Foreign exchange risk
The Company operates internationally and is exposed to foreign exchange risk arising from transactional currency exposures, primarily with respect to the euro, Singapore dollar, Chinese yuan and Brazilian real. The exposure arises from sales or purchases in currencies other than the Company’s functional currency. The Company uses forward currency contracts to eliminate the currency exposure once the Company has entered into a firm commitment of a project contract.
For foreign currency risk, the principal terms of the forward currency contract (notional and settlement date) and the future expense or revenue (notional and expected cash flow date) are identical. The Company has established a hedge ratio of 1:1 for all its hedging relationships.
The main Company’s exposure to foreign currency risk is as follows based on notional amounts:
Foreign exchange risk (summary)
31 December 2025 | 31 December 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
in millions of local currency | EUR | SGD | BRL | CNY | EUR | SGD | BRL | CNY |
Fixed assets | 204 | 2 | 463 | 30 | 213 | - | 851 | 32 |
Current assets | 128 | 5 | 522 | 25 | 145 | 5 | 1,304 | 37 |
Long-term liabilities | (181) | (1) | (456) | (22) | (190) | (0) | (1,063) | (22) |
Current liabilities | (220) | (12) | (1,100) | (164) | (235) | (16) | (1,622) | (140) |
Gross balance sheet exposure | (70) | (7) | (570) | (132) | (68) | (12) | (530) | (93) |
Estimated forecast sales | 18 | - | - | - | - | - | - | - |
Estimated forecast purchases | (1,370) | (473) | (3,008) | (3,481) | (1,688) | (764) | (3,053) | (4,836) |
Gross exposure | (1,423) | (479) | (3,578) | (3,613) | (1,755) | (776) | (3,583) | (4,929) |
Forward exchange contracts | 1,461 | 473 | 3,621 | 3,657 | 1,808 | 775 | 3,609 | 4,937 |
Net exposure | 38 | (7) | 43 | 44 | 53 | (1) | 25 | 8 |
Net exposure in USD | 45 | (5) | 8 | 6 | 55 | (1) | 4 | 1 |
Overall, currency gross exposure decreased due to progress in the construction of FPSO Jaguar and FPSO GranMorgu, as well as the completion of the three FPSOs delivered in 2025: FPSO Almirante Tamandaré, FPSO Alexandre de Gusmão and FPSO ONE GUYANA. Future BRL requirements remain almost stable, as the construction costs in BRL are offset by the operational needs of the Company’s two new vessels operating in Brazil.
The estimated forecast purchases relate to project expenditure and overhead expenses for up to three years. The main currency exposures of overhead expenses and Brazilian operations are hedged at 100% for the coming year, between 66% and 100% for the year after, and between 33% and 100% for the subsequent year, depending on internal review of the foreign exchange market conditions.
Foreign exchange risk (exchange rates applied)
2025 | 2024 | 2025 | 2024 | |
|---|---|---|---|---|
Average rate | Closing rate | |||
EUR 1 | 1.1298 | 1.0824 | 1.1750 | 1.0389 |
SGD 1 | 0.7654 | 0.7487 | 0.7779 | 0.7335 |
BRL 1 | 0.1791 | 0.1865 | 0.1826 | 0.1617 |
CNY 1 | 0.1391 | 0.1390 | 0.1428 | 0.1370 |
The sensitivity on equity and the income statement resulting from a change of 10% of the US dollar’s value against the following currencies at December 31, would have increased (decreased) profit or loss and equity by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis as for 2024.
Foreign exchange risk (sensitivity)
Profit or loss | Equity | |||
|---|---|---|---|---|
10% increase | 10% decrease | 10% increase | 10% decrease | |
31 December 2025 | ||||
EUR | (1) | 1 | (162) | 162 |
SGD | 1 | (1) | (37) | 37 |
BRL | (0) | 0 | (56) | 56 |
CNY | (0) | 0 | (50) | 50 |
31 December 2024 | ||||
EUR | 1 | (1) | (182) | 182 |
SGD | 0 | (0) | (56) | 56 |
BRL | (1) | 1 | (49) | 49 |
CNY | 0 | (0) | (67) | 67 |
As set out above, by managing foreign currency risk, the Company aims to reduce the impact of short-term market price fluctuations on the Company’s earnings. Over the long-term however, permanent changes in foreign currency rates would have an impact on consolidated earnings.