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Yinson upbeat on year ahead

Yinson upbeat on year ahead
Malaysian offshore production and support services provider Yinson Holdings, fresh from the successful delivery of its FPSO John Agyekum Kufuor destined to be deployed offshore Ghana, is upbeat on its prospects for the year ahead, local reports cited executive group chairman Lim Han Weng as saying.

Yinson could even start generating earnings from this project by the third quarter of the year, he added.

The FPSO is due to sail for Ghana by the end of this month and could see first oil several months earlier than the deadline of August set in its contract, with revenue coming into the fiscal second quarter results, he said.

As a side benefit of the project, Yinson had converted its existing $780m conventional syndicated term loan into an Islamic Murabahah term financing facility to partially finance the project and this has resulted in it being able to meet the debt over total assets financial ratio benchmark that is required for the group to be a Shariah-Compliant security.

The $3.3bn, 15-year FPSO chartering, operation and maintenance contract from Eni Ghana Exploration & Production was signed in January 2015 and has five yearly extension options.

FPSO John Agyekum Kufuor will process oil and gas from the Offshore Cape Three Points (OCTP) block, located in the Tano Basin, about 60km off the coast of Ghana.

Lim noted however that Eni has also been awarded a new exploration license at Cape Three Points Block 4 in March last year. This partially surrounds the OCTP block and Eni, which operates both blocks, is reportedly considering a potential tie in of Block 4 with OCTP’s existing infrastructure and Yinson’s FPSO John Agyekum Kufuor.

“We envisage the development of subsea wells tied back to a FPSO, which will be connected to shore via a gas transport line. The OCTP oil production start-up is expected in 2017 while the gas production, which will supply the domestic market for power generation, is expected in 2018,” said Eni.

As such, Lim noted it is likely that Yinson’s FPSO contract with Eni will span 18 years, since Eni and the Ghanaian government has signed an 18-year gas sale contract.

"Including the additional oil and gas block that was newly awarded (Block 4), there is a high chance that FPSO John Agyekum Kufuor will be deployed for more than 20 years,” said Lim.

Other factors such as the signing of a letter of intent (LOI) from Talisman Energy are also positive for Yinson going forward.

“Going forward, Yinson’s earnings momentum will be driven by its strong clientele, as well as formidable and long-term contracts. The African and Asian regions will remain as our geographical focus," said Lim.

“We target to complete negotiations with Talisman Energy by April, after which we can provide more clarity on the contract terms along with the value of FPSO OSX-1 vessel that we are acquiring."

The LOI from Talisman Energy is for the supply of an FPSO facility for the Ca Rong Do (CRD) Field offshore Vietnam. First oil is seen likely to be during the early third quarter of 2019.

The acquisition of FPSO OSX-1 will add to Yinson’s current fleet of FPSO vessels, bringing its total FPSOs owned to six.

Lim also noted that it currently only has one FPSO , FPSO Four Rainbow, yet to be redeployed.

He added the group is in the process of bidding for projects that require FPSO Four Rainbow’s facilities, which feature a large storage capacity of 600,000 barrels per day and production capacity of 40,000 barrels of oil per day, but reiterated the company is not unduly concerned as its cash flow remains strong and holding costs are not high.

“West Africa would be a good location for this vessel as it is best suited for the waters there. We hope to redeploy it soon, though it is not a pressing task for us to do, seeing that it is only one vessel that is not utilised. FPSO Four Rainbow, which is laid up in Labuan at the moment, is not costly to maintain, plus we do not have cash issues,” added Lim.

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