MISC BERHAD INTEGRATED ANNUAL REPORT 2025 08 11 09 05 12 SEC 06 STRATEGIC REVIEW 10 07 13 01 02 03 04 58 www.miscgroup.com 59 www.miscgroup.com #deliveringProgress SHORT TO MEDIUM TERM What Happened in 2025 The global LNG supply expanded during the year following the ramp-up of new liquefaction capacity, particularly in the United States. Over 90 bcm per year of additional capacity was sanctioned, representing the second-highest level of liquefaction capacity reaching final investment decision in a single year. Despite the robust LNG supply expansion, the LNG carrier market remained soft for most of the year, primarily due to vessel oversupply following continued strong newbuild deliveries. While spot rates for modern tonnage saw some recovery in the final quarter, supported by robust winter demand, older steam turbine vessels continued to face pressure. A record 15 steam turbine LNGCs were scrapped globally throughout the year, reflecting the market’s growing preference for modern, fuel-efficient vessels. OUR OPERATING ENVIRONMENT OUR OPERATING ENVIRONMENT LNG SECTOR E3 Global LNG Supply and Demand forecast 2021 2022 2023 2024 2025 2026 2027 Mt of LNG 130 120 110 100 90 80 Supply Demand Source: Woodmac Impact: While underlying LNG supply-demand fundamentals remained positive, the LNG shipping market remained subdued largely due to persistent vessel oversupply, with weak charter rates weighing on earnings. However, the imbalance is expected to be temporary, supported by upcoming liquefaction capacity. Response: The GAS Business segment remained focused on advancing fleet rejuvenation with modern and efficient vessels. During the year, the segment secured contracts for two Very Large Ethane Carriers (VLECs) and delivered seven consortium owned LNGCs to QatarEnergy. In parallel, the segment redeployed an existing asset through the conversion of Puteri Delima Satu into a Floating Storage Unit (FSU) at the Pengerang Regasification Terminal, as well as identified disposal opportunities for ageing vessels. Looking ahead, the continued expansion of global liquefaction capacity is expected to support rates for modern, fuel efficient LNGCs from 2026 onwards. However, in the near term, the escalation of conflict in the Middle East has introduced uncertainty to global energy markets. The closure of the Strait of Hormuz has disrupted approximately 19% of global LNG flows, prompting Asian buyers to seek alternative supply sources. This is expected to lengthen voyage distances, supporting tonne mile demand and rates for modern LNGCs. While the situation remains uncertain, the GAS Business segment's secured income strategy, anchored on long term charters with strong counterparties, provides resilience and helps insulate earnings from market volatility. How We Were Impacted and How We Responded What Is the Outlook? Key Capitals: Material Matters: Risks: Strategic Pillars: M1 M2 M3 M4 M5 M6 M7 M11 R1 R2 R3 R4 R5 R6 R7 R8 R9 R10 R11 SP1 SP3 LNGC Rates Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 2024 2025 $/day 100,000 80,000 60,000 40,000 20,000 0 MEGI/XDF (Spot) MEGI/XDF (3Y TC) TFDE (Spot) TFDE (3Y TC) Steam (Spot) Steam (1Y TC) Source: Clarksons SHORT TO MEDIUM TERM What Happened in 2025 In 2025, global oil markets remained supported by resilient oil demand and evolving supply dynamics. Oil demand continued to grow, driven by sustained consumption in Asia, while oil supply expanded steadily as OPEC+ unwound its production cuts alongside rising output from non-OPEC producers. At the same time, expanded sanctions continued to reshape global oil trade flows. Against this backdrop, the crude tanker market remained firm throughout the year as robust tonne-mile demand from geopolitical trade realignments and tighter vessel availability following expanded sanctions, supported the crude tanker rates. CRUDE OIL SECTOR E4 Crude Tanker Rates Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 2024 2025 $/day 120,000 100,000 80,000 60,000 40,000 20,000 0 VLCC (TCE) VLCC (3Y TC) Suezmax (TCE) Suezmax (3Y TC) Aframax (TCE) Aframax (3Y TC) Source: Clarksons World Liquid Fuels Supply and Demand 110 105 100 95 90 85 mbpd forecast 2021 2022 2023 2024 2025 2026 2027 Supply Demand Source: Energy Information Administration (EIA) Impact: Robust growth in oil supply, coupled with muted oil prices, supported stockpiling activities and increased demand for shipping and floating storage. These developments provided a favourable operating backdrop for the crude tanker market throughout the year. Response: The Petroleum & Products segment maintained resilient earnings through its secured income strategy, focusing on niche, customer driven markets such as Dynamic Positioning Shuttle Tankers (DPSTs), dual-fuel petroleum tankers and ship-to-ship (STS) operations in the US Gulf. To sustain this resilience, it advanced its fleet rejuvenation programme by securing long term charters for two LNG dual-fuel Suezmax vessels during the year. Looking ahead, global oil demand is expected to remain steady, supporting underlying tanker demand over the medium term. In the near term, the closure of the Strait of Hormuz has disrupted a key oil trade route, constraining supply from the Middle East and prompting buyers to source alternative supply. This is expected to increase tonne mile demand and support tanker rates. However, prolonged disruptions and higher oil prices may weigh on demand and limit the upside. Against this backdrop, the segment's secured income strategy provides earnings stability despite market uncertainty. How We Were Impacted and How We Responded What Is the Outlook? Key Capitals: Material Matters: Risks: Strategic Pillars: SP1 SP3 M1 M2 M3 M4 M5 M6 M7 M11 R1 R2 R3 R4 R5 R6 R7 R8 R9 R10 R11
RkJQdWJsaXNoZXIy NDgzMzc=