Wah Seong Corporation Berhad Annual Report 2017

FROM THE BOARD OF DIRECTORS AND KEY SENIOR MANAGEMENT WAH SEONG CORPORATION BERHAD ANNUAL REPORT 2017 19 OIL AND GAS (“WASCO”) Discussion of strategies, operational capabilities to achieve the desired business objectives and results Execution remains the key focus area for WASCO during the year under review. With an order book of RM3.42 billion at the beginning of the year, a major portion which relates to the Nord Stream 2 Pipeline Coatings and Logistics Contract (“NS2”), WASCO started the year on a strong footing. During the course of 2017, WASCO’s Pipelines Services Division commissioned three new coatings facilities in Europe, making it the largest pipe coating group in Europe. WASCO’s pipe coating operations in Kotka, Finland and in Mukran, Germany were commissioned during the year and started coating pipes for NS2 on 27 th March 2017 and 13 th July 2017 respectively. The NS2 Project entails the coating of 2,400 km of pipes for a pipeline in the Baltic Sea and is the largest infrastructure gas pipeline project in Europe/World at the moment. WASCO’s scope also includes the project management of logistics activities which involves managing the four pipe storage and transshipment sites located along the pipeline route. As at 31 st December 2017, a total of 518 km of pipes have been concrete coated using both facilities, and a total of 309 km of pipes were transshipped to the pipe storage site in Port of HaminaKotka, Finland and Port of Karlshamn in Sweden. During the year under review, the project has progressed as planned and the coatings and transshipment operations are expected to continue into 2019. On 12 th July 2017, Wasco Coatings Europe BV established a new pipe coating facility in the Mediterranean Sea. Located at Thisvi, Greece within the vicinity of our strategic partners, Corinth Pipeworks, a global manufacturer of steel pipe and hollow section for the energy and construction industry, the Greece operations executed a small pipe coating contract for the Trans Anatolian Pipeline (“TANAP”) project. With its maiden track record last year, the Greece operations were successful in securing three new contracts to be executed in year 2018. In December 2017, Malaysia’s pipe coating operations successfully completed the coating of 446 kilometers of pipes for the Johan Sverdrup Pipeline Project for Statoil ASA, the second major pipeline contract after the successful execution of the Polarled Pipe Coating and Logistics Contract in year 2015. The market remains challenging in the region during the year and order book replenishments continue to be low, however the Malaysian pipe coating operations continues to be an important part of the Group’s operations as activities are expected to pick up in this region beyond 2019. In 2017, Bayou-Wasco successfully completed the Appomattox Deepwater Development Project for Shell which contributed positively to the Associate/Joint Venture profit of WASCO. The EVRAZ-WASCO and WELSPUN-WASCO progressed as planned during the year. Both companies are in the process of getting certified and pre-qualified with oil and gas customers in their respective region. EVRAZ-WASCO is expected to have a busy year in 2018 with order backlogs in hand to be executed during the year. Hanko Kotka Karlshamn Mukran Lubmin near Greitswald Narva Bay DENMARK SWEDEN NORWAY ESTONIA RUSSIA LATVIA RUSSIA LITHUANIA FINLAND MANAGEMENT DISCUSSION AND ANALYSIS