MISC Integrated Annual Report 2020

KEY FOCUS AREA REFERENCE TO OTHER SECTIONS KEY ACHIEVEMENTS STRATEGIC PRIORITIES MATERIAL MATTERS UNSDG PILLAR/KEY FOCUS AREA 1: TO DRIVE SUSTAINABLE VALUE FOR OUR SHAREHOLDERS DELIVERING OUR STRATEGY Petroleum & Product Shipping i. Secure more time charters for conventional fleet • Secured EBIT has increased more than 100% from 2015 on the back of increased secured contracts through the following efforts: » » Secured several new time charter contracts for mid-sized tanker and VLCC segments » » Renewed several long-term time charter contracts in our mid-sized tanker and VLCC segments » » Scaled back chemical fleet through the sale of all seven A-class and redelivery of two L-class vessels which were mainly on spot charters • Further grew secured income portfolio through long-term charters with Total for two newbuild LNG dual-fuel VLCCs (2020) • Seized opportunities to grow DPST market share in both the North Sea and Latin America and secured multiple contracts from 2017 to 2020 to provide DPST newbuilds to several oil majors such as Equinor, Shell Brazil and Petrobras » » Latest contract won in 2020 was for three Suezmax second-generation DPSTs by Petrobras » » In 2015, there were four DPSTs on long-term charter. By the end of 2020, this had grown to ten units. With seven DPSTs under construction as at 31 December 2020, this will bring the total DPST fleet to 17 units by 2022 • Established new niche market for the new breed of green and environmentally-friendly vessels » » Took delivery of two Aframax newbuildings equipped with LNG dual-fuel systems in 2019 » » The Total contract won in 2020 as noted above are for two of our first LNG dual- fuel VLCCs » » Included in the new DPST contracts won as noted above are for two of the world’s first LNG dual-fuel second-generation DPSTs for Equinor and four eco-friendly DPSTs for Petrobras ii. Expand niche market assets such as shuttle tankers with time charters Offshore Business i. Explore acquisition opportunities selectively arising from asset divestments by oil and gas players globally • Explored and evaluated opportunities but none materialised. With the recovery of the oil price, focus was given to organic growth but continue to look for acquisition opportunities that meet MISC’s investment criteria Offshore Business Business Review on pages 154 to 159 Petroleum & Product Shipping Business Review on pages 144 to 153 ii. Pursue organic growth and expand international footprint, especially to South America/West Africa, where the FPSO opportunities are • Pursued floater opportunities in the Asia Pacific and Middle East region from 2016-2020, and expanded footprint as a leading player in providing offshore solutions in the ASEAN region through several major projects secured as follows: » » FSO Benchamas 2 , which achieved first oil in 2018, is leased by Chevron Offshore Thailand Limited for a firm period of ten years » » FSO Mekar Bergading is leased to Hess Exploration and Production Malaysia B.V., a subsidiary of Hess Corporation for a firm period of 16 years » » FSO Golden Star , which received its first condensate/oil in December 2020 at Sao Vang and Dai Nguyet (SVDN) Project in Vietnam in December 2020, is leased by Idemitsu Kosan for a firm period of seven years • Undertook a major multi-year capability building exercise to ready ourselves for the Atlantic Basin FPSO market and actively participated in tenders in the region » » Secured first deepwater FPSO project in Latin America from Petrobras for Mero 3 FPSO project (2020) • Successfully secured extension of charter period for some of MISC’s existing assets, with the latest contract extension secured in 2020 for FPSO Espirito Santo // Key Messages / Highlights / Strategic Review / Sustainability / Financial Review ////// MISC Berhad / Integrated Annual Report 2020 4 92 MISC Berhad / Integrated Annual Report 2020 4 93 ////// Financial Review / Sustainability / Strategic Review / Highlights / Key Messages // Section Section