Yinson Annual Report 2018

Stewardship Management Discussion and Analysis (Cont’d) aggregate value of USD1 billion span through a maximum period of 15 years and expected to start contributing to the Group’s result in year 2019. Due to unforeseen circumstances, PTSC CRDwas notified that the scheduled work for the field development of our client had been temporarily halted due to a force majeure event. PTSC CRD will take all reasonable actions to mitigate the effects and continue to monitor the situation closely, whilst reserving our rights. However, based on our current assessment of the situation, we do not expect this to have any material impact on our financials. In a more positive outcome fromour Vietnam joint venture, our joint venture company – PTSC Asia Pacific Pte. Ltd. (“PTSC AP”) – secured a settlement and amendment agreement and received termination payment of USD209 million from PTSC pursuant to the cancellation of a bareboat charter contract that resulted from the liquidation of the Lam Son Joint Operating Company (“LSJOC”). The proceeds were partly utilised to fully repay the outstanding amount under the financing facility of the FPSO PTSC Lam Son project. The Group viewed this outcome positively as it was an opportunity to rebase our costs and immediately deleverage the Group with the early termination payment, as well as it being testimony to the Group’s solid termination mitigation planning and risk management. Subsequently, PTSC AP successfully entered into an interim contract with PTSC to charter FPSO PTSC Lam Son for the continuation of petroleum operations within the Lam Son Field with retrospective effect from July 2017. Meanwhile, Yinson recently concluded negotiations with TH Heavy Engineering Berhad (“THHE”) and JX Nippon Oil & Gas Exploration (Malaysia) Limited (“JX Nippon”) for the provision of EPCIC (Engineering, Procurement, Construction, Installation and Commissioning) and leasing of FPSO facilities novation arrangement on 30 April 2018 that will eventually see our only FPSO that has yet to be deployed – FPSO Four Rainbow – undergoing conversion and subsequently be deployed at the Layang field in Block SK10, offshore of Miri, Sarawak. This project is a highly suitable development for Yinson as it will further boost our order book and, more importantly, a milestone as it is an opportunity to serve our domestic O&G market where we expect to commence operations in 2019. In April 2017, Yinson together with our joint venture partner, PetroVietnamTechnical ServicesCorporation (“PTSC”) clinched a contract from Talisman Vietnam 07/03 B.V. (“TLV”) for the supply, operation and maintenance of a FPSO facility for the Ca Rong Do field development in Vietnam, to be executed through a joint venture company, PTSC Ca Rong Do Ltd (“PTSC CRD”). This bareboat charter project has an estimated MILESTONES The year began auspiciously with the naming ceremony for FPSO John Agyekum Kufuor (“FPSO JAK”) that was named after Ghana’s former President, His Excellency John Kofi Agyekum Kufuor, in the presence of Ghana’s First Lady, Her Excellency Rebecca Akufo-Addo. The First Oil Ceremony for FPSO JAK was later graced by Ghana’s President, His Excellency Nana Addo Dankwa Akufo-Addo, together with the former President himself. FPSO JAK subsequently achieved provisional acceptance and commenced lease contract in June 2017. Completed within budget and three months ahead of schedule with zero-Loss Time Injury (“LTI”), FPSO JAK serves as a testimony to our strategy of transforming Yinson into a world class FPSO service provider with the capability to perform and execute large scale FPSO projects. The positive impact of FPSO JAK on the Group’s results was instantaneous. In November 2017, the successful project provided the crucial confidence factor that led to a strategic business collaboration arrangement with a Japanese consortium comprising Sumitomo Corporation, Kawasaki Kisen Kaisha Ltd, JGC Corporation and Development Bank of Japan Inc. under a conditional share purchase agreement of a 26% equity stake in our 100% owned subsidiary – Yinson Production (West Africa) Pte Ltd – that owns FPSO JAK, valued at maximum of USD117 million. 42 Yinson Holdings Berhad Annual Report 2018