Yinson Production continues to favor the lease-and-operate model for its FPSO business

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Yinson favors the FPSO lease model

Highlights

Yinson Production continues to favor the lease-and-operate model for FPSOs, even as customers shift to turnkey projects due to new accounting rules.
Yinson’s net revenue for 1HFY2027 fell 16.7% to RM2.07 billion, while its offshore production segment results after finance costs declined 2.88% to RM438 million.
Yinson remains confident in strong demand in the FPSO market, with only a small number of companies signing new projects relative to the overall market size.

This article was translated from the original. Read the original version by our correspondent here.

Yinson’s contracting stance in a changing market

As reported by The Edge Malaysia, Yinson Production Ltd group chief executive officer Flemming Guiducci Grønnegaard said project execution did not differ significantly between the lease-and-operate model and a turnkey structure, but the company was more comfortable with contracts that maintained its existing way of working with customers.

He said Yinson did not operate like a shipyard that handed over an asset and then ended its involvement, but instead maintained long-term relationships with customers. According to him, the company preferred the lease-and-operate model because it saw customers’ and contractors’ interests as being aligned.

Customers for floating production, storage and offloading facilities, or FPSOs, are now exploring more turnkey-based projects rather than leasing vessels from providers such as Yinson. This shift is driven in part by accounting rules that require customers to record lease liabilities, eliminating the off-balance-sheet advantage previously associated with the leasing model.

Direct ownership of vessels can also reduce long-term costs compared with leasing, opening the door to broader competition, including from shipyards that deal directly with customers. However, Grønnegaard said that if the business were expanded in this way, Yinson would want to work with customers that allowed it to deliver projects in a way similar to how it operates today.

Market demand and half-year performance

Yinson Production, which is owned by Yinson Holdings Bhd, remains confident that demand prospects are strong, given that the number of companies continuing to sign new FPSO projects is small relative to the overall market size.

The company also uses engineering, procurement and construction contracts with several shipyards, particularly repair yards in China and fabrication yards in Asia, Southeast Asia and Indonesia. Yinson said it maintained close dialogue with shipyard partners to secure construction slots.

For the first six months ended 31 July, or 1HFY2027, Yinson’s offshore production segment results after finance costs fell 2.88% to RM438 million, from RM451 million previously. Net revenue also declined 16.7% to RM2.07 billion from RM2.49 billion.

The group has 11 floating assets in its fleet, five of which are wholly owned.

In our earlier coverage of the platform launch of Menarabena by Menara Asia, we examined efforts to digitize the construction supply chain by matching contractors with suppliers while consolidating product certification, documentation and compliance information. The article also covered collaboration with CIDB Holdings through its Information Centre in Shanghai to streamline the approval and certification process, with the aim of improving procurement efficiency without replacing existing certification requirements.

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