4.3.24Provisions
The movement and type of provisions during the year 2025 are summarized as follows:
Provisions (movements)
Demobilization | Warranty | Restructuring | Employee benefits | Other | Total | |
|---|---|---|---|---|---|---|
Balance at 1 January 2025 | 112 | 118 | 1 | 22 | 313 | 565 |
Arising during the year | - | 66 | (0) | 3 | (18) | 51 |
Unwinding of interest | 5 | - | - | 1 | 5 | 11 |
Utilized | (2) | (34) | (0) | (1) | (33) | (70) |
Released to profit | (53) | (40) | (0) | (1) | (16) | (111) |
Other movement | - | 0 | (0) | 1 | (1) | 0 |
Balance at 31 December 2025 | 61 | 111 | 0 | 25 | 249 | 447 |
of which : | ||||||
Non-current portion | 54 | - | - | 25 | 52 | 131 |
Current portion | 7 | 111 | 0 | - | 197 | 315 |
Demobilization
The provision for demobilization relates to the costs for demobilization of the vessels and floating equipment at the end of the respective operating lease periods. The obligations are valued at net present value, and a yearly basis interest is added to this provision. The recognized interest is included in the line item ’Financial expenses’ of the consolidated income statement (refer to note 4.3.9 Net Financing Costs).
The decrease in the provision for demobilization mainly relates to the sale of the semi-submersible production facility Thunder Hawk to the client, leading to the release of the existing demobilization provision and demobilization receivable (refer to 4.3.16 Other Financial Assets), partially offset by the unwinding of interest accrued on the provision for FPSO Cidade de Anchieta.
Expected outflows within one year are US$7 million and US$54 million after five years.
Warranty
For most Turnkey sales, the Company gives warranties to its clients. Under the terms of the contracts, the Company undertakes to make good, by repair or replacement, defective items that become apparent within an agreed period, starting from the final acceptance by the client.
The decrease in the warranty provision resulted from the regular consumption of existing warranty provisions over the applicable warranty period, the utilization of existing warranty claims from clients partially offset by new provisions accrued on projects under construction over the period or still under warranty period and new warranty claims from clients.
As of December 31, 2025, the Company expects US$22 million of the recognized warranty provision to be released within 12 months.
Other
Other provisions mainly relate to planned local content penalty on construction projects and include claims, regulatory fines related to operations, and onerous contracts.
The reduction in Other provisions mainly relates to the Company’s progress in settling planned local content penalty obligations in relation to FPSO Sepetiba, FPSO Almirante Tamandaré and FPSO Alexandre de Gusmão.