MODEC Enhances FPSO Business With Decarbonization Focus

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  • MODEC, a prominent FPSO operator in Japan, unveils its mid-term business plan (2024-2026), focusing on enhancing the profitability of its core FPSO business, investing in decarbonization efforts, exploring new opportunities, and strengthening its business foundation.
  • Guided by its vision of harmonious coexistence between humanity and the ocean, MODEC aims to pioneer sustainable solutions for the future through its unique floating technologies.
  • The mid-term plan, aligned with its “Vision 2034,” emphasizes sustainability management and addresses the global trend toward decarbonization.
  • MODEC aims to contribute to society by ensuring stable energy supply and reducing carbon emissions, while also venturing into floating offshore wind power, alternative energies, and digital businesses.
  • Financially, MODEC expects stable earnings from leasing revenues and ongoing construction projects, setting financial targets for sustainable growth.

MODEC’s Mid-Term Business Vision

Considering the present energy landscape, MODEC, Japan’s FPSO operator, has revealed its mid-term business blueprint for 2024-2026. It emphasizes enhancing the profitability of its core FPSO operations, allocating funds for decarbonization efforts, exploring new prospects, and reinforcing its business infrastructure, including talent development.

With a vision of “pioneering a world where the ocean and humanity co-exist in harmony,” MODEC is on a mission to unlock the ocean’s potential by supplying “unique floating solutions for a sustainable future.” To this end, the Japanese firm has formulated a mid-term business plan, covering the three years through fiscal year 2026, which comes with a slogan ‘Explore a Sustainable Future with Innovation.’

The plan is formulated by backcasting from the vision for the next ten years, known as its ‘Vision 2034,’ taking into account the business environment surrounding the company and the accelerating global trend toward decarbonization. The firm will focus on sustainability management.

MODEC’s Strategic Initiatives

MODEC outlined: “We will contribute to society by ensuring a stable energy supply while reducing the carbon dioxide emissions in our core business of FPSO operations. In addition, we will contribute to the realization of an environmentally friendly society by promoting floating offshore wind power, alternative energies, and digital businesses, leveraging our unique floating and digital solutions. We will also work to expand our human capital and foster a corporate culture that supports these initiatives.”

MODEC expects its earnings during the new mid-term business plan period to be strongly supported by stable leasing revenues from the five charter contracts that started operation during the previous mid-term business plan period, as well as revenues during construction from the two large projects for which orders were received last year.

The Japanese player has set financial targets of return on equity, price-to-earnings ratio, and adjusted EBITDA, in addition to net income, to achieve sustainable growth and further promote cash flow and cost of capital-conscious management. The mid-term business plan 2024-2026 is based on the company’s recently renewed vision, mission and core values, and newly established materialities.

MODEC’s Position In The FPSO Market

“Coexisting with the decarbonization trend and maintaining stable energy supply remains an important issue, and the oil companies are continuing the deep-sea oilfield development projects,” explained MODEC while anticipating steady demand related to its FPSO systems for oil and gas production, especially the ultra-deepwater large-scale projects.

Last year, the Japanese player secured new FPSO construction orders with ExxonMobil Guyana for the Uaru project in the Stabroek block off the coast of Guyana, and Equinor Brasil Energia for the BM-C-33 block field offshore Brazil.

Anticipating Demand In Deep-Sea Oilfield Development

Rystad Energy underlines that Guyana is second only to Brazil in the number of new FPSO projects set to kick off operations. The country is expected to produce 1.7 million barrels of oil per day by 2035, which would make it the fourth-largest offshore oil producer in the world.

The South American FPSO market is on the rise alongside the global FPSO market, which is estimated to reach $20 billion in 2027, based on a report by The Insight Partners. MODEC has been busy with new FPSO deliveries. One of the recent ones was confirmed in August 2023.

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Source: offshore-energy