MOVING FORWARD OFFSHORE BUSINESS STRATEGIC PARTNERSHIPS INCREASE COMPETITIVE EDGE EXPANDING OUR FOOTPRINT • Penetration into new markets through qualification and active bidding for deep-water projects • Sourcing for opportunities in targeted markets in Asia Pacific, the Americas and Africa. Sustainability focus to future-proof the business: well as actively exploring opportunities in the renewable energy segment by capitalising in our vast offshore experience. In order to drive worldwide recognition of our NBF Development Programme, we introduced the initiative at the FPSO World Congress in Singapore. The NBF Development Programme which has multiple phases to it was executed to develop future ready and safe FPSO solutions. During the year, we conducted Front End Engineering and Design for the Hull, moorings and riser system, as well as an innovative Topside design which makes it intrinsically safe, provides flexibility for future growth and reduces the overall EPCIC schedule. The holistic programme also features a robust pre-developed procurement plan and early engagement with key vendors. On top of that, it also features strategic alliances with a financing structure in place, which will lead to the development of a large newbuild FPSO that includes technologies to reduce carbon emissions and execute the EPCIC of the newbuild FPSO with reduced CAPEX, shorter schedule and with the least possible interfaces. Towards enhancing our competitive edge, OBU has entered into strategic partnerships with reputable industry player to increase our competitive edge by providing complementary solutions. Our partnerships will enable us to pursue targeted opportunities which will complement MISC’s capability and reduce our risk in terms of project participation. More opportunities will open up for OBU to enter into mutually beneficial contracts to supply floating production assets under various contract schemes such as Lease and Operate, EPCIC, Build, Operate, Transfer (BOT) and Build, Own, Operate, Transfer (BOOT). • New Ventures Technology Department • Introduced groundbreaking NBF Development Programme to develop future ready and safe FPSO solutions at the FPSO World Congress Strategic partnerships to increase competitive edge We continued with our strategic efforts to expand our market footprint. While we are pursuing expansion in the domestic market and other countries where we have established our footprint, we are also selectively exploring growth opportunities in new markets. This has resulted in OBU being selected to participate in international deepwater projects which has increased our familiarity with the technical, commercial and contractual aspects of the bids, particular in relation to the clients, project size and locations. We have also established relationships and qualifications with top tier clients which has opened opportunities for us to participate in future global projects and be part of their sustainability goals and agenda. The World Bank has projected global economic growth to reduce to 3% in 2023 – 2024, from 5.7% in 2021. Inflation is on the rise and is projected to rise to 6.5% in 2023 from 4.7% in 2021. Brent oil prices are estimated to be lower in 2023, averaging at USD95.30/bbl from USD103.30/bbl in 2022. However, the FPSO market is slated to recover, having grown from just nine awards in 2021 to 12 in 2022, and expectations of approximately 19 projects in 2023. There has also been an uptrend in 2022 in activities in the newbuild market, which we expect to continue into the year ahead. This will have a positive impact on OBU, as we are expanding our capability towards not only the conversion redeployment market, but the newbuild market as well, especially in the Latin America region. At the same time, we are cognisant of difficulties that lie ahead. Driven by rising inflation, fuel and material costs which will increase in 2023, that will affect the profitability of most contractors and yards. Competition will further heighten especially within the Asia Pacific region, with suppliers vying for regional projects. Going into 2023, it is crucial for OBU to focus on our competitive edge. Our future plans will see us further improving the health and safety performance of our staff and their working environments. Towards enhancing the capabilities of our workforce to meet client needs and demands, we will continue to invest in recruitment, training, talent management, knowledge transfer, and our diversity and inclusion programmes. Incorporating digital solutions within projects and operations and also with our clients will be a key focus for the year ahead. We will continue to drive excellent project execution to ensure complete project delivery within budget and on time, as well as maintaining reliable and safe operations. This also ties in with our aim to drive great health and safety outcomes into the future. Towards pursuing greater cost savings and increased efficiencies, OBU will work on developing our in-house Operation and Maintenance (O&M) capability. We believe this will enable us to have better control over the outcome of our projects as well as improve safety records. We are committed to generating future growth and securing new contract awards from a number of targeted opportunities, while maintaining and enhancing existing contract operational performance and contract renewals. As for our major Brazilian project, we are determined to deliver the project on time and on budget through excellent project delivery. Sustainability remains at the forefront of our future strategic path, as we continue to execute initiatives and actions that support energy transition towards securing our position as a global player. In this regard, we will continue to invest in upskilling our talent to grow their capabilities and strengthen their support systems. We remain focused on transitioning into a net-zero world by developing and delivering energy transition or renewable energy solutions to ensure our continued success. Business Review Business Review 123 122 MISC Berhad Integrated Annual Report 2022
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