MOVING FORWARD Moving into 2022, the tanker market continues to face headwinds from lingering impacts of the pandemic on oil demand, with supply side cuts remaining at significant levels. The spread of new COVID-19 variants of concern (VOC) throughout the world have further increased concerns over the outlook for global oil demand. While some improvements in the tanker market from current levels are expected in the first half of 2022 on the back of gradual easing of OPEC+ output cuts and further improvements in oil demand in many regions, some pressure is expected to remain in the near-term future. However, more meaningful improvements could materialise in the second half of 2022, with further recovery in oil demand and the potential eventual phasing out of OPEC+ cuts suggesting the potential for tanker demand to increase in 2022 to close to 2019 levels. On the supply side, the Clarksons Average Tanker Earnings has projected underlying tanker fleet capacity to be 7% larger at the end of 2022 compared to the end of 2019. Demolition is expected to pick up pace in 2022 as many old vessels currently storing crude oil, will be scrapped once they offload crude. Additionally, environmental regulations such as Energy Efficiency Existing Ship Index (EEXI) and Carbon Intensity Indicator (CII) may push shipowners to sell their vessels for scrap earlier than their end-of-life date. In the longer-term, expected limited supply growth and growing impacts from environmental regulations suggest a more positive outllook for the tanker market. The oil trade will also be impacted by the ongoing energy transition. AET’s future business strategies remain fundamentally geared towards pursuing long-term sustainability by growing our secured-income portfolio and participating in new low-carbon maritime opportunities either on our own or through strategic partnerships. We will build our resilience by fortifying our existing operations. This will involve aspects such as leveraging on core competencies in the mid-size tanker segment to maintain our lightering footprint and position in the US Gulf, as we pursue optimal mid-size tanker fleet through asset light or rejuvenation opportunities and focus on becoming the STS service provider of choice for core customers in Brazil. We also plan to rejuvenate the VLCC fleet and grow our secured-income portfolio with eco-solution VLCCs, thus achieving differentiation in a crowded market. Alongside that, AET will maintain our competitive position in the DPST sector and retain our standing as one of the leading DPST providers. Decarbonising our existing fleet operations remains a key focus for the years ahead, and we will phase out inefficient and carbon-intensive vessels. In line with the Group’s Sustainability Strategic Priority on Towards Decarbonisation, AET’s low-carbon vessel-transformation pathways contribute to MISC’s GHG Intensity Reduction 2030 Targets and NetZero GHG Emissions Commitment by 2050. The plan is to build our presence in the Atlantic and Asian regions to explore opportunities in energy transition, and participate in low-carbon business solutions through collaborations and/or partnerships. In line with our future strategic priorities, we will build both our organisational and talent capabilities, to enable AET to capitalise on emerging business opportunities brought about by the energy transition. PETROLEUM & PRODUCT SHIPPING BUSINESS REVIEW Winner of the Singapore Registry of Ships (SRS) Ship Owner of the Year Award 2021 for our commitment and contribution to the maritime ecosystem Via the Port Arthur Seafarer’s Center, the Apostleship of the Sea of the United States of America (AOS-USA) recognised our extraordinary efforts to repatriate crew safely during the pandemic in the Western Gulf of Mexico with The Maritime Samaritan Award The Chamber of Shipping America (CSA) Jones F. Devlin Awards recognised our outstanding safety records for a combined 48 ships in our fleet Awarded SKA Gold rating by the Royal Institute of Chartered Surveyors (RICS) for the sustainable fit-out of our new London office The CSA also recognised a total of 50 ships with the Environmental Achievement Awards, reflecting industry recognition of our stringent HSSE and environmental protection measures Awards in 2021 During the year, we received multiple international accolades and awards. In April 2021, AET was recognised with the Singapore Registry of Ships (SRS) Ship Owner of the Year Award which was presented at the Singapore International Maritime Awards (IMA) ceremony as part of the Singapore Maritime Week. SRS recognises an outstanding owner of quality Singapore-registered ships and takes account of fleet size, growth, operational excellence and sustainable contribution to human capital development both ashore and at sea. The award reflects our commitment and contributions to the entire maritime ecosystem as a global company with Asian roots and as a leading player of responsible and sustainable shipping. We also obtained several sustainability and environmental awards during the year. The Apostleship of the Sea of the United States of America (AOS-USA) via the Port Arthur Seafarer’s Center recognised AET with The Maritime Samaritan Award for our extraordinary efforts to repatriate crew safely during the pandemic in the Western Gulf of Mexico. Our excellent health and safety record continued to receive international acknowledgement when the Chamber of Shipping of America (CSA) awarded AET the Jones F. Devlin Awards in recognition of our outstanding safety records for a combined 48 ships for 2021. AET’s London office received the SKA rating of Gold awarded by the Royal Institute of Chartered Surveyors (RICS). This accreditation recognises the sustainable fit-out of our new London office through an environmental assessment method, benchmark and standard. As well as that, the CSA recognised for 2021 a total of 50 ships from AET with the Environmental Achievement Awards, thus reflecting industry recognition of our stringent HSSE and environmental protection measures. MISC Berhad 134 Integrated Annual Report 2021 MISC Berhad Integrated Annual Report 2021 135
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