Malaysian contractor MISC will be “very selective” in the offshore work it pursues as the company focuses on the execution of the Mero-3 floating production, storage and offloading vessel for Petrobras’ Libra block in the pre-salt Santos basin offshore Brazil.

“Nevertheless, the [offshore business] segment will continue to monitor the market for the next major project as and when the right opportunity arises,” Petronas subsidiary MISC said on Friday.

The contractor believes that the expected recovery in oil demand from the Covid-19 vaccine rollout and a more stable oil price environment will pave the way for increased activity in the global offshore upstream arena.

"Notwithstanding the expected increase in activity levels, the offshore business segment will be very selective on growth opportunities as it focuses on the execution of the new FPSO project in hand."

The company is also currently one of four contractors or consortia currently vying for the FPSO for Petronas' Limbayong field development offshore Sabah, East Malaysia, which could be awarded within weeks.

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MISC’s majority-held subsidiary Malaysia Marine & Heavy Engineering (MMHE) has performed well of late as operators – in tandem with the recent oil price recovery – have revived several deferred projects.

MMHE recently won the engineering, procurement, construction, installation and commissioning contract for the central processing platform for SapuraOMV Upstream’s Jerun field development offshore Sarawak, East Malaysia.

Cautiously optimistic

“Nevertheless, the volatile industry condition and the wider lingering effects of the Covid-19 pandemic remain major risks moving forward. As such, the [marine and heavy engineering] segment maintains its cautiously optimistic stance regarding its business prospects throughout the year and into 2022,” said MISC.

The contractor added that its prospects of acquiring more marine repair projects are highly dependent on the reopening of borders and worldwide recovery from the coronavirus pandemic.

Hence, it expects the marine business to remain challenging… [and] will continue to pursue business opportunities in other areas and new regions to grow the company’s order book.

MISC’s total first quarter 2021 revenues were 2.541 billion ringgit (US$618 million), 3.8% lower than Q1 2020 mainly due to lower revenue from ongoing projects and the lower number of vessels secured for repair and maintenance works in the marine and heavy engineering segment in the current quarter.

However, the reduction in revenue was mitigated by higher earning days in the petroleum and product shipping and liquefied natural gas asset solutions segments which helped to boost group operating profit to 463.8 million ringgit in the first quarter.

The marine and heavy engineering segment had revenues of 343.5 million ringgit for the three months ended 31 March, down 3 million ringgit or 0.9% from the comparable period of the previous year mainly because of fewer vessels secured for repair and maintenance. This was due to the limited volume of marine repair projects in the current market as a result of high charter rates offered for shipments during the prolonged winter period as well as the lingering effects of the Covid-19 pandemic.

Operating loss

Marine and heavy engineering reported an operating loss of 101.9 million ringgit for Q1 2021 versus a 5.6 million ringgit profit one year prior, not least because of a cost provision recognised as a result of a revised target completion date for an ongoing project.

Meanwhile, MISC’s offshore division had first quarter 2021 revenues of 696 million ringgit, more than double the 238.1 million ringgit achieved 12 months prior, mainly thanks to the recognition of construction revenue for an FPSO.