Program of Changing KPC’s Management Model

As you know, KPC has recently taken required steps to implement the program for changing its current management model and adopting the Strategic Management Model. This will enhance the current relationship between KPC and its subsidiaries to increase their commerciality by granting them more authorities and autonomy in managing their operations, in addition to focusing KPC efforts towards strategic issues related to the oil sector and setting high-level guidelines to subsidiaries while monitoring their performance without interference with their executive authorities.

To implement such program, it has been segmented into different projects, each of which was assigned to a distinct implementation team.

Below is the progress in implementing the different projects up to October and the key steps to be carried out in November.

	Progress up to October	Next Steps to be carried out in November
Capital Administration	•  Submitted the capital budget 2007/2008 based on the new capital administration process to KPC Board and obtained their approval. •  A new capital projects administration department was created in KPC-HO for managing the new process.
HR Strategic Planning (20Y) and Five Year Plan Processes	•  Continue designing the HR strategic planning and Five year Plan processes and related guidelines	•  Finalize designing the HR strategic planning and Five year Plan processes and related guidelines •  Obtain the necessary approvals on the processes.
Manpower planning	•  Developed action plan for implementing the recommendations on improving the manpower planning process.	•  Obtain approval on the action plan and commence implementing the action plan.
Strategic Planning (20Y) and Five Year Plan Process	•  Developed draft strategic planning process. •  Continue designing Five Year Plan process.	•  Finalize designing the strategic planning process and obtain necessary approvals. •  Finalize designing the Five year Plan process.
HR Polices/ Procedures	•  Finalized reviewing HR policies/ procedures that have minor disagreement between KPC and subsidiaries and developed recommendations. •  Finalized reviewing HR policies/ procedures under disagreement between KPC and subsidiaries and require further investigation and developed recommendations.	•  Develop a report on the recommendations and discuss with HR sub-steering and HR steering committees.
Performance Management System	•  Continue implementation of the new performance management system for Q1 06/07	•  Commence implementation of the new performance management system for Q2 06/07
Reorganization Of International Marketing (RIM)	•  The final International Marketing reorganization study was submitted and presented to KPC Board.	•  Discuss the final report with KPC Board of Directors.
Transitional KPC-Head Office Organization Structure	•  Implemented the new structure for KPC - Corporate Planning	•  Obtain steering committee approval on the new transitional organization structure for Administration and Training groups. •  Develop Transition plan and commence implementation.
Change Management	•  Executed the requirements for November communication plan. •  Continue analyzing the results of the second pulse check survey conducted for Corporate Planning and HR groups in KPC and Subsidiaries to test their awareness on the overall program.	•  Discuss the results of the Org DNA survey with the management and prepare action plan to implement the recommendations of the survey. •  Execute the requirements for December communication plan. •  Finalize analysis of the second pulse check survey and communicate it.