MISC Annual Report 2018

MARKET REVIEW Over the course of 2018, the offshore industry experienced improvement, albeit slowly. There were early signs of recovery in offshore activities as oil prices started to stabilise. Several major field development and offshore maintenance projects were sanctioned in early 2018. However, sustained market recovery was not certain as oil prices remained unsteady. The marine industry encountered further headwinds as some ship owners inclined to defer their dry docking activities, in reaction to uncertainty over the implementation of the International Maritime Organisation (IMO) 2020 Sulphur Cap on 1 January 2020. Meanwhile, the tanker market was sluggish on the back of a slower pace of expansion in global seaborne trade, and weak demand exerted significant downwards pressure on tankers’ dry docking activities. In contrast, the LNG market experienced an improvement in trade growth, mainly driven by an increase in LNG demand from Asia and the rerouting of trade flows attributed to trade tensions. KEY DEVELOPMENTS IN 2018 In 2018, our Heavy Engineering Business segment delivered the fabrication, procurement, construction, testing and pre-commissioning of five units of Dangote Catenary Anchor Leg Mooring (CALM) buoys to SOFEC Incorporated for deployment to the Dangote Oil Refining Company, offshore Nigeria. We also delivered the engineering, procurement, construction, installation and commissioning (EPCIC) works of Sepat-A wellhead platform for PETRONAS Carigali Sdn Bhd to the Sepat field, offshore Terengganu, Malaysia. Both contracts were delivered on schedule and with zero Loss Time Injury. For onshore projects, we successfully completed two contracts for Refinery and Petrochemical Integrated Development (RAPID) in Pengerang, Johor, Malaysia, for Toyo Engineering & Construction Sdn Bhd – for the prefabrication of pipes and fittings and pipe supports for the Centralised Piping Fabrication works, and piping and steel structure installation works for the Refinery of Gas area. We also completed three work orders for CARIGALI-PTTEPI Operating Company Sdn Bhd for the provision of minor fabrication services for the modification of facilities located in the Malaysia-Thailand Joint Development Area. These work orders refer to part of a three-year ‘call-out’ contract which runs until the second quarter of 2020. MANAGEMENT DISCUSSION & ANALYSIS MARINE & HEAVY ENGINEERING Our well-equipped yard includes dry docks, land berths, quays and a shiplift. These facilities enable us to perform repair works, maintenance, marine conversion and refurbishment of a wide range of vessels HEAVY ENGINEERING MARINE BUSINESS We have the largest fabrication area (by Tonnage capacity) in Malaysia to provide Engineering, Procurement, Construction, Installation and Commissioning of complex structures for offshore and onshore facilities HIGHLIGHTS OF THE YEAR OUR BUSINESS OUR LEADERSHIP OUR PERFORMANCE OUR COMMITMENT TO SUSTAINABILITY OUR GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 50 TH ANNUAL GENERAL MEETING 113 MISC BERHAD ANNUAL REPORT 2018 112