Malaysian shipping giant — and de facto Petronas subsidiary – MISC remains “cautiously optimistic” on the outlook for its heavy engineering sub-segment in view of the growing risks of global recession and geopolitical tensions, which could slow down business prospects despite the possibilities of new business opportunities resulting from the growth in capital expenditure and renewable energy and decarbonisation efforts.

Looking ahead, MISC noted that the global upstream capex will continue to increase in 2023 driven by high oil prices, strong cash flows and improved global oil demand. The outlook for the upstream oil and gas sector remains promising despite growing concerns on global recession and the world economy.

“This positive momentum will provide a huge uptick in the global FPSO market in the coming years, leading to a higher number of FPSO awards in the near term, coming from the South American region, led by Brazil, followed by West Africa,” the contractor said on Wednesday.

“The offshore business segment will selectively pursue new opportunities in the market whilst focusing on the execution of the project in hand and undertake mitigation measures to minimise cost and schedule pressures.”

Meanwhile, the marine sub-segment is expected to remain challenging mainly due to stiff competition from Chinese shipyards amidst the reopening of China’s borders and limited dry-docking opportunities as older LNG carriers decommission from service due to inability to comply with Energy Efficiency Existing Ship Index and Carbon Intensity Indicator requirements imposed by the International Maritime Organization, said MISC.

The contractor added the marine sub-segment continues to prioritise on improving project execution and successful delivery of current projects via operational and cost efficiency and aims to capture opportunities in the domestic and international markets as well as those in the renewable energy and decarbonisation sectors to sustain and grow its order book.

MISC’s revenues for the first quarter of 2023 were 3.079 billion ringgit ($672 million), up 7.4% year-on-year. The increase in revenue was, however, offset by lower revenue recognition from the conversion of a floating production, storage and offloading vessel. Group operating profit for the three months ended 31 March were 825.5 million ringgit – an increase of 59.7% higher from one year prior.

The offshore business segment recorded higher profit in the quarter ended 31 March as the previous corresponding quarter was affected by an increase in construction costs of an FPSO arising from the global supply chain issue and lockdowns in parts of China, which affected the movement of project personnel, goods and services as well as from engineering, procurement and construction activities.

“Our robust performance stems from our core strength of forging partnerships with strategic clients, championed by our team who is committed to our strategic aspirations. Nevertheless, we are attentive to the slowing global growth and changing energy needs worldwide,” said MISC chief executive Rajalingam Subramaniam.

“As we embark on our business transformative journey, we are determined to seize these opportunities, capitalising on our financial and brand strength, both regionally and globally.”