74 YINSON HOLDINGS BERHAD | INTEGRATED ANNUAL REPORT 2024 RISKS AND OPPORTUNITIES External environment Risks Opportunities Yinson Production’s response Short to medium-term (1 to 5 years) Busy energy market • Supply chain constraints leading to increased delivery cost and delayed deliveries. • Greater competition for limited talent pool will lead to higher costs for talent acquisition and retention. • Higher oil prices, allowing more projects to become economically viable. • Companies with strong supply chain practices will be preferred by clients. • Companies that manage human capital well will be sought after. • We have strategically built a pipeline of profitable assets. • We have strengthened our project execution capacity. • We engage with our supply chain early and focus on quality engagements. • We have maintained our position as employer of choice. ESG and climate change focus • Tighter access to capital due to evolving investor appetites to favour ESG-positive industries. • Reputation risk for traditional energy producers. • Reputational and regulatory risks associated with misleading environmental claims. • Lack of interest from the research community into oil & gas projects. • Lack of interest in pursuing oil & gas careers among young talent pool. • More opportunities for projects that favour a pathway to a greener economy. • Strong opportunities for transitional projects. • More synergistic opportunities within the industry. • Companies that have clear and transparent transition plans will enjoy stakeholder confidence. • We are making great strides implementing our Zero Emissions FPSO Concept. • We are actively building the carbon value chain. • The projects we undertake must align with our Climate Goals and 30 by 30 targets. • We adhere to the highest standards of transparency and disclosure. • We are a leader in the sustainability space and have built a network of like-minded strategic partners. Increased regulatory requirements • Non-compliance with regulatory requirements. • Increased compliance costs. • Opportunities for companies with strong regulatory compliance teams and track record. • We have built strong corporate, compliance and regulatory teams. • We adhere to the highest standards of compliance. Long-term (6 to 10 years) Accelerated development of alternative energies • Decline in oil consumption. • Earlier shift away from oil & gas. • Good opportunities still remain for providers with strong track records of delivery and ESG performance. • Strong opportunities for transitional projects. • We are relatively resilient to external impacts due to the longterm nature of our contracts and surety of our backlog revenues. • We are an industry leader in project delivery and operations & maintenance. • We have a strong transition story. Arrival at carbon neutral and net zero target dates, 2030 and 2050 • Inability to meet targets, causing financial impact and reputational risk. • Low investor confidence. • Continued confidence in companies that are transparent about their ESG journey. • We have set our Climate Goals and are transparent about our efforts and progress. Technology and AI • Outdated and slow business and decisionmaking processes. • Unable to compete with peers. • Development of future generation assets powered by AI. • Efficient and ESG-positive assets and processes will be preferred. • Cost savings from efficiency gains. • New business revenue streams. • We are implementing all the latest technologies on board FPSO Agogo. • We are leading the industry in asset lifecycle management technologies, including predictive maintenance. • We are at the forefront of integrating AI into our processes.
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