Yinson Annual Report 2020

38 Yinson Holdings Berhad SECTION 2 EXTERNAL ENVIRONMENT R E G U L AT I ON S Overview Risks Opportunities • Over 100 governments committed to updating their national climate plans in line with the Paris Agreement, and these enhanced climate plans aim to include all vital sectors. • The International Maritime Organisation (“IMO”) has ruled that from 1 January 2020, marine sector emissions in international waters be slashed. The marine sector will have to reduce sulphur emissions by over 80% by switching to lower sulphur fuels. • Increased pressure from governments to adopt cleaner energy. • Increased technical complexity in FPSO operating environment in areas such as water treatment, flaring, and emissions. • Geopolitical tensions, regional instability and territorial disputes could affect oil field concessions. • Higher compliance costs. • Increased demand for FPSOs in Brazil. • Yinson’s clean record with regulators gives us an edge in heavily regulated environments. • IMO sulphur regulations have the potential to be highly disruptive to the pricing and availability of compliant fuels. Growing demand for middle distillates could result in upward price pressure on fuels such as diesel and jet fuel. • Other capital providers could provide alternative funding solutions for new projects. T E C H NO L OG Y Overview Risks Opportunities • Offshore projects in increasingly isolated locations and deep waters increase the need for robust remote monitoring and data-driven operations. • Blockchain has enormous potential to reduce the risk of fraud, errors, and invalid transactions in energy trading, while making financial transactions more efficient, facilitating regulatory reporting requirements, and enabling interoperability. • Cybersecurity concerns – safeguarding of confidential information and data integrity due to increased cybersecurity attacks from external hackers. • Production improvement and efficient decision-making utilising real-time data and information. • Cost savings and improvement performance from digitalisation of various areas such as finance, Health, Safety, Environment and Quality (“HSEQ”) and procurement. EXTERNAL ENVIRONMENT How Yinson mitigates this risk: Renewables assets (pg 21), Group strategy (pg 30), Sustainability-linked financing (pg 53), Renewables (pg 68) Governance (pg 69), Government and regulatory bodies (pg 107), Natural Capital (pg 120), MD&A (pg 128) How Yinson mitigates this risk: Business systems and processes (pg 74), Building IT capabilities (pg 77), MD&A (pg 128)