Business Risks

Floating Production systems (FPSOs, FSOs and TLPs) are installed in various countries with offshore oil and gas fields, but country risks associated with such installation are considered low for the following reasons.

In EPCI contracts (turnkey projects), since construction fees are in principle collected in advance according to the progress of construction, it can be said that the risks associated with collection are extremely low.

In service contracts for lease, charter, and O&M (operation & management) of FPSOs, etc, since the majority of our contractual counterparties are leading oil development companies including the European and American majors that have the rights to develop oil and gas fields, our company's business risks are not those of the oil-producing countries but rather the risks associated with the countries where either the oil development companies as contractual counterparties or their parent companies that guarantee payment are located.

Our company has some contracts with the government-run oil companies of oil-producing countries or contracts in which government-run oil companies of oil-producing companies partially participate, but our company only bids on projects that are judged safe after conducting our own country risk evaluation at the inquiry stage of the projects. In this case, our company also uses trade insurance and other means to mitigate country risks when deemed necessary.

With respect to the risk of disruption of service provision due to natural disasters such as hurricanes or cyclones in the waters where FPSO and other operations are conducted, or due to political conditions in the countries that own the oil or gas fields, our company endeavors to prevent damage to the company's group by limiting the liability of the company's group in contracts with oil development companies as our customers and by taking out insurance.