Integrated Annual Report 2021

Focused on expanding our market reach Our existing portfolio of long-term contracts will continue to support the Offshore Business segment’s financial sustainability. However, even as we maintain our active presence in the domestic market and other countries where we have established our footprint, we are prudently pursuing opportunities to expand our market reach. We have been on the lookout for opportunities in targeted markets namely Asia Pacific, the Americas and Africa where we have been closely engaging with major clients to support field developments in these regions. These activities are set to continue into 2022 and beyond. Continued to build our human capital capability and capacity We have continued to build our people’s capabilities and capacities, in line with our goal to transform into an international player that is able to meet client demands in the global arena. During the year, we continued to add personnel to our workforce, thus adding a diversity of new experience and capabilities into our team to ensure excellence delivery of projects and operations. Bearing in mind these expected market trends, the Offshore Business will employ a prudent and cautious approach by selectively pursuing opportunities in targeted markets. In line with the MISC growth agenda, we will continue to explore potential projects that will serve MISC’s best interests both locally and internationally. We remain open to opportunities in Asia Pacific, the Americas and Africa, and with new partners, technologies and markets that are related to our core business. For the year ahead, our focus is to improve our health, safety and environment performance and outcomes. We plan to continue with our recruitment drive to bring onboard new talents that will shore up our organisational capabilities. We remain committed to focusing on the training and development of our staff, driving a robust talent management system, implementing knowledge transfer measures, and championing diversity and inclusion within our workforce. Leveraging on digitalisation, we will incorporate digital solutions within our projects and operations with the aim of exceeding customer expectations, whilst improving our efficiency and speed of delivery. A key focus for 2022 is delivering successful project execution to ensure complete project delivery within budget and on time. We also plan to develop operations and maintenance capabilities in-house, to reduce our dependencies on third party contractors. Securing contract extensions from our base of existing clients is a clear priority, to generate a stable longer term income base. We also plan to fully implement initiatives identified within our Sustainability Plan, in line with our sustainability commitments. Pursuing opportunities in Asia Pacific, the Americas and Africa Focused investment in technology In line with our goal of leveraging on technology to grow our capabilities and capacities, we have embarked on a New Build FPSO (NBF) Development Programme to leapfrog competitors’ technology and create competitive advantage. Taking advantage of climate change opportunities With climate change presenting both risks and opportunities for maritime players, the Offshore Business segment has been cognisant of the potential opportunities that we can take advantage. We are actively pursuing the decarbonisation agenda by incorporating sustainable design and technologies into our FPSO design, in line with the Groups Net-Zero GHG Emissions Commitment by 2050. As well as that, we are also exploring opportunities in the renewable energy segment that capitalises on our vast offshore experience. HSSE as our utmost priority Health and safety remained our topmost priority and we have made significant improvements in our occupational health and safety processes by enhancing our Safety and Health Management System. Our efforts in this space have been acknowledged by the Malaysian Society for Occupational Safety and Health (MSOSH) when it awarded the FSO Orkid with the Gold Class 1 Award for the second consecutive year in December 2021. We also recorded Lost Time Incident Frequency (LTIF) of 0.15 and Total Reportable Case Frequency (TRCF) of 0.44 in 2021. MOVING FORWARD Despite COVID-19 related restrictions, the global offshore exploration and production space has shown its resilience and ability to execute projects. Considering this, expectations are that the oil and gas sector will continue on its upward trajectory into 2022. Upstream investment remains on track, with projections that investment will surpass USD400 billion in 2022, from USD350 billion in 2020. In the medium term, the outlook for the FPSO and other floating production systems market is promising with positive expectations for global growth and sturdy oil prices, together with attractive returns for offshore developments and pipeline projects to be sanctioned. FPSO project awards should remain high in 2022 with operators planning large field developments in Asia Pacific, the Americas and Africa. South America has been earmarked as the largest source of FPSO demand in the medium term, as projects in the region should move forward despite volatile oil prices because of their favourable break-even prices and long field life. Over the next five years, growing emphasis on cost reduction and predictable execution should spur demand for standardised newbuild FPSOs. However, FPSO leaser capacity limitation and high oil prices may drive big upstream operators to own instead of leasing FPSOs. As well as that, a few major upstream operators have also explored alternative contracting structures such as Build, Own, Operate, Transfer (BOOT) where the FPSO leaser will construct, install and then lease-operate the FPSO for a certain period after which the FPSO ownership and operation will transfer to the upstream operator. Tight leaser capacity has also resulted in FPSO leasers forming joint ventures with Engineering and Technology companies to execute FPSO engineering, procurement and construction (EPC) contracts. OFFSHORE BUSINESS BUSINESS REVIEW Embarked on New Build FPSO Development Programme Expanded our workforce, to add to our diversity of skills and expertise FSO Orkid obtained Gold Class 1 Award for 2nd year running by MSOSH LTIF of 0.15 TRCF of 0.44 Incorporating sustainable design and technologies into FPSO design MISC Berhad 140 Integrated Annual Report 2021 MISC Berhad Integrated Annual Report 2021 141