Yinson Annual Report 2020

133 Annual Report 2020 Business development Since the oil and gas sector’s downturn in 2014, Yinson has fared well by focussing on the business fundamentals, building up our project execution, operational and financial strengths. We took on good FPSO projects and delivered them with excellence. We continued to be a reliable partner to our clients, which brought about greater shared successes. Furthermore, with the growing confidence and increased stability in the oil and gas industry over the last few years, Yinson grew exponentially in the FPSO industry and became one of the largest FPSO providers globally. Entering FYE 2020, we were optimistic the worst was over and that there would be increased capital expenditure into the FPSO market. Indeed, the financial year saw capital expenditure for FPSO orders worldwide increasing by 30% to USD16 billion. The discovery of deepwater assets in offshore Africa and Brazil and relatively stable crude prices at that time added to the positive sentiment. In preparation for this uptake, Yinson remained steadfast on our plans laid in 2018 to focus on bids in Brazil and Ghana for FYE 2019. We focused our efforts on projects that best matched our ability to deliver them, considering factors such as project specifications, client profile and overall risks and rewards. We were successful in our bid and entered into two LOIs in October 2019 and subsequently firm contracts on 23 March 2020 with Petrobras for the charter, operations and maintenance of an FPSO for the Marlim revitalisation project, in the north-eastern part of the Campos Basin. The FPSO for this project, FPSO Anna Nery (previously referred to as FPSO Marlim 2), cements Yinson’s first step into Brazil and is our largest project to date. The estimated aggregate value of the contracts is USD5.4 billion, with a contract period of 25 years from the date of final acceptance, which is expected to occur in Q2 2023. The Marlim project award boosted the Group’s orderbook over firm and option periods to sit above USD10 billion as at the end of FYE 2020. This is a major milestone for Yinson, and a testament to the confidence our clients have in Yinson as a reliable and preferred FPSO provider to perform and deliver on these projects with good quality. We managed to not only qualify, but win a project in our first attempt in Brazil – the world’s largest FPSO market. The award of the LOI by Aker Energy for Project Pecan in Q1 FYE 2020 was another feather in our cap for Yinson. Regrettably, the LOI was terminated due to the client’s plan to postpone the project amid the Covid-19 pandemic. We are currently in process of settling the termination in accordance with our contractual rights.