SHANGHAI (Feb 20): Yinson Holdings Bhd (KL:YINSON) has completed its largest floating, production storage and offloading (FPSO) vessel, Agogo FPSO, three months ahead of schedule at Cosco Shipping Heavy Industry (Shanghai) Shipyard.

Agogo FPSO, which has a minimum storage capacity of 1.6 million barrels, is now ready to depart for Angola, western-central coast of Africa, where Azule Energy has chartered it under a 15-year contract worth US$5.3 billion (RM23.48 billion), with a five-year extension option. Yinson won the contract two years ago.

Azule Energy is Angola’s largest independent oil and gas producer that is a 50:50 joint venture between British oil giant BP and Italian energy company Eni.

Speaking to the media after the naming ceremony, the group’s wholly owned unit Yinson Production’s chief executive officer Flemming Grønnegaard said that the Agogo FPSO naming ceremony was held three months ahead of schedule, and expects it to be ready for first oil earlier than initially planned, ahead of the initial timeline communicated to its client, Azule Energy.

Upon the full acceptance of Agogo FPSO, Yinson will have eight FPSO vessels in the lease and operate phase that generates recurring income.

Notably, its FPSO Maria Quitéria, whose backlog contracts stand at US$5.1 billion, achieved first oil in October last year, while FPSO Atlanta, whose backlog contracts stand at US$2.1 billion, achieved first oil in December 2024.

With these in the fleet, Yinson Production estimates an annual cash flow of roughly US$850 million to US$900 million (after adjustments for non-cash expenses) on a recurring basis. This will be a quantum leap compared with the US$300 million amount generated in the nine months ended Oct 31, 2024 (9MFY2025).

Going forward, Yinson is targeting to win at least one FPSO project every year.

The US$1 billion redeemable convertible preference shares (RCPS) deal signed in January is expected to boost its cash position to US$1.383 billion from US$583 million.

The enlarged equity position will help strengthen Yinson’s financial muscle to take up three to four mid-range FPSO projects valued at between US$1 billion to US$1.8 billion each, according to Grønnegaard.

He explained that the RCPS is staggered over 18 months in tandem with its project pipeline. “We have no interest in getting the cash in before we need it.”

Commenting on the FPSO industry, Grønnegaard said that the industry is now in a “super sustainable” period because the number of players has come down from about 40 players previously to a handful now, while FPSO demand is stable.

As for supply chain risk, Grønnegaard is not worried about Chinese shipyards that have been exceptional in deliverability and execution, copying and surpassing Yinson in the FPSO business.

He explained that completing an FPSO involves various parties such as shipyards, modules and fabricators. Yinson’s expertise in access to client needs, as each oil field requires different types of specification, as well as project management with various stakeholders, is one skill that is hard for the shipyard to replace.

Agogo FPSO is set to operate in Block 15/06 offshore Angola and is expected to contribute at least 10% of the country's oil production, solidifying the country’s position as Africa’s second-largest offshore producer.

The Agogo FPSO deploys cutting-edge carbon reduction technologies, including the first pilot of a post-combustion carbon capture system (CCS) on an FPSO.

The carbon-reducing technologies onboard the FPSO are expected to reduce carbon emissions by up to 27%. On top of post-combustion CCS, they also include a closed flare system, hydrocarbon blanketing, combined cycle technology, automated process controls and all-electric drive systems.

Shares of Yinson closed unchanged at RM2.26, valuing the group at RM6.56 billion. Year-to-date, the stock has fallen 14%.