TANJUNG OFFSHORE BERHAD

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MANAGING DIRECTOR’S REVIEW MV Tanjung Gelang performing well testing activities for Carigali PTTEPI Operating Company (CPOC) Offshore Support Vessels Services (cont’d) As of May 2010, the Group will be operating sixteen (16) wholly owned offshore support vessels which are chartered out to oil majors operating in Malaysian waters. Save for two (2) offshore support vessels, MV Tanjung Manis and MV Tanjung Gaya which are on spot charters, all our vessels are on secured long term charters up to FYE 2016 and we are confi dent that the demand for these vessels will remain robust given the continuous development and production of new and existing development programmes for various oil and gas Production Sharing Contracts (PSCs), spearheaded by PETRONAS together with other oil majors operating in this region. Our People As of todate, the Group employs a total of 550 employees comprising senior management, corporate executives, professional engineers and marine offi cers at all levels of responsibilities within the Group. Apart from various capital investments in offshore support vessels, maintenance workshops and facilities, the Group has also invested substantially in human capital, which is also one of the important aspects of the Group. In line with our expansions and growth in business operations, we have also recruited and provided various training programmes at all levels within the Group. During the year, we have sent various engineering teams for complete technical training at our principals’ centres, both local and overseas for in-depth exposures on the latest technological advances in the oil and gas industry. We have also sponsored various batches of students at Akademi Laut Malaysia (ALAM) where successful marine students are offered employment with Tanjung Group. Through these sponsorship programmes, we are able to attract local marine talents and providing a qualifi ed workforce for Tanjung Group’s future marine expansions. 43 TANJUNG OFFSHORE BERHAD (662315-U) ANNUAL REPORT 2009 Equipped with the latest technical knowledge and hands on experiences, our engineers of multiple disciplines would be able to offer their services to the oil majors, in the shortest time frame at their locations especially for urgent projects or during unforeseen emergencies. Outlook for the Future Despite the reduction in overall profi tability of the Group in FYE 2009, we are still upbeat on the prospects of both the upstream and downstream sectors of the oil and gas industry in Malaysia. We take cognizance of the operational losses at our subsidiary CERS UK and have also implemented a turnaround plan for immediate cost reduction measures and restructuring of the production processes for the manufacturing of waste heat recovery units for the international markets. On the back of a new contract secured from the U.S. recently, we are confi dent that CERS UK will turnaround and deliver better results in the year ahead. In the past twelve (12) months, we have witnessed oil prices treading at lows of USD35 per barrel which has since recovered and stabilised at between USD70 - USD80 per barrel in recent months. As such, we remain positive on the long term opportunities within the industry based on our capital investments in recent years, in particular, the offshore support vessels, equipment facilities and the continuous development of our human capital. In the long term, we believe that most oil majors including PETRONAS will continue to spur exploration, development, production and maintenance activities. This is evident from the recent engineering equipment contracts and the award of long term charters for all fi ve (5) new AHTS vessels which were launched and delivered to the Group in late FYE 2009 and early FYE 2010.
TANJUNG OFFSHORE BERHAD (662315-U) ANNUAL REPORT 2009 MANAGING DIRECTOR’S REVIEW CERS UK’s manufacturing plant in Hull, UK Casing division at CERS, UK Coiling division at CERS, UK Most oil majors have also implemented various rejuvenation programmes to enhance the oil and gas recovery rates at existing and matured production sharing contracts (PSC). Based on these developments, we believe that there are various niche opportunities for Tanjung Group to participate in these support services. We have invested in the development of our technical manpower, offshore support vessels and maintenance facilities at our workshops so as to provide our range of integrated services to the oil majors on a long term basis. Despite the tough operating environment and challenges in the fi nancial markets in FYE 2009, we have remained resilient and have capitalised on our available resources to further enhance our product offerings and actively promote our products and services to new and existing customers both locally and abroad. We believe that this will result in achieving better effi ciencies that translate into further optimisation of production at the lowest costs for the oil majors. Overall, we foresee another fruitful year ahead for the Group on the back of foreseeable growth in demand for our integrated services and our turnaround plan at CERS UK. We have to continue to position ourselves and remain resilient in the midst of a fast changing business environment. We will remain focused in the oil and gas industry and maintain our relevance in becoming the preferred integrated oil and gas service provider in Malaysia and the region. ..................................................................... HAJI OMAR BIN KHALID Managing Director 30 April 2010 44
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