MISC Annual Report 2017

MISC BERHAD | Annual Report 2017 98 KEY DEVELOPMENTS The year saw the FSO Benchamas 2 Project with Chevron Offshore Thailand Ltd. in the Gulf of Thailand making good progress. This project marks MISC’s maiden foray into Thailand’s offshore Oil & Gas market and opens up opportunities for us to do business with Chevron in other areas where it operates. To date, the project has achieved 1 million manhours without Lost Time Injury (LTI) attesting to our high operational and safety standards. The FSO Puteri Dulang obtained a three-year extension until 2021 from PETRONAS Carigali Sdn. Bhd. (PCSB) while the FPSO Cendor obtained Petrofac Malaysia Limited (PML) approval for changes in the contract period from 10 firm years with four one- year extension options to 12 firm years with 2 one-year extension options effective 1 January 2017. An agreement was signed in December 2017 for the novation of the FPSO time charter contract for the Ruby II from PETRONAS Carigali Vietnam Limited (PCVL) to PetroVietnam (PVN). Under this agreement, PVN will assume all rights, liabilities and obligations of the charter with Vietnam Offshore Floating Terminal Limited (VOFT), a joint venture between MISC and Petroleum Technical Services Corporation. In 2017, Gumusut-Kakap Semi-Floating Production System (L) Ltd. (GKL) was awarded a USD255 million settlement, after obtaining an adjudication decision in its favour in its case against Sabah Shell Petroleum Co. Ltd. OUTLOOK With oil prices expected to remain in the USD60 to USD70 range in 2018, the Offshore Business segment expects more FIDs in the coming year with as many as 12 FPSO project awards expected over the next 12 months. Based on Energy Maritime Associates’ (EMA) Floating Production Systems Quarterly Report for Q4 2017, there are 142 potential projects (excluding requirements for Tension Leg Platforms (TLPs), spar production platforms (SPARs) and FSRUs) in the appraisal, planning, bidding or final design stages that require either a floating production facility or storage facility. Moreover, potential demand for an additional 29 FLNG platforms, brings the total to 171 potential new projects over the next five years. The limited FIDs by Oil Majors and national oil companies is expected to lead to stiff competition particularly in the domestic market. Moving forward, the segment will continue to focus on strategic acquisitions of distressed assets and building strategic partnerships, while at the same time focusing on expansion within the domestic and international arenas. In addition to our expansion in Brazil and India, the Offshore Business segment remains open to opportunities in West Africa and the Americas. MANAGEMENT DISCUSSION & ANALYSIS OFFSHORE BUSINESS