ANTICIPATED AND KNOWN RISKS (CONT’D) Operating in a highly regulated industry with stringent compliance requirements (Cont’d) • Implement an emergency response plan to ensure timely and effective management of any disaster and/ or emergency incident; • Provide crew training programmes focused on environmental management and pollution prevention; • Ensure proper handling, storage, disposal and recording of scheduled waste by dedicated and competent Quality, Health, Safety and Environmental (“QHSE”) personnel; and • Install nitrogen oxides-certified diesel engines onboard vessels to achieve international emission standards. Compliance with these conventions, protocols and regulations may require significant expenditure, thereby increasing operational costs and potentially impacting financial performance. Nevertheless, failure to comply could result in financial penalties, administrative or legal proceedings, or suspension of business activities. We remain committed to upholding the highest standards of regulatory compliance across our operations, supported by the measures outlined above. FUTURE OUTLOOK AND PROSPECTS According to PETRONAS’ Activity Outlook 2026-2028 Report, Malaysia’s upstream industry continues to demonstrate resilience, supported by a strategic target to sustain oil and gas production at close to 2 million barrels of oil equivalent per day (MMboe/d). PETRONAS will continue to invest in exploration, deepwater development, enhanced oil recovery, and new Production Sharing Contracts, awarded under the Malaysia Bid Round 2024. These upcoming activities are set to unlock additional reserves, strengthening the nation’s energy security while generating new opportunities for technical service providers and innovative solutions. For upstream business, in the short-term 2026-2028, PETRONAS will focus on revitalising Malaysia’s exploration and production landscape to strengthen domestic energy security. This includes intensifying exploration in new and mature areas, accelerating appraisal of recent discoveries, and ensuring timely maturation of resources to sustain base production. Key projects such as Belud, Kurma Manis and Sepat will play a pivotal role in meeting production targets. Concurrently, the upstream business is advancing decarbonisation efforts in line with the Net Zero Carbon Emissions 2050 Pathway by progressing carbon capture and storage (“CCS”) hubs as a strategic solution and new revenue stream, positioning Malaysia as a regional CCS hub. Looking ahead to the medium- and long-term, upstream business is committed to safeguarding production supply while embedding decarbonisation across the value chain. Macroeconomic and geopolitical risks We remain mindful of macroeconomic and geopolitical developments in the markets which we serve, as these might pose risks to our business. Among others, trade policies and sanctions imposed by global economic powerhouses may result in evolving global trade policies and tariff measures, which may alter global trade flows and subsequently indirectly affect demand for offshore support services. Wars and armed conflicts in the Middle East may directly impact or disrupt our operations for our vessels which are serving customers there. In addition, Organization of the Petroleum Exporting Countries (“OPEC”) production decisions have a direct impact on global oil prices, influencing upstream activity levels and charter demand. To mitigate these risks, we closely monitor these market developments, maintain flexibility in vessel deployment and diversify our revenue base across multiple geographies to reduce reliance on any single market. Meanwhile, we obtain insurance coverage for our vessels, including war risks, to cover for hull and machinery, as well as protection and indemnity. 31 Annual Report 2025
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