Yinson Production eyes expansion after US$1.46bil refinancing

KUALA LUMPUR: Yinson Production's US$1.458 billion (RM5.9 billion) Agogo floating production, storage and offloading (FPSO) project bond refinancing has freed up financing capacity for new projects as the company eyes expansion across Southeast Asia, West Africa and Latin America.

Chief financial officer Markus Wenker said the refinancing allowed the company to repay about US$1.4 billion in existing loans, freeing up lending capacity among its financiers to support future projects.

He said Yinson Production had diversified its funding sources over the past four years, reducing its reliance on bank loans to a financing mix of about 75 per cent bank funding and 25 per cent institutional investment.

"The US$1.458 billion Agogo FPSO project bond was our third in three years, the largest FPSO project bond ever issued and the first outside Brazil.

"Project bonds have become a key instrument in our financing playbook, and I expect us to continue using them where they offer the best financing solution," he said in a media briefing on Thursday.

Wenker said the company had access to several billion US dollars in debt financing to support its growth plans.

"There still seems to be a perception that capital for large offshore projects is not available. Our financing track record over the last few years demonstrates quite the opposite," he said.

He added that investors remained willing to provide long-term funding for projects with sound risk profiles and contracted cash flows.

Chief executive officer Flemming Guiducci Grønnegaard said the company continued to see a healthy pipeline of FPSO opportunities, particularly in the mid-sized segment, across its key markets.

"The fundamentals of the offshore energy market remain strong, and we continue to see a healthy pipeline of FPSO opportunities.

"We have built the organisation and capabilities to manage four or five major projects concurrently, but growth for us is not about chasing volume. We will remain selective and pursue the projects where we believe we can create the greatest long-term value," he said.

Grønnegaard said the company was exploring opportunities in Suriname and Guyana, while Namibia could offer further potential as its oil and gas investment policies develop.

He also reaffirmed Yinson Production's preference for the lease-and-operate model, which allows the company to maintain long-term client relationships rather than simply build and hand over assets.

Beyond FPSOs, the company is developing capabilities in floating liquefied natural gas (FLNG), having begun recruiting key personnel earlier this year.

Grønnegaard described FLNG as a natural extension of its business, drawing on the company's experience in developing, financing, owning and operating offshore infrastructure.

Wenker said traditional bank financing had become more challenging due to regulatory constraints, while several Western export credit agencies had withdrawn from financing new FPSO projects over environmental, social and governance concerns.

Nevertheless, he said lenders and investors remained willing to finance high-quality offshore infrastructure backed by credible sponsors and long-term contracted cash flows.