Mid-term
Business Plan2020
February 7th, 2018

Contents

Review of Previous Mid-term Business Plan

Mid-term Business Plan 2020(2015-2017)

 Outlook of Long Term Energy Consumptions

 Environment Current Market

 Result Strategy of Mid-term Business Plan 2020

 Activity

 Target for 2020 - Quantitative Goals
 Mission and Vision

APPENDIX2

Review of Previous Mid-term
Business Plan (2015-2017)

Review of Previous Mid-term Business Plan
(2015-2017) - Environment

Reduced number of projects due to low oil price and political instability in Brazil

Number ofProjects*

WTI Oil price（USD/bbl.）
14014121201010088066044022000201120122013

2014201520162017

Previous Mid-term Business Plan
From ：Number of projects: EMA, “Floating Production Systems Outlook Report 2018 Q1 Executive Summary”
WTI oil price: EIA*Floating production facility excluding FSO & MOPU

4

Review of Previous Mid-term Business Plan
(2015-2017) - Result

Strong increase of net income despite the revenue drop

Revenue (USD MM)
4,000
3,500

Target of Previous Mid-term Business Plan
Revenue

Net Profit

ROE

3,500

10010%Net Profit (USD MM)
200

3,000150

2,500
2,000

100

1,500
1,000

505000201120122013

2014

2015

2016

2017

0Previous Mid-term Business Plan
5

Review of Previous Mid-term Business Plan(2015-2017) - Activity

Action Plans were steadily achieved, and will be evolved into the new Mid-term Business Plan.

Asset Integrity Enhancement

Enhanced asset management with active resource allocation.
Achieved EPCI and O&M service which enable longer and more stableproduction by effective use of accumulated know-how in O&M for each
FEED/EPCI/O&M.

Strengthened CompetitivenessImproved EPCI cost competitiveness and shortened delivery time.
Reduced cost of O&M.

Execution of R&D

Continued research of technology for seabed mining.
Continued R&D of technology for offshore wind power.
Developed FSRWP®.

Efficient Organization
Asset Integrity: To provide with design, facility and production service
for long-term safe & steady oil and gas production.
FEED: Front End Engineering Design

Enhanced group cash management for efficient use of funds.

EPCI: Engineering, Procurement, Construction & Installation
O&M: Operation & Maintenance6Mid-term Business Plan 2020

Outlook of Long Term Energy Consumption

Oil will stay as an important source of energy, whereas Gas will rise sharply.
Total energy consumption（mtoe/y）17,865
16,185

14,576
13,6842014

Oil consumption （mtoe/y）

4,266

4,474

4,630

2020

2030

2040

Gas consumption（mtoe/y）
4,775

Renewable energy consumption（mtoe/y）

2,259

3,686
2,893

2014

2020

2030

from ： IEA, “World Energy Outlook 2016”

2040

3,456

4,313

2014

*mtoe: million tonnes of oil equivalent

1,937

3,141

2020

2030

2,827

2040

2014

2020

2030

2040

8

Current Market

Business conditions have improved and numbers of prospective projects are coming.
Bidding & Final Design

Numbers of projects using floating oil and gas production facilities (as of September 2017)

PlanningWorld Total

Appraisal

5613548CanadaChinaNorth Sea
2655152GOM

1Southeast Asia

Mediterranean

3761443311

Brazil101198626

Australia & New Zealand

Other S. America & Caribbean
12224

Southwest Asia & Middle EastAfrica

91667

from ：EMA, “2017 Q4 FPS Report" *Australia & New Zealand includes one project in bidding and ﬁnal design stage in Paciﬁc.

1139

Strategy of Mid-term Business Plan 2020
Maximize LIFECYCLE VALUEDevelopment of new business

Evolution of Asset Integrity

Penetrate into gas market

0103

Asset Integrity

Digitalization

GASR&D

0204

Digitalization

Continuous investment in R&D

LIFECYCLE VALUE : The value which MODEC provides with stakeholders, i.e.,

community, customer, partner and our shareholders through thewhole life of the FPSO, from design to operation.

10Strategy of Mid-term Business Plan 2020
1.Evolution of Asset Integrity

Maximizing Lifecycle Value

Evolution of Asset Integrity

O&M

FEED

EPCI

O&M

FEED
KPI management aiming tomaximize lifecycle value

Integrated Management System
GlobalOrganization

ITPlatformHRDevelopment

Optimization

Renewal of ERP

Investment in
Next leaders/specialists
11Strategy of Mid-term Business Plan 2020
2. Digitalization
Massive amount of operational data is our key asset of competence.
We will move forward with a digitalization program to enhance the lifecycle value.
Enhanced efficiency leveraging IoTAdvanced Analytics
Reduced maintenance cost
Safe & Steady operation
Increased uptime

Optimized FPSO design & EPCI- Targeting to achieve O&M
automation by applying robotics

FPSO operational data12

Strategy of Mid-term Business Plan 2020
3. Penetration into gas marketExpected volume of investment in floating gas related facility■Considering alliance/collaboration with 3rd parties if necessary.

EuropeNorth America & the Caribbean
Middle East

Southeast Asia

South Asia

AfricaSouth AmericaAustralasia

Accumulated volume ofmarket in 2018-2020
from ：MODEC

13

Strategy of Mid-term Business Plan 2020
4. Continuous investment in R&D

Offshore fleet repair

Offshore wind power

Development and materialization of innovative

Research for low costin-situ fleet repair method using CFRP

offshore installation

Seabed mining
development
Leading a Japanesenational project14

Target for 2020 - Maximize LIFECYCLE VALUE

USD

USD

4,000 MM

200 MM

Net Profit

12%AwardRevenue

ROE（FPSO）

2020

2Award1（Gas）

Digitalization

vessels/year

6vesselvessels in 2018

- expand up to 202015

Mission and Vision- Commitment to leading the offshore industry

MISSION

MODEC delivers and safely operates high-quality, innovative
ﬂoating solutions for the oﬀshore industry.
VISION

To be the global leader in delivering and operating innovativeand reliable ﬂoating solutions by cultivating diverse and talented
teams that work with integrity, communicate openly, serve thecommunity and protect the environment.

16APPENDIX

Outlook of Oil Price

Both scenario 1 and 2 show steady oil price.
Scenario2

Scenario1
Energy demand will increase steadily due to the rise of world

Energy demand will increase but that will be offset by improved

population, growth of living standards and urbanization inenergy efficiency in industry and home, which is enabled bydeveloping countries.

widespread low-energy-consuming equipment.
125

Unit：USD/bbl

110

80

85

78

73

2020
from ： IEA, "World Energy Outlook 2016"

2030

2040
18

Continue to accumulate experience

2030

2028

2026

2024

2022

2020

2018

2016

2014

2012

2010

2008Petrobras
Petrobras
Petrobras
TullowPetrobras
Petrobras
Petrobras
Petrobras
Petrobras
Petrobras
Petrobras
JVPCPetrobras
Petrobras
KNOC
CNR
Santosavailable
OMV
Tullow
BHPB
Shell2006

Petrobras Mero Pilot FPSO
(2)FPSO Carioca MV30
(3)FPSO Cidade de Campos dos Goytacazes MV29
1
FPSO Prof. John Evans Atta Mills
2
FPSO Cidade de Caraguatatuba MV27
3
FPSO Cidade de Itaguaí MV26
4FPSO Cidade de Mangaratiba MV24
5
FPSO Cidade de São Paulo MV23
6FPSO Cidade de Angra dos Reis MV22
7
FPSO Cidade de Santos MV20
8FPSO Cidade de Niterói MV18
9FSO Rang Dong MV17
10FSO Cidade de Macaé MV15
11
FPSO Cidade do Rio de Janeiro MV14
12
FSO Rong Doi MV12
13
FPSO Baobab Ivoirien MV10
14FPSO MODEC Venture 11(15) FPSO Stybarrow Venture MV16
1
FPSO Raroa
2
FPSO Kwame Nkrumah MV21
3
FPSO Pyrenees Venture
4
FPSO Fluminense
(1)

2004

Charter/O&M (as of February 2018)

22y
21y

More than
200 years ofO&M
45＋α
EPCI

20y
10y
20y
20y
20y
20y
15y
12y

9y
9y

7.5y

20y
8y

7y
10y

5y

5y
7y +
15y5y+

10yy

15y
17.5y
Charter（fixed）

Charter（option）

O&M

19

Disclaimer

The information contained in this material is based on a set of assumptions and it is notguaranteed as to its materialization of financial visions or corporate strategies.

20