Yinson in a good place despite competition for projects

PETALING JAYA: Yinson Holdings Bhd will need to put in the best front-end engineering design (pre-feed) for two floating production storage and offloading (FPSO) projects in Angola and Suriname, as the group is competing with two to three other global players.

If its design is selected by French oil giant, Total, Yinson could potentially secure the FPSO charters involving substantive vessel capital expenditure of Us$1bil-us$1.5bil (Rm4.1bil-rm6.1bil).

The other pre-feed providers could be Japan-based Modec and a JV between Saipem and BW Offshore, said Aminvestment Research in its latest report.

“We caution that Yinson will need to provide the best Feed to be in the pole position to secure these FPSO charters,’’ the research house pointed out.

The pre-feed, the first undertaken by Yinson’s Oslo office for a fee, will provide technical and commercial lease and operate proposals to Total within eight months from the agreement date.

The research house said this positive news comes on the back of recent developments that Yinson is again poised to secure the Parque das Baleias (PDB) FPSO charter from Petrobras’ re-tendering exercise.

It said Yinson emerged as the sole bidder in an earlier tender following the disqualification of a consortium of Norway-based Bluewater and Saipem.

The research house said Yinson was already planning for a rights issue with its Us$1bil (Rm4.1bil) Anna Nery project for Petrobras and potentially fresh renewable energy (RE) projects.

If Yinson were to secure all three of these FPSOS, it estimated that the group will need to undertake a rights issue of up to Rm2.3bil, assuming 100% equity stakes, with capital expenditure of Us$800mil (Rm3.2bil) for PDB and Us$1bil (Rm4.1bil) each for the Suriname and Angola projects.

Meanwhile, Maybank IB Research said Yinson is one of the most profitable FPSO players globally by return-on-equity and was recently selected by Total to perform preliminary pre-feed for two FPSO projects offshore Angola and Suriname.

Unlike its peers, Maybank IB said Yinson’s FPSO contracts are generally more bankable (strong counter parties), providing steady visibility (long term charters, termination protection) with reasonable project internal rate of returns.