90 YINSON HOLDINGS BERHAD | INTEGRATED ANNUAL REPORT 2024 MAINTAINING EXCELLENT SAFETY AND ENVIRONMENTAL PERFORMANCE Regulus Offshore achieved yet another year LTI-free – a performance that we have maintained yearly since our inception. Our excellent safety performance is a testament to the stringent HSE protocols that we follow, as well as our safety competencies and efficient organisation structure, which our clients highly appreciate. During the year in review, we conducted a safety culture campaign aimed at achieving Generative or Excellence safety levels, to further promote a safety-conscious mindset among employees and encourage a proactive approach to prevent accidents and incidents. On environmental management, we embarked on a fuel optimisation initiative in response to our clients’ requests. We channelled significant efforts into reporting and strategic planning to ensure our vessels operate optimally, such as maintaining economical speeds during voyages. This approach has yielded positive results, demonstrating our commitment to reducing emissions and contributing to environmental sustainability. SUPPORTIVE OPERATING ENVIRONMENT STRENGTHENS OUR BUSINESS OUTLOOK FURTHER OSVs within the logistics segment continue to play a crucial role in facilitating the expansion of Malaysia’s upstream industry, which is currently undergoing a dynamic energy transition. According to the Petronas Activity Outlook 2024-2026, Malaysia’s upstream activities are currently served by around 300 offshore platforms and subsea structures and about 11,000 km of pipelines. Petronas foresees abundant investment opportunities in Malaysian waters over a longer period, with 32 greenfield and 39 brownfield projects in its pipeline, of which 38 are sanctioned for execution. This growth raises demand for OSVs, which play an important role in servicing these offshore development projects. Petronas forecasts 148 vessels will be needed to serve the offshore operations and production segment. Concurrently, the number of vessels supporting drilling and projects is expected to increase by 29%, reaching 249 in 2024, up from 193 in 2023. The industry is already facing an industry-wide shortage of OSVs, which will serve to increase demand even further – and as a result, drive daily charter rates higher. Regulus Offshore stands to benefit from this growth and increased charter rates. During the year, Petronas increased the cut-off ages for vessels participating in its tenders from 15 years to 20 years. This presents an opportunity for us to further extend our fleet’s services, enhance our competitiveness, optimise our vessel utilisation and achieve cost efficiencies. This, together with Petronas’ regulatory prioritisation on local vessels through its Panel Umbrella contracts, gives Regulus Offshore an advantage among OSV players as our vessels are Malaysian flagged. RISKS AND OPPORTUNITIES External environment Risks Opportunities Regulus Offshore’s response Short to medium-term (1 to 5 years) Increased offshore activity in Malaysian waters. • Inadequate OSVs to service offshore activities. • Shortage of skilled manpower for OSV segment. • Increase in OPEX costs, including spare parts, crew salary and logistics costs. • Higher charter rates. • OSV players with a strong track record can attract skilled manpower. • More synergistic opportunities within the industry. • We have maintained a strong track record of operating, environment and safety performance. • We have secured long-term, profitable contracts that suit our business model with reputable counterparties. • We focus on building efficient assets and processes to manage costs well. Regulatory and labour market changes in Malaysia and beyond. • Non-Malaysian-flagged vessels unable to supply OSV services locally. • Players with high reliance on non-local crew face high crewing costs. • Non-compliance with regulatory requirements. • Increased compliance costs. • Opportunities for companies with strong regulatory compliance teams and track record. • Malaysian-flagged vessels will be prioritised for Petronas projects. • We will continue our focus on Malaysian projects while exploring business activities beyond Malaysia. • We have built strong corporate, compliance and regulatory teams.
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