Yinson upbeat on FPSO business this year

By KEVIN WONG / Pic By ISMAIL CHE RUS

Yinson Holdings Bhd is optimistic on the floating production, storage and offloading (FPSO) business this year as there has been an increasing number of tenders.

“We see more bidding activities. I have never seen the number of tenders this high in the last three years, Yinson group CEO Lim Chern Yuan (picture) said.

“Over the past few years, we believe there were some under investments in the oil and gas (O&G) business and now is mainly a catch-up,” he added.

Lim also expects more jobs to be awarded in the short term.

The integrated offshore production and support services provider firm has secured its first local FPSO charter contract worth of US$860 million (RM3.47 billion) in May.

Initially, the project was awarded to TH Heavy Engineering Bhd (THHE) by JX Nippon O&G Exploration (M) Ltd. However, THHE was unable to complete the project due to financial issue amid the downturn in oil prices.

As a result, Yinson will pay THHE a novation fee of RM374 million, while operations will be commencing in 2019.

At the same time, Lim said the firm is in an exclusive negotiation with Nigeria’s First Exploration and Petroleum Development Co Ltd (First E&P).

“Both the client and us are aligned to try to sign something definitive as soon as possible, but it is a long-term contract and has a big value. With that said, we will try to close it by September,” he said.

Lim said Yinson is still bidding for some projects, but it also depends on both financial and human resources (HR) factors before taking on more projects.

In terms of competition, he remains unfazed as there are not many FPSO players in the business.

“It (FPSO business) is a capital-intensive business where you need the track record and HR behind it. Currently, we don’t see all players coming into the business.

“What we have done in the past one to two years was to build up our balance sheet and HR, and with the oil prices being where it is right now, I think we are in a good position to take on more projects,” he said.

Commenting on high crude oil prices which are traded nearing the US$80 per barrel level, Lim said it will not have a direct benefit to the firm as its charter rates are fixed.

“However, we will capitalise on the increased demand for FPSOs in the market,” he said.

For new FPSO projects, Lim said Yinson has started to look for bidding activities in the American region.

“Historically, we have always looked at Africa and Asia,” Lim said.