Board of Directors APICORP ACTIVITIES IN Project and Trade Finance. Project Finance

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1 APICORP ACTIVITIES IN 2006 Project and Trade Finance 2006 has set up another historical record for the project and trade financing activities at APICORP in terms of business volume as well as arranging mandates and bank roles awarded to APICORP. In addition, we have increased our involvement in financings based on Islamic principles in Project Finance as well as in Trade Finance transactions. We have had an exceptional year in terms of transactions progressed, allowing us to keep a steady asset growth, from US$ 1.1 billion at the end of 2005 to US$ 1.3 billion by year end 2006, despite substantial prepayments. Indeed, investments in the energy sector have been massively supported by high oil prices and steady foreign demand for hydrocarbon products. In such a dynamic but also highly competitive environment, the Corporation has continued to play an instrumental role in the financing of most of the oil, gas and petrochemical projects launched in the Arab World, focusing on projects that are entrepreneurial and viable. As a result, the Corporation has closed in 2006 more than 20 transactions totaling US$ 13 billion, with underwriting and final take commitments amounting in aggregate to US$ 1.4 billion and US$ 970 million respectively. This compares to the 19 transactions closed in 2005, totaling around US$ 10 billion, with final take commitments amounting in aggregate to US$ 800 million. Our net income for 2006 has reached US$18.8 million, slightly above the 2005 net income (US$ 17.2 million). Project Finance Project Finance has remained the most active and profitable segment of the Corporation s lending activities in The number of mandates awarded to APICORP for Project Finance transactions has reached this year the number of 8 arranging mandates, including in particular 2 bookrunner roles, 1 technical bank role and 1 agency role in some landmarks transactions. As further evidenced in the following table, which provides a sample of the deals concluded during the year, the Corporation continued in 2006 to play a leading role in the arrangement of most of these financings. 15

2 Client Main Sponsors Amount, Date of Signing & Type Purpose APICORP Role SHUAIBAH Saudi Malaysia Water & Electric Co. Ltd. PIF SEC ACWA Power US$ 947 million January 2006 Power Generation Senior Arranger RABIGH Saudi Aramco Sumitomo Chemical Co. Ltd. US$ 2.34 billion March 2006 Integrated Refinery Arranger, Underwriter, Bookrunner NAKILAT Qatar Petroleum Qatar Navigation Company Qatar Shipping Company US$ 500 million March 2006 Shipping Arranger AMPTC OAPEC US$ 326 million March 2006 Shipping Arranger, Underwriter Bookrunner EQUATE Union Carbide Corporation Petrochemical Industries Company (PIC) US$2.5 billion May 2006 Expansion of petrochemical facilities Arranger, Underwriter SHARQ SABIC SPDC US$780 million May 2006 Expansion of petrochemical facilities Arranger, Underwriter YANSAB SABIC Saudi Private Investors Public Shareholders US$1,197 million June 2006 Petrochemical facilities Arranger, Onshore Security Agent AOL Oman Oil Company (OOC) Oman Refinery Company (ORC) LG International Corporation (LGI) US$ 625 million August 2006 Petrochemical facilities Arranger, Underwriter, Technical Bank GNMTC General National Maritime Transport Company (GNMTC) US$ 172 million August 2006 Shipping Co-Arranger SABIC EURO SABIC Euro1,250 million November 2006 Expansion of petrochemical Lead Arranger 16

3 Trade Finance In 2006, very good progress of the plan launched the previous year to revitalize and expand the Trade Finance activity of the Corporation has been made and has translated into a further increase of the volume of business and some senior roles in that field, as shown in the following table, which provides a sample of the deals concluded during the year. Client Main Sponsors Amount, Date of Signing & Type Purpose APICORP Role EGPC EGPC / IDB US$ 50 million April 2006 Oil trading Co-Arranger with IDB VITOL Vitol Holding B.V. US$ 300 million May 2006 General corporate purposes Arranger, Underwriter, Documentation Bank, Bookrunner TRAFIGURA Trafigura US$ 300 million November 2006 General Corporate purposes Lead Arranger SAMIR Corral Petroleum Holding US$ 100 million April 2006 Oil purchases. Participant Advisory The Corporation has remained committed to provide specialized advisory services in the field of structured finance for the hydrocarbon industry within the region. However, due to the high level of activity on the lending side, the Corporation has had to adopt a highly selective approach in order to preserve the quality of its services. The two advisory mandates won in 2005 for NAMA as well as for Ibn Zahr were still in progress at the end of Research Research Unit has continued to make significant progress in improving the frameworks and methodologies for scanning the Corporation environment, framing its business strategy and assessing industry and country risks. In addition to their in-house applications, the research findings have provided original materials for presentations to regional and international conferences and workshops, which greatly enhanced the Corporation s profile. Furthermore, the unit has continued preparing and dispatching externally its monthly Economic Commentary, which is becoming the Corporation s brand in the field. 17

4 APICORP s mission is to contribute to the development and the transformation of the Arab hydrocarbon and energy industries through equity and debt financing, advisory and research. 18

5 APICORP ACTIVITIES IN 2006 Direct Equity Investments As at end-2006, APICORP has equity investments in 14 companies situated in seven Arab countries. That portfolio of investments was valued at US$ million, based on the net asset values at the end of The operations of these companies cover a wide array of activities: drilling and related services, seismic services, extraction of LPG, production of methanol, polyethylene, ethylene glycol, polypropylene, methyl tertiary butyl ether, aromatics, purified terephathalic acid, polyester fibres, linear alkyl benzene, carbon black, urea, NPK fertilizer, storage of petroleum products, and production acrylic fiber. A brief summary on each of our direct equity investment is provided below: (1) - Bahrain National Gas Company (BANAGAS) APICORP share: 12.5% BANAGAS was established in 1978 to extract and market LPG and light naphtha from associated gas. Total production in 2006 was 81,650 tons of propane, 89,374 tons of Butane and 186,192 tons of light naphtha. At year-end 2006, BANAGAS reported net income of BD 12 million (versus BD 11.4 million in 2005). (2) - Arab Drilling & Workover Company (ADWOC) APICORP share: 20% ADWOC was established in 1978 to provide drilling and related operation services in Libya and nearby Arab markets. In 2006, ADWOC has achieved an average utilization rate of 97% for its 15 rigs, an increase of 4% over In 2006, ADWOC posted net income of LD 16.8 million (versus LD 7.2 million in 2005). (3) - Arab Company For Detergent Chemicals (ARADET) APICORP share: 32% ARADET was established in 1981 to produce 50,000 tons/yr of linear alkyl benzene (LAB). The LAB complex at Baiji, in operation since 1987, also includes an aromatics line with a capacity of 30,000 tons/yr of benzene and Toluene. In 2006, the Company produced approximately 18,000 tons of LAB, all of which was sold on the regional markets. At end 2006, ARADET generated net loss of US $ 5 million (versus a net loss of US $ 2.6 million in 2005). 4) - Tankage Méditerranée (TANKMED) APICORP share: 20% TANKMED was established in 1984 to provide storage services for petroleum products at La Skhira terminal in Tunisia. TANKMED s total storage capacity stands at 300,000 cubic meters. As at the end of 2006, TANKMED maintained a capacity utilization rate of 99%, compared with a utilization rate of 95% for year 2005 achieving an income of TD 9.2 million and a net profit of TD 3.6 million versus a net profit of TD 2.5 million for year of

6 (5) - Arab Geophysical Exploration Services Company (AGESCO) APICORP share: 10% AGESCO was established in 1985 to provide advanced seismic services in Libya and the Arab world. The company maintains three seismic crews and was able to achieve operation rate of 92% in AGESCO recorded an unpredicted net profit of LD 11.2 million at the end of 2006 (versus LD 0.45 million in 2005). (6) - The Saudi European Petrochemical Company (Ibn Zahr) APICORP share: 10% Ibn Zahr, established in 1985 in Jubail, can produce 1.3 million tons/yr of methyl tertiary butyl ether (MTBE), a gasoline octane booster and 640,000 tons/yr polypropylene. In 2006, MTBE production was about 1.67 million tons and polypropylene output totaled about 561,000 tons. At end 2006, Ibn Zahr reported a net income of SR 1,785 million versus a net income of SR 2,156 million in (7) - Alexandria Carbon Black Company (ACBC) APICORP share: 12% ACBC was established in 1993 to produce and market carbon black, an oil based material. ACBC currently has a design capacity of about 150,000 tons/yr. The company, at the end of 2006, produced over 190 thousand tons of Carbon Black and posted a net income of about LE million versus LE 171 million in (8) - The Arabian Industrial Fibres Company (Ibn Rushd) APICORP share: 8.26% Ibn Rushd was established in 1993 in Yanbu on the west of Saudi Arabia. Ibn Rushd is an integrated petrochemical complex composed of three plants for the production of aromatics (730,000 tons/yr), purified terephthalic acid (PTA, 350,000 tons/yr) and polyester (146,000 tons/yr). In 2006, Ibn Rushd produced a total of 921,000 tons of products; tons polyester; tons aromatics; and tons of PTA. Ibn Rushd recorded a net loss of SR 522 million in 2006 versus a net loss of SR 384 million in (9) - Oriental Petrochemicals Company (OPC) APICORP share: 14% OPC was established in 1996 with an initial capacity of 120,000 tons/yr polypropylene that later can be expanded to 162,000 tons/yr. The company announced the successful commissioning of its plant at the beginning of 2002, and since then it has become the main producer and supplier of polypropylene in the local market. During 2006, OPC produced over 142,000 tons and marketed 143,000 tons of polypropylene, and was able to generate a net profit of LE 24.7 million (versus 31.7 million in 2005). 20

7 10)- Alexandria Acrylic Fibres Company (AFCO) APICORP share: 10% AFCO was established late 2003 in, and its plant with a nameplate capacity of 18,000 t/yr was completed in September The plant was commissioned in December 2005, to produce poly acrylic fibers, which is used mainly in manufacturing carpets and blankets. In October 2006, production capacity reached 104% and it is forecasted to achieve a net operating income of LE 2.5 million and LE 17.8 million in 2006 and 2007 respectively. The issued capital in cash was increased with an amount of LE million to become LE million in 2006, with a main purpose to double plant capacity to 36,000 t/yr. 11)- Yanbu National Petrochemical Company (Yansab) APICORP share: 1.57% Yansab was established in early 2005 by SABIC with a paid up capital of SR 5,625 million (US$ 1.5 billion), of which SABIC owns 55%, SABIC partners in Ibn Rushd and Taif own 10%, and the remainder percentage was offered to the Saudi public. Currently, the company has become listed on the Saudi Stock Market (Tadawul). Yansab petrochemical complex, which costs US $ 5.6 billion, is being built in Yanbu Industrial area and expected to be completed in late The complex will produce 900,000 tons per year of polyethylenes 700,000 tons per year of ethylene glycols, 400,000 tons per year of poly propylene, in addition to some other by products. 12) ian Methanol Company (EMethanex) APICORP share: 7% Metanex Corporation, ian Petrochemicals Holding Company (ECHEM), ian Natural Gas Holding Company (EGAS), ian Natural Gas Company (GASCO) and APICORP established EMethanex in 2005 with an initial paid up capital of US $ 30 million to build a US $ 950 million cost methanol production facility in Damietta, with a nameplate capacity of 3,600 ton per day. The start of commercial operation is planned in April 2010 and the target markets are Europe, and Asia. EBGDCO 13) The ian Bahraini Gas Derivative Company (EBGDCO) APICORP share: 20% The ian Natural Gas Company, Danagaz of Bahrain and APICORP established EBGDCO in 2005 in with a share capital of US $ 23 million. The objective of the company will be to construct a US $ 75 million facility for propane and butane recovery from associated natural gas. The plant will be located at Ras Shakair on the Suez Gulf. 21

8 APICORP ACTIVITIES IN 2006 APICORP EQUITY PARTICIPATIONS AS AT 31 DECEMBER 2006 Company Name Paid-up Capital Participation Other Major Shareholders Activities Bahrain National Gas Company (BANAGAS) Bahrain BD 8 million 12.5% Bahrain National Oil Co. (BANOCO), Bahrain Caltex Trading & Transport Co., Bahrain Extraction and marketing of LPG and condensates from associated gas. Arab Drilling and Workover Company (ADWOC) Libyan Arab Jamahiriya LD 12 million 20% Arab Petroleum Services Co. (APSC), Libya Santa Fe, USA Drilling and related operations in the Arab world. Arab Company for Detergent Chemicals (ARADET) Iraq ID 36 million 32% Government of the Republic of Iraq Government of the Kingdom of Saudi Arabia Government of the State of Kuwait Arab Mining Company, Jordan The Arab Investment Co., Riyadh of linear alkyl benzene and sodium tripolyphosphate (STPP). STPP project is being implemented. Tankage Mediterranee (TANKMED) Tunisia TD 12 million 20% I Entreprise Tunisienne d Activities Petrolieres (ETAP), Tunisia Societe Tuniso Seoudienne d Investissement et de Developpement (STUSID) Banque Tunisio-Koweitienne de Developpement (BTKD) Storing, trans-shipping and handling petroleum and petrochemical products at La Skhirra terminal. Arab Geophysical Exploration Services Company (AGESCO) Libyan Arab Jamahiriya LD 4 million 10% Arab Petroleum Services Co. (APSC), Libya Halliburton, USA National Oil Co., Libya Providing advanced seismic services in the Arab world. Saudi European Petrochemical Company (IBN ZAHR) Saudi Arabia SR 1,025 million 10% Saudi Basic Industries Corp. (SABIC), Ecofuel, Italy Production of gasoline octane booster MTBE, and Polypropylene (PP). Jordan Phosphate Mining Company (JPMC) Jordan JD 75 million 0.76% Government of the Kingdom of Jordan Government of the State of Kuwait Investment Agency - Brunei Islamic Development Bank, Saudi Arabia Others Mining phosphate rock, production and marketing of chemical fertilizer compounds. 22

9 APICORP ACTIVITIES IN 2006 APICORP EQUITY PARTICIPATIONS AS AT 31 DECEMBER 2006 Company Name Paid-up Capital Participation Other Major Shareholders Activities Alexandria Carbon Black Company (ACBC) LE 150 million 12% Indian Industrial Investment Group (BIRLA), India Transport and Engineering Company (El Nesser Tire Co.), Pirelli Tire Company, Italy Al-Nasr Coke Company, Saudi ian Industrial Investment Company, International Finance Corporation (IFC), USA Continental Carbon Company, USA of carbon black. The Arabian Industrial Fibers Company (IBN RUSHD) Saudi Arabia SR 3,550 million 8.3% Saudi Basic Industries Corp. (SABIC), Saudi Arabia Gulf Investment Corporation, GIC, Kuwait Saudi Pharmaceuticals Co., Saudi Arabia SAFCO, Saudi Arabia, Others Production of Aromatics, PTA and Polyester Fibers. Oriental Petrochemical Company (OPC) LE 120 million 14% Oriental Weavers Group, Arab International Investments Co., Libya National Bank of (Al-Ahli Bank), ian Petrochemicals Co., Misr Insurance Co., Orient Insurance Co. (Al-Sharq), of Polypropylene. Alexandria Acrylic Fibers Company (AFCO) LE million 10% Aditya Birla Group, India Sidikrier Petrochemical Co., Alexandria Carbon Black Co., Saudi ian Industrial Investment Co., of Acrylic Fibers Yanbu National Petrochemical Company (Yansab)* Saudi Arabia SR 5,625 million 1.57% SABIC SABIC Partners in Ibn Rushd and Taif Saudi Public of PE, EG, PP and other by products ian Methanol Company (EMethanex)* US $ 30 million 7% ian Petrochemicals Holding Company (Echem), ian Natural Gas Holding Company (Egas), ian Natural Gas Company (GASCO), MethanexCorporation, Canada Production of and Marketing of Methanol The ian Bahraini Gas Derivative Company (EBGDCO)** Bahrain US $ 23 million 20% The ian Natural Gas Holding Company ( Egas) Danagaz of Bahrain Fractionation of natural gas liquids (NGL) to recover propane and butane. * Under construction. ** Under formation 23