies 3. Reengineering Human Resources Management processes During this project, all the processes and sub-processes in human resources along with supporting documents such as overall regulations, guidelines, procedures, process flow diagrams, etc. were revised and improved. 4. Continuous training and development of staff capabilities In order to ensure long-term growth and empowerment of human resources for the execution of business strategies and Human Resource by degree Human Resources PhD, 1% 1,819 1,709 1,743 1,663 MSc, 16% Diploma, 27% 1,204 BSc, 56%

24 Financial Statements In this part of the Annual Report, the audited consolidated financial statements of Petropars Limited and its subsidiaries for the year 2015 is presented

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42 Abbreviation List Abbreviation bbl CAPEX CEO CMMS ENI EPC ERP GDP GTU HOA HSE IGAT IMS IOEC IOOC ISIRI KCT LNG LPG LTIF MDP MEG MMSCFD NICO NIOC O & M OGP POGC POMC POSCO PPI PPI-FZE PPL PRE R&D SPGFD SPIFON SPITN T/D TCF TD TSA Description Barrel Capital Expenditure Chief Executive Officer Computerized Maintenance Management System Ente Nazionale Idrocarburi Engineering, Procurement, Construction Enterprise Resource Planning Gross Domestic Production Gas treatment Unit Heads Of Agreement Health, Safety, Environment Iran Gas Trunkline Integrated Management System Iranian Offshore Engineering and Construction Co. Iranian Offshore Oilfield Company Iran s Standards and Industrial Researches Institute Kish Completion Technology Liquefied Natural Gas Liquefied Petroleum Gas Lost Time Injury Free Master Development Plan Mono Ethylene Glycol Million Standard Cubic Feet per Day Naftiran Inter-trade Company National Iranian Oil Company Operation and Maintenance Oil and Gas Producers International Institute Pars Oil & Gas Company Petropars Operation & Management Co. Petropars Oilfields Services Co. Petropars Iran Petropars International FZE Petropars Limited Petropars Resources Engineering Research and Development South Pars Gas Field Development South Pars Integrated Fiber Optic Network South Pars Integrated TETRA Network Tons Per Day Trillion Cubic Feet Total Depth Technical Service Agreement 80

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