GAS ASSETS & SOLUTIONS KEY DEVELOPMENTS MOVING FORWARD As we move into 2023, LNG demand is expected to remain strong on the back of the continuation of the Russia-Ukraine war and increasing use of sustainable energy in Asia. Consequently, LNG spot trades are expected to reduce with buyers more likely to lock-in long-term contracts with suppliers to secure their supply over a longer period of time. This in turn could lead to low market liquidity for spot LNG shipping fleets. With less market players seeking to charter LNG vessels on a short-term basis, this will present GAS Business with opportunities to secure long-term charter contracts. On the demand side, an influx of requirements for LNG carriers was observed in 2022 whereby 150 new orders were placed. This caused an increase in vessel costs due to the limited availability of shipbuilding capacity coupled by rising cost of raw materials. As such, GAS Business will employ an extremely selective approach in pursuing opportunities on LNG newbuilds for the near term future. With the industry is heading to more sustainable practices, various pressures from financiers and regulators can be observed. SECURED NEW PROJECTS TO STRENGTHEN OUR LONG-TERM RECURRING REVENUE STREAM MISC, through its wholly-owned subsidiary, Portovenere and Lerici (Labuan) Pte Ltd (PLL), along with its consortium partners, Nippon Yusen Kabushiki Kaisha (NYK), Kawasaki Kisen Kaisha, Ltd. (K-Line) and China LNG Shipping (Holdings) Limited (CLNG), were awarded a total of 12 newbuilding LNG carrier awards by QatarEnergy which is one of the world’s largest LNG producers. The first seven long-term time charter contracts were secured in August 2022, while another five contracts were secured in November 2022. All 12 newbuilding vessels are expected to be delivered in 2025. This key success was the result of GAS Business ramping up our business development efforts in exploring opportunities with new clients and new regions. The multinational collaboration we entered via the consortium combines decades of experience, knowledge and expertise in the transportation of LNG. MISC has been steadfastly building up our collaborative partnerships as part of our business strategy to gain access to new markets and channels and pool our resources and industry know-how to fulfil the growing demand for energy transition and decarbonisation, and to ensure sustainable value creation for our customers. LEVERAGED ESTABLISHED RELATIONSHIPS WITH CURRENT CLIENTELE TO SECURE NEW CONTRACT OPPORTUNITIES During the year, we leveraged on our existing strong relationship with our current customer, SRM, to secure 10-year long-term charter contracts for two LNG carriers. In total, this adds up to four LNG carrier contracts with SRM, including two newbuilds that were constructed in South Korea where one was recently delivered in January 2023, and the other carrier scheduled for delivery by end March 2023. We are truly honored with SRM’s continuous trust and recognition of MISC’s capabilities and expertise. These new long-term time charter contracts are testament of our customers’ continuous trust and recognition of our capabilities and expertise and will further reinforce MISC’s leading position as a significant global player in the LNG shipping sector. Total of 12 newbuild LNG carrier awards with QatarEnergy • 2 newbuild LNG carrier awards from SRM, bringing it to a total of 4 LNGCs • Newbuild vessels to be equipped with eco-efficient technologies to reduce GHG emissions Traditional financiers are more favourable towards green energy related products and as such GAS Business will work closely to meet these objectives by diversifying our asset portfolio to meet market demands. Policy and regulatory challenges are also dominating the landscape via the implementation of IMO’s EEXI and CII policies. Stricter compliance on vessels emissions will not only impact our operations but will also exert pressure on existing vessels that do not meet the required ratings. GAS Business will ensure that our fleet will comply with regulatory standards for uninterrupted operations. Moving forward, our long-term plan is to invest in modern, efficient LNG carriers and decarbonising our operations by applying the latest technology that will improve on fleet efficiency. Our goal is to differentiate ourselves in a competitive market to ensure long-term sustainable growth for our business. PROGRESSED WITH EXPLORING MINIMUM MANNING FSU OPERATION SOLUTIONS Including vessels with X-DF 2.1 Engines and iCER & Air Lubrication Systems to reduce GHG emissions NEWBUILD VESSELS TO BE EQUIPPED WITH ECO-EFFICIENT TECHNOLOGIES TO REDUCE GHG EMISSIONS Our latest accomplishment includes equipping our upcoming LNG carriers with cutting-edge eco-efficient technologies such as X-DF 2.1 engines featuring the Intelligent Control by Exhaust Recycling (iCER) System and the Air Lubrication System, which greatly reduce GHG emissions. These newbuilds are testament to our unwavering commitment towards supporting the maritime industry’s decarbonization goals by adopting innovative and responsible practices in our operations. Our implementation of these state-of-the-art technologies reflects our strength in promoting a greener and more sustainable shipping industry. Having completed the first phase of our concept feasibility study for minimum manning FSU with remote operation capability, in 2022 we progressed in this space by obtaining an Approval in Principle (AIP) from Lloyd’s Register on 16 March 2022 for the Operation of FSUs as Normally Unmanned Installations (NUI). Our efforts reflect GAS Business’ aspiration to embrace new technologies to enhance our competitiveness and sustainability. Obtained AIP from Lloyd’s Register for the Operation of the FSUs as NUI Business Review Business Review 111 110 MISC Berhad Integrated Annual Report 2022
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