4.3.5Expenses by Nature
The table below sets out expenses by nature for all items included in EBIT for the years 2024 and 2023:
Note | 2024 | 2023 | |
|---|---|---|---|
Expenses on construction contracts | (1,704) | (2,130) | |
Employee benefit expenses | (995) | (842) | |
Vessels operating costs | (770) | (512) | |
Depreciation, amortization and impairment | (113) | (94) | |
Selling expenses | (9) | (10) | |
Other costs | (300) | (232) | |
Total expenses | (3,890) | (3,820) |
'Expenses on construction contracts’ decreased compared with prior year. Despite having five FPSO’s under construction during both periods, the reduction is a result of (i) lower progress on FPSO Almirante Tamandaré, FPSO Alexandre de Gusmão and FPSO ONE GUYANA, as those projects approached completion during the period, and (ii) the completion of FPSO Prosperity during the last quarter of 2023 and of FPSO Sepetiba early January 2024, partially offset by (iii) progress on the awarded contracts for FPSO Jaguar, GranMorgu FPSO, FSO Trion and on brownfield projects.
’Employee benefit expenses’ increased due to higher work-hour-related activities in Turnkey projects and the ramp-up of operations on the fleet in operation.
’Vessel operating costs’ increased mainly as a result of a higher scope of work in several vessels and the operational start of FPSO Prosperity during the last quarter of 2023 and FPSO Sepetiba early 2024. Notwithstanding the sale of the units during 2024, FPSO Liza Destiny and FPSO Prosperity continue to be operated by the Company through the OMEA signed with the client in 2023. The change in consolidation method of FPSOs N’Goma, Saxi Batuque and Mondo for the Operational scope, triggered by the completion of the acquisition of shares from Sonangol EP, also contributed to this increase.
’Depreciation, amortization and impairment’ increased compared with the prior year, mainly driven by movements in impairment losses, following the US$39 million FPSO Cidade de Anchieta impairment (refer to paragraph 4.3.13 Property Plant and equipment) the year-on-year effect of which is partially offset by an impairment of a funding loan provided to some equity-accounted entities recognized in 2023.
Expenses related to short-term leases and leases of low-value assets amounted to US$5 million (2023: US$6 million).
The increase of ‘Other costs’ is mainly driven by the overall ramp-up of activities and the change in consolidation method of FPSOs N’Goma, Saxi Batuque and Mondo.