PETALING JAYA: MISC Bhd is expected to monetise its Mero 3 floating production, storage and offloading (FPSO) asset by offering a 50% equity stake when the vessel is ready.
MISC will potentially decide on the equity partners after the vessel is converted from the existing very large crude carrier (VLCC) Bunga Kasturi Dua.
The conversion is slated to be done by the second half of 2024.
Kenanga Research, in a report, said MISC was adamant on completing delivery of the project on its own, seeing this as an opportunity to demonstrate its technical capabilities.
“Given the multiple years of building blocks put in place prior to the contract win, management seems confident in its capabilities of successful project delivery and execution of the Mero 3 FPSO (to be named Marechal Duque de Caxias).
“This is despite the project being MISC’s maiden FPSO project in Brazil, and a high local content requirement of 40%, ” said Kenanga Research.
MISC’s partners for topside modules and procurement matters will be Siemens and Aker Engineering, while the conversion works will most likely be awarded to a Chinese yard to further improve commercial returns from the project.
RHB Research explained that under such an arrangement, MISC will reduce its reliance on local contractors, which could be two to three times costlier, and may potentially be subjected to a penalty as a result of not complying with the 40% local content requirement.
“MISC has received more FPSO tenders subsequent to the signing of the letter of intent with Petrobras for the 22.5-year FPSO Mero 3 contracts.
“The successful delivery of this project should allow MISC to penetrate the Americas and West Africa as well as open up more premium FPSO leasing opportunities, ” said RHB Research.
The research house expects a weaker second half of 2020 due to a moderation of tanker rates.
RHB Research noted that rates could improve in financial year 2021 (FY21), as Opec is slowly ramping up its production, but could still be weaker year-on-year due to normalisation from abnormally high rates in the first half of 2020.
Even if MISC does not secure any fresh charters for the rest of the year, AmInvestment Bank Research said MISC’s FY20 to FY21 earnings growth will still be supported by the delivery of three very large ethane carriers (VLEC) to Shenzhen-listed Zhejiang Satellite Petrochemical Co Ltd on 15-year time charters by the fourth quarter of this year.
Additionally, MISC will deliver three more VLECs, one LNG carrier and one dynamic positioning shuttle tanker in FY21.
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