Sumitomo acquires 25% stake in Yinson's $5.4 bil. project in Brazil

01, May. 2020

KUALA LUMPUR, NNA – Major Japanese trading house Sumitomo Corp. is buying a 25 percent stake in a $5.4 billion offshore project secured by its Malaysian business partner, Yinson Holding Berhad.

Under the agreement with the Malaysian offshore development services provider, Sumitomo will participate in the floating production, storage and offloading (FPSO) owning and chartering business for the Marlim II Project, off the coast of resource-rich Brazil.

Sumitomo is expecting demand for FPSO floating vessels to rise in the coming years. Used by the offshore crude oil and gas production industry, they are designed to produce and process hydrocarbons, store oil, and offload it directly onto a tanker.

Said Sumitomo in its media statement, "As a preferred deep-water oil and gas production platform, demand for FPSOs is expected to grow in the coming years. With about 30 percent of the global demand generated in Brazil, the country is the world’s leading FPSO market."

The FPSO facility will serve the Marlim oil and gas field revitalization project, which is operated by Brazil’s state-backed Petrobras and situated 150 kilometers off the Brazilian coast in the Campos Basin. The two entities co-owned by Sumitomo and Yinson will sign agreements for owning, chartering as well as operation and maintenance with Petrobras.

FPSO in operation (Photo courtesy of Yinson)
FPSO in operation (Photo courtesy of Yinson)

The Marlim project is expected to generate 70,000 barrels of oil a day and four million cubic meters of gas daily, according to Sumitomo.

Production is scheduled to begin in the beginning of 2023, with a 25-year contract for the estimated value, according to a statement by Yinson.

On expanding its energy business, Sumitomo said, "We will establish the marine infrastructure business, which encompasses FPSOs, as part of our new energy business domain, and create synergies from its integration with existing energy businesses. Through these activities, we will contribute to the stable supply of energy, particularly oil and gas."

The project represents Sumitomo’s second FPSO business following the offshore Ghana oil and gas field development project also together with Yinson in 2018.

The Marlim project also marks the first time Sumitomo is participating right from the start with the construction phase.

"Through participating in the project from earlier phase through to operation and management, Sumitomo aims to acquire substantial knowledge and expertise on FPSO business management," said the Tokyo-based trader.