Yinson Annual Report 2021

64 YINSON HOLDINGS BERHAD SECTION 03 : EXTERNAL ENVIRONMENT OIL & GAS MARKET OVERVIEW RISKS OPPORTUNITIES YINSON’S STRATEGIC RESPONSE IMPACT t 0JM HBT EFNBOE XBT severely impacted in 2020 due to Covid-19. However, demand has increased in 2021, surpassing the OPEC compliant supply since Q3 2020. Oil prices have risen to pre- Covid-19 levels. t .BOZ PJM HBT developments that were postponed in 2020 are now progressing due to rising demand and pricing. t "T HMPCBM FOFSHZ demand continues to rise, the long-term outlook for oil & gas remains promising, even alongside an increasing contribution from renewables to the energy mix. t " QSPMPOHFE QBOEFNJD may cause short-term risks of further delays in the development of new oil & gas projects. t *O UIF MPOHFS term, accelerated development of alternative energies may cause a shift away from oil & gas earlier than predicted, resulting in an earlier decline in consumption. t .BOZ EFMBZFE QSPKFDUT have reached an improved maturity, which means less uncertainty and lower risks. t $VSSFOU USFOET JO energy transition, as well as the lag in oil & gas reserve replacements, could lead to even higher oil prices – allowing more projects to develop and become economically viable. t :JOTPO XJMM DPOUJOVF UP strengthen our project execution capacity, while continuously adhering to our Project Execution Philosophy, thus limiting our vulnerability to changing market conditions. Stakeholder groups Materiality Capitals FPSO MARKET OVERVIEW RISKS OPPORTUNITIES YINSON’S STRATEGIC RESPONSE IMPACT t %VF UP UIF postponement of oil & gas developments in 2020, the number of FPSO awards for the year ended at an all-time low. However, most postponed projects have now resumed and a significant increase in awards are anticipated in 2021 and beyond. t %FMBZT JO QSPKFDU awards due to a prolonged pandemic. t &YFDVUJPO SJTL EVF to the pandemic’s potential impact on subcontractors and fabrication yards. t 8JUI BO BOUJDJQBUFE increase in project awards expected against a backdrop of limited specialist FPSO contractors in the market, there is potential for FPSO contractors to be more selective and obtain more balanced commercial contracts. t 5IF '140 MFBTF NBSLFU has, as always, been relatively resilient towards external economic impact due to the long-term nature of its contracts. t :JOTPO T VOJRVF 1SPKFDU Execution Philosophy limits our vulnerability to a volatile FPSO market. Stakeholder groups Materiality Capitals S10 S1 S3 S2 S4 S6 S7 S9 S8 M6 M7 M11 M4 S10 S1 S3 S2 S4 S6 S7 S9 S8 M7 M8 M11 M4 EXTERNAL ENVIRONMENT C1 C2 C5 C1 C2 C5