I am heartened to share that the AET team has maintained our progress as a sustainable global brand, demonstrating business and operational resilience. As the pandemic persists, we have noted its impacts on the emotional health of our people both at sea and ashore and have continued to provide a supporting hand to our workforce through comprehensive employee wellness programmes. At all times, we have prioritised the safety and wellbeing of our people, in particular our own frontliners at sea and on site who due to the nature of their responsibilities, had to weather the risks of the pandemic in delivering on their jobs. Alongside that, we are investing in talent, technology, and supporting new solutions that, in the interim, will shift the industry towards a low-carbon future. Our strategy of focusing on growing assets that generate stable long-term income while maintaining flexibility to capture the upside when cycles turn in our favour, has helped us mitigate business volatilities arising from the pandemic, and the supply and demand anomaly of seaborne crude transportation. Through strategic partnerships and collaborations, we have added further longer-term charters with global energy players that have and will provide long-term secured income. I believe all this has significantly enhanced AET’s ability to navigate market uncertainties in a challenging year where the tanker sector recorded the lowest rates and earnings on some trades in the past 30 years. PETROLEUM & PRODUCT SHIPPING BUSINESS REVIEW One of the reasons I believe AET has remained a resilient leading tanker owner and operator is our strategic ability to look beyond short-term survivability and invest in future-focused asset classes. In the past five years, we have invested approximately USD2 billion in new assets, of which about USD1 billion has been in dual-fuel assets. These groundbreaking vessels will contribute to the growth of our long-term secured income and eco-efficient vessel fleet. Our eco-efficient fleet also allows us to support our customers with their own decarbonisation journey and demonstrates our commitment to a sustainable future. With the signing of a new long-term contract for three dual-fuel VLCCs with Shell in March 2021, we have strengthened our pioneering position in dual-fuel assets. This year we will reach another milestone with the delivery of our two state-of-the-art dual-fuel VLCCs on charter to TotalEnergies, which, upon delivery, will be amongst the world’s first and most environmentally-friendly VLCCs in the market. In 2021 and January 2022, AET took delivery of Eagle Pilar and Eagle Campos, our eco-efficient second generation dynamic positioning shuttle tankers (DPST) for longterm charter to Shell in the Brazilian Basin expanding our presence in the Latin American market. AET has another five second generation DPSTs to be delivered to Petrobras and Shell in 2022, which will bring our global shuttle tanker fleet to 17, with 13 operating in offshore Brazil. Last year we also secured most of the debt financing required for the eight assets to be delivered in 2022. Our financial position reflects our robust balance sheet, strong counterparties and clear visibility of income. As at the end of 2021, we have a relatively low gearing ratio whilst maintaining a balance sheet strength of approximately USD4 billion. During the year, we launched our Sustainability Strategy 2021-2025 reflecting our ethos that embracing sustainability is a continuous journey which is part and parcel of how we run our business, backed by a solid climate conscious agenda and a strong balance sheet. In line with MISC Group’s decarbonisation strategic priority, our 2030 target is to reduce our fleet’s greenhouse gas (GHG) intensity by 40% against a baseline year of 2008 and commit to net-zero by 2050. Starting this year, and as part of our Sustainability Strategy, we will progressively align our climate-related disclosures with Task Force for Climate-Related Financial Disclosures (TCFD) recommendations. At AET, we hold ourselves accountable for taking climate action. Therefore, I am very pleased to share that AET recently made an investment into a climate tech start-up Daphne Technology, to support the development and deployment of technology for methane abatement. This strategic investment is for the dual purpose of equity investment in early stage start-ups for GHG emissions abatement technology and promoting the use of such technologies onboard our assets to prove the benefits of the technology for ourselves and the industry. It focuses on the ‘E’ and ‘S’ leg of our ESG strategy. In addition to the environmental focus, we have expanded our social contribution to support the underprivileged while strengthening our governance to contribute to our 11 identified UN Sustainable Development Goals. We continued our support for communities impacted by the ongoing pandemic with our 2021 COVID-19 donations partnering again with local charities food programmes in Singapore, Brazil, India, the Philippines, the UK, the USA and also now in Norway. Aside from this, we are also supporting the future growth of the maritime industry through scholarships and internships. ALAM continues to be our key strategic community investment as we, through our cadet sponsorship programme, shape maritime leaders of the future. In addition, any financial support from governments in the locality, such as Job Support Scheme (JSS) in Singapore, have been returned to society through our various Community Investment initiatives and support schemes. Moving into 2022, our strategy hinges on four core elements. We plan to build our resilience by fortifying our existing operations; continue decarbonising our existing fleet operations and phase out inefficient and carbon-intensive vessels; continue exploring low-carbon business opportunities emerging from energy transition either alone or through likeminded partners; and to enable this, develop a diverse talent pool. I am confident that our business resilience and future-focused strategy puts us on strong ground to grow our asset portfolio in a balanced manner as we continue to support the needs of the energy market and capitalise on energy transition opportunities. The timing of the pandemic to an endemic and the return of tonne-mile demand would be critical in determining any further improvement in AET’s financial returns. CAPTAIN RAJALINGAM SUBRAMANIAM President & CEO, AET PRESIDENT & CEO’S REMARKS CAPTAIN RAJALINGAM SUBRAMANIAM President & CEO, AET KEY DEVELOPMENTS Building resilience and navigating towards our low-carbon future In the medium to long term, the biggest challenge facing the industry is the call for tackling climate change. AET is playing our part by supporting the Call to Action for Shipping Decarbonisation as a member of the MISC Group. Driven by our people, we have been partnering with like-minded industry players over the past few years to work together towards a common goal to contribute to the development of a sustainable and decarbonised global maritime trade network. As at the end of 2021, AET’s operations included six dual-fuel vessels - three Aframaxes in the Atlantic and one in the Pacific, as well as two DPSTs in the North and Barents Seas. A further five dual-fuel VLCCs currently at newbuilding stage will be delivered in 2022 and 2023. 4 Aframaxes 2 DPSTs 5 dual-fuel VLCCs to be delivered in 2022 and 2023 Our portfolio of dual-fuel vessels 11 dual-fuel vessels MISC Berhad 128 Integrated Annual Report 2021 MISC Berhad Integrated Annual Report 2021 129
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