MISC announced the addition of two new vessels the FPSOs Marechal Duque de Caxias and Eagle Veracruz were of which now 15 % of the group’s AET fleets are powered by LNG dual-fuel technology, and the numbers are expected to grow.
LNG continues to be key role in transition, MIDF believes these latest additions to MISC’s fleet is in line with MISC’s commitment to continue supporting energy sustainability while promoting energy transition for the shipping industry. Shipping industry, while being one of the hard-to-abate sectors in terms of emissions, had been eyeing LNG as an alternative to the conventional diesel. By using dual-fuel engines, MIDF is expecting LNG demand for this industry to grow in the near future, hence solidifying forecast that LNG will be less susceptible in the commitment for energy transition, as per NETR.
While the FPSOs are set to provide a new revenue stream for MISC as it enters the South American region, in consideration of an upscaling in the upstream development within its offshore blocks, the house opines that production will not take place immediately, hence we are not factoring in the revenue for MISC at this juncture. Additionally, the uncertainties in crude oil prices as well as the regional conflict in the Middle East continued to pose a risk to offshore vessels.
The house maintains its NEUTRAL call on MISC, with a target price of RM7.37.
