Interview with Capt. Rajalingam Subramaniam

Okay. Thanks, Keng Sin. First, let me acknowledge the audience. We're in the midst of very distinguished charismatic leadership group from across the maritime industry and I feel so humble and honored to be amongst you. I feel so happy that situation has improved that we are able to meet face to face and welcome to Asia, welcome to Singapore for all our friends and colleagues who have flown in from abroad. I'm conscious that there's actually two big maritime industry programs running at the moment which is the Singapore Maritime Week and also the Nor-Shipping in Europe. It's just so good to see so many in the same room. I didn't know what I signed up for when my corporate comms said you're going to say a few words because doing things virtually over the last two years, I see a lot of faces and I'm sure that there will be some Q&A coming along which sometimes virtual program you have the defense of the monitor.

Going in straight to the pandemic and the Ukraine Russia conflict. First is the tragic human cost. Both the pandemic and the conflict and it is this tragic human cost which bears upon us. These are things that we would have hoped would not have happened. I just came back from Europe and in my cohort there was actually a participant, a senior leader from the Ukrainian banking fraternity who moved out of Kyiv with her two kids and her mother and her hubby is still a senior civil servant in the Ukrainian government having to take arms, has been inducted as part of the armed forces and looking at some of the pictures that she was showing us it's heartbreaking. I hope that there will be some normality soon for everyone and we've got friends on all sides of the borders. We just hope that this comes to normalcy as soon as possible. Our thoughts and prayers to everyone directly and indirectly affected due to this pandemic and also the conflict.

The economic sanction and funneled immediately after the pandemic that we have faced. We all read the same news reports, and whilst our wish is that it's going to be for a shorter term, the inflation, the risk of stagflation, the risk of recession, etc. Though we would hope that it's for a shorter term, but it's quite clear that the sanctions are going to not go away. It's quite clear that it's going to stay for long. Just like the World Trade Organization, the World Bank and other economic forecasters shown that what we would have hoped for in 2022-2023 is definitely going to be a regression from what has been initially forecasted. So that's the world that we are in at the moment.

And coming to the second question that you asked in terms of what we have been doing both at an MISC Group level and also for the entity that I'm directly accountable for in AET, it has been a busy two to two and a half years, and what I must say that it has been very purposeful and progressive in terms of what we have done. My finance team, because a large majority of the audience here are from the financing institution, my team has done very well in terms of raising close to about $1 billion of debt financing for all the 12 to 13 assets that we are going to we have either delivered or on delivery schedule over this year and next year. I want to say thank you to all the partnership banks and financial institutions who's been with us, new and old. It has been a busy period for us as far as that is concerned. So I'm happy to say all financing, all refinancing has more or less been closed out during this period.

On the progressive side, this is a time that we also on the sustainability, we've adopted 17 UN SDG goals, and on the Dow Jones Sustainability Index, on the TCFD scenarios, these are areas that we have progressively done quite well in my view to push the organization forward and making the talent in our organization, our board, and our shareholders more ESG competent in their knowledge and creating the conflict of ideas, creative conflict for us to push the management to move forward in those areas. We've also done incubation of startups in Singapore together with BCG DV. Three startups in Singapore on safety, decarbonization, and space management, and we've also invested on an early stage startup in Switzerland for methane slip abatement technology so that we want to incubate and co-create and not just being a user, but also co-create for the industry. On the talent side, D&I, I'm personally a very committed person as far as D&I is concerned. The E in the middle is coming to fruition as well. We are an organization across all three geographies. We've got nearly about 40 nationalities, give or take about 12 of them the predominant nationalities. Whilst we give diversity its due and it's not just gender diversity, I'm proud to say that in my AET team about half of my team members ashore are from the women gender and about one third of my middle management and senior management are women. But that is only one diversity angle. At the same time in areas that we are developing new like in Brazil, I'm proud to say that the localization agenda is also important for us and over the last two years we have inducted talent from the industry, localization plus also talent existing talent from our organization. So that's a give or take what we have done over the last two to two and a half years.

And Keng Sin, to add we do it because it's not convenient, we do it because it's the right thing to do. It's a longer term game.

Okay. Specific to talent, what we've done, the D&I agenda and being more inclusive of the multi-generationals, being more inclusive in terms of thoughts, ideas, etc. We sit on my team members, my leadership sits on D&I sustainability groups, D&I advocacy groups, etc. But more importantly is the agility of the talent for the current but purposing for the future. That is something that I believe that we have done more purposefully. Understanding things and just now I mentioned about making our talent ESG competent. HSE used to be the license to operate. ESG is the license to prosper and progress. So making our talent more ESG competent in terms of the thought ideas that we put in, creating the avenues for discussions within our talent groups, creating that mix because sometimes to develop, you also need to post them elsewhere. Doing that. And I'm proud to say that over the last two years, the number of scholarship and internship programs that we have rolled out throughout our nine, ten offices globally by far has been the largest. Because we believe in developing talent and it is not just developing talent for us, it's developing talent for the industry and for the future. So these are things that we have done more purposefully. And as an organization, we do not participate in job support schemes globally on our own. We believe that with the broad shoulders that we have, we should actually be giving back rather than taking on. And I think Abhishek mentioned just now, except for the tanker industry, the rest of the segments have been doing much more profitable. Last year, the tanker industry went through its worst freight rates. But I must say that my team members have done well in terms of returning a profitable number and cash balances, which is better through all the exercises that we have done. And with that, we've been able to give back. Like in Singapore, the job support scheme comes by default, and we give it back to society and not a single cent goes on our balance sheet, no sorry, on our accounting line or on our cash line. And those are things that we do progressively for the organization.

Okay. Right. And coincidentally, I'm sure that most of us would have read the ICCP report yesterday. And relate back to what Mr. Antonio Guterres has boldly said about governments and business leaders saying one thing and doing another. I thought for a diplomat, that's a very strong statement coming from him. But coming closer to home, why did we do that? We started our LNG dual fuel journey in 2017 with our first two Aframax dual fuel. And that was also closely after the previous ICCP report, which talks about whether the 1.5 degrees pre-industrial is possible and what is probable in terms of trying to mitigate that. This is my second tour duty in Singapore over the last 17 years in a senior leadership position. One of the pivotal moments was at Marina Bay Sands, Gardens by the Bay. My youngest son, Vinod, he was in his early teens. And there, when you come down at your last stage, there is this screen which talks about global warming. That impacted me in terms of what we are leaving for the next generation. So we should be part of the solution. When we came to the idea of whether we need to incubate a dual fuel mechanism, we said that because we also have LNG carriers, we know transfer technology is not going to be that difficult. We know that the world is long on gas and everyone can say that this is a transition fuel. I personally believe that it is a fuel in transition because you can go bio, etc. And then we took our first leap. My board was very supportive. My shareholders were very supportive. We knew that being a first mover is going to not give us the commercial returns that we would expect from other asset classes. But with broad shoulders that we have, we said we're going to definitely make this leap. So we went on. And then from there, we went on our shuttle tankers with dual fuel LVOC. And then we've also delivered VLCCs with dual fuel as well. So all our petroleum asset classes have got that. And that's a proof of concept, which is saying that it is probable, is doable, and we should not be kicking the can down the road. But that is not going to probably give us that solution until 2030. We sort of an aspiration and targets. What about 2050? I must give credit to my boss, Dato EE, who came up together with like-minded leaders in the industry to give birth to the Castor Initiative. Under the Castor Initiative, it is where even DPM Heng was mentioning about the Castor Initiative yesterday at the SMW opening. Collaboration partnership has to come into this. What you heard what was reported today and on what we announced yesterday on the ammonia dual fuel for VLCCs is drawing a line in the sand saying, 'By 2026, we would like to see this happen.' Scalability of green ammonia has been committed, but we're going to take that next leap because ammonia, in our opinion, is one of the pathways to achieve the 2050 decarbonization agenda. So the years of making our talent ESG competent, our board ESG competent, and our shareholders ESG competent helps us in moving. And I've got clients, financiers, who are coming in and saying, 'We want to be part of the solution.' I've got to give big credit to our platinum clients, the energy majors, the financiers who've come on board and participated in the credit risk and also participated in sharing on the commercial viability of the assets and being part of the ecosystem of solution. Solutions are there. Opportunities are there. I know we do not want to make this into a sustainability or an E agenda. Everybody is talking about it. But talk is cheap. We've got to act now. With the ICCP report yesterday, I think it is very clear that the call for action is now and not later. On another point that I want to make, even at the SMW opening panel discussion yesterday, I was surprised to see that the highest number of question was actually in terms of we as leaders saying so much, but we are still building assets with a certain technology which is more polluting rather than more abating. So I thought that that sums it up well in terms of the questions that the audience is asking and what is highest on our agenda. And I call upon the leadership of the industry to rise up to the occasion and do what is right rather than what is convenient and waiting for something else to happen, waiting for the great to happen and negating the good. It is all possible solutions. I'm sorry if I stressed on this a bit too much. I'm in the midst of distinguished audience here, charismatic capable leaders. There's going to be multiple pathways in terms of maritime decarbonization. We've got to also appreciate that maritime transportation is the most energy efficient amongst all transportational models and 80% of global trade is done through that. And we have to give due credit to our seafarers who've kept the global trade flowing throughout the pandemic and I'm sure that they have gone through a much bigger risk and much bigger duress during this period.