MISC looking to pick up distressed FPSO assets, petroleum tankers

Local media cited MISC president and ceo Yee Yang Chien as saying that the prolonged low oil price environment could result in FPSO owners putting some of their assets up for sale and that these may be assets which have term-charter contracts in place.

Yee noted that there are fewer greenfield FPSO contracts to bid for now and it thus makes more sense to buy into ones in operation. “This will eliminate construction risk and we could enjoy the profits as soon as we purchase the assets,” he said.

“We have been looking at the market since the last year, and our prediction is somewhat coming true as some distressed assets have cropped up in the market. But we are not in any rush as oil prices are still low,” Yee reiterated.

He also said MISC’s business development focus was now on North and South America, Europe and Africa. “We are also looking at acquiring petroleum tankers if there are opportunities," Yee said.

He warned however that the group needed to grow in tandem with its financial capability which has now been restored to comfortable levels with very low debt, and despite its MYR1.9bn ($481m) purchase of the remaining 50% stake in the Gumusut-Kakap Semi-Floating Production System will still be at just 0.3 times.

Looking at individual segments, Yee said the offshore and heavy engineering division under its Malaysia Marine and Heavy Engineering unit is expected to be slow this year due to slower upstream activities.

Other segments such as LNG and petroleum shipping will be stable, he said. “But, for liquefied natural gas (LNG) shipping, most of our ships are on long-term charter and it will continue to sustainably contribute to our earnings this year as of last year.

“Although petroleum shipping is a bit exposed to the volatility of the current market, I expect the demand and charter rates continue to be robust based on the production of oil that has not slowed down.”