Yinson Annual Report 2021

54 YINSON HOLDINGS BERHAD SECTION 02 : BUSINESS REVIEW OFFSHORE PRODUCTION MARKET OVERVIEW Brent crude oil price hovered above USD50 per barrel in January 2021 and subsequently exceeded the USD60 mark in February 2021. In March, the price increased to USD70 per barrel and has since then stabilised at the mid USD60 level. The oil price surge, given better demand outlook coupled with storage rundown, is likely to persist. Whilst market conditions in 2021 remain complex due to a high dependence on oil production from OPEC+, global crude oil demand is still expected to rebound to pre-pandemic levels, resulting in a projected petroleum and liquid fuels production of 97 million barrels per day in 2021 and 101 million barrels per day in 2022. While crude oil prices were heavily impacted in 2020 by both Covid-19 and competition for market share by OPEC+ producers, the recovery will be led by oil supply management efforts, primarily by OPEC+ and global demand growth that provides sufficient support for ongoing investments in new supply sources. ZERO-EMISSION FPSO CONCEPT One of Yinson's commitments is to seek and develop solutions for clean and responsible production of hydrocarbons. We continuously research and seek opportunities to lower our environmental footprint for FPSOs in operation as well as for new projects. In the period under review, Yinson developed the Zero- Emissions FPSO Concept. Both future and existing technologies have been included in the design, and Yinson is ready to provide the next generation of FPSOs to the market. The concept features combined cycle technology; designs of closed flare and venting system; implementation of carbon capture solutions; as well as the potential of receiving power from renewable energy sources. We are looking forward to engaging with our customers and existing clients to provide responsible solutions that will benefit all stakeholders. SAFETY PERFORMANCE Through the tremendous effort made, and significant resources deployed, we were able to maintain an industry- leading safety performance in FYE 2021. We recorded Zero LTIs on board all our operating FPSOs, with a highlight being FPSO Adoon achieving another year without LTI, making it 9 years in total. We also recorded zero LTIs for our assets under construction, which chalked up nearly 3.5 million man hours in FYE 2021. Performance-wise, we maintained commercial and technical uptimes of 100% and 99.5% respectively in FYE 2021 across the operating fleet. These are truly commendable performances, especially given the various challenges arising from the Covid-19 pandemic. My heartfelt thanks go out to our projects team, operations team and crew for their tireless efforts. PROJECTS UPDATES One highlight of the year was undoubtedly FPSO Abigail- Joseph’s achievement of first oil on 28 October 2020, marking the commencement of its firm charter period of 7 years, with options to extend for a further 8 years. The unit set sail from the Keppel Benoi shipyard in Singapore on 26 February 2020 after a 7-month conversion period – making it one of the fastest deliveries of a brownfield FPSO modification project in the world. This fast-track upgrade was made possible through an innovative redeployment strategy that utilised an existing vessel in our fleet, FPSO Allan. Due to the Covid-19 circuit breaker enforced in Singapore, the naming ceremony for FPSO Abigail-Joseph was not able to take place. Nevertheless, the vessel’s arrival and start-up was still a much-celebrated milestone, as the vessel is Nigeria’s first wholly indigenously developed greenfield oil & gas project. We are pleased to report that FPSO Abigail-Joseph has been producing steadily without any major challenges, achieving a technical uptime of over 99% in its first two full quarters of operations. We are grateful to our client, First Exploration & Petroleum Development Company Limited (“FIRST E&P”) for their support, and letting Yinson be a part of the great work they are doing in Nigeria. The conversion of FPSO Anna Nery remains on track with a successful accumulation of more than 4.6 million manhours without any LTIs thus far. Her first dry docking campaign was successfully completed in Q3, and second dry docking campaign is currently underway. Module fabrications at our four sites are progressing well, with the first module on track for delivery in Q3 2021. Despite the Covid-19 pandemic, delivery of critical long lead equipment to our topside subcontractors and shipyard in China is taking place smoothly as planned. Adaptability and learning from our experiences has always been a hallmark of Yinson's project execution strategy. FPSO Helang was Yinson's first project to have its entire shipyard works (vessel repair, life extension and topside integration), alongside with partial topside fabrication, performed in China. The experience gave us insight into the vast availability of top tier facilities in China that are well suited to FPSO projects, and allowed us to build relationships with subcontractors and vendors who were eager to demonstrate their capabilities and develop partnerships for future projects. We factored in the positive experiences and strong relationships gained from the FPSO Helang conversion when reviewing the original project execution strategy for FPSO Anna Nery, which had been developed several years ago. Following the review, we made a strategic decision to move all fabrication works to China instead of splitting fabrication between China, Singapore and Indonesia. It was a big adjustment with great effort required from all levels across the business. However, I am pleased that these changes have contributed to cost savings of around 10% and a 5 to 6-month schedule improvement. The savings are mainly