MISC banking on FPSO deals

KUALA LUMPUR: MISC Bhd is working on three to four floating, production, storage and offloading (FPSO) deals that can potentially push its offshore business contribution to one third of its profits, from 20% in 2016.
President and group CEO Yee Yang Chien said it is looking at a combination of bidding for greenfield projects and potential asset acquisition, adding that these deals are both in the global and Asian region.
“The leads are there, the prospects are there. We’re hopeful that one or two can materialise this year,” he told a press conference after its AGM yesterday.
He explained that profit from the offshore business can increase to one third if the three to four FPSO deals can be secured and assuming its other segments like liquefied natural gas (LNG) shipping as well as petroleum and product shipping do not grow.
This comes as MISC continues to diversify its income stream to grow the offshore and petroleum segments, as opposed to being reliant on the LNG shipping segment in the past.
“Whatever assets, whether FPSO, LNG or petroleum ship, which is able to give us secured and sustainable recurring income, we will do those. We will chase those opportunities. We’re after the income quality,” said Yee.
Yee said MISC is working to sustain its performance for 2017, which will not be too different from 2016, where two thirds of its profit is from LNG shipping, 20% from offshore business and the remaining from petroleum and product shipping.
“Whatever we have today in our books and portfolio of assets continue to generate stable income despite what we encounter in the open market. Our current portfolio of assets will continue to underpin our ability to sustain the profit. In 2017, our focus is on replenishing our pipeline of growth projects,” said Yee, adding that any new projects that it secure in 2017 will contribute in 2018.
He said the LNG shipping market is in a dire state as there are too many ships out there and not enough demand.
“The LNG market is dire but all our ships are secured with long term charters and they’re not exposed to what’s happening in the market. We’re protected,” said Yee.
MISC also expects the average rates for the petroleum tanker market in 2017 to be lower than 2016 because of heavy delivery of new vessels.
“But we continue to believe that it will remain profitable for us in 2017 despite average rates being lower than 2016,” he said.