4.3.3Revenue

The Company’s revenue mainly originates from construction contracts and lease and operate contracts. Revenue originating from construction contracts is presented in the Turnkey segment while revenue from lease and operate contracts is presented in the Lease and Operate segment. Around 39% of the Company’s 2024 Lease and Operate revenue is made of charter rates related to lease contracts, while the remaining amount originates from operating contracts. The Company recognizes most of its revenue (i.e. more than 99%) over time.

The Company’s policy regarding revenue recognition is described in further detail in note 4.2.7 B. Critical Accounting Policies − (d) Revenue. For the disaggregation of total revenue by country and by segment, please refer to Geographical Information under note 4.3.2 Operating Segments and Directional Reporting.

The Company’s construction contracts can last for several years, depending on the type of product, scope and complexity of the project, while the Company’s Lease and Operate contracts are generally multiple-year contracts. As a result, the Company has (partially) outstanding performance obligations to its clients (unsatisfied performance obligations) at December 31, 2024. These unsatisfied performance obligations relate to:

• Ongoing construction contracts, including the construction of vessels under finance leases that still need to be completed;
• Ongoing multiple-year operating contracts. Note that for this specific disclosure on unsatisfied performance obligations, the lease component of the Lease and Operate contracts is excluded (this component being described in further detail in notes 4.3.13 Property, Plant and Equipment and 4.3.15 Finance Lease Receivables). As noted, some contracts include (performance) bonuses when earned or penalties incurred under the Company’s Lease and Operate contracts. The net amount of performance-related payments for 2024 decreased to US$22 million (2023: US$132 million). This decrease is mostly related to the temporary shutdown of three units during the period.

The following table presents the unsatisfied performance obligations as at December 31, 2024 (in billions of US$):

The unsatisfied performance obligations for the committed construction contracts mostly relate to five major construction FPSO contracts and one FSO. Revenue related to these construction contracts is expected to be recognized over the coming two years in line with the construction progress on these projects.

The unsatisfied performance obligations for the operating contracts relate to i) the Company’s vessels leased to clients where the Company is the operator (both operating and finance lease contracts) and ii) four operating contracts for operating services on a vessel that is owned by the client. The operating contracts end between 2024 and 2050. The Company will recognize the unsatisfied performance obligation over this period in line with the work performed.

The Company can agree on various payment arrangements which generally reflect the progress of delivered performance obligations. However, if the Company’s delivered performance obligation exceeds installments invoiced to the client, a contract asset is recognized. If the installments invoiced to the client exceed the work performed, a contract liability is recognized.

As a result of various commercial discussions with clients, the Company recognized revenue amounting to US$28 million in 2024 (2023: US$7 million) originating from performance obligations satisfied in previous periods.

Lease revenue recognized for leases where the Company is the lessor, for both operating and finance leases, relates to fixed and variable lease payments. Most of the Company’s revenue from lease contracts is based on fixed day-rates. To the extent that lease payments are dependent on an index or a rate, they are excluded from the initial recognition of the lease payments receivable. The impact related to a change in index or a rate is recognized in the consolidated income statement from the date the change occurs.

Contract balances

The table below sets out the contract balances for the years 2024 and 2023:

Contract assets

The contract asset balance decreased to US$6,809 million, compared with US$7,134 million at December 31, 2023. This is related to progress made during the period on the construction of FPSO Almirante Tamandaré , FPSO Alexandre de Gusmão, FPSO ONE GUYANA, FPSO Jaguar and the GranMorgu FPSO, more than offset by the finalization of the FPSO Sepetiba construction as the contract asset related to this unit was reclassified to finance lease receivables (refer to note 4.3.15 Finance Lease Receivables).

Regarding information about expected credit losses recognized for contract assets, refer to note 4.3.27 Financial Instruments – Fair Values and Risk Management.

Contract liabilities

Current contract liabilities of US$31 million (December 31, 2023: US$74 million) comprise the amounts of those individual contracts for which the total installments invoiced exceed the revenue recognized over time. Contract liabilities are reported in trade and other payables (see note 4.3.25 Trade and Other Payables).

As at December 31, 2024, current contract liabilities are related only to minor construction projects.

Non-current contract liabilities of US$28 million (December 31, 2023: US$22 million) as at December 31, 2024, mostly relate to future demobilization performance obligations associated with expected demobilization costs in finance lease contracts.

The Company recognized revenue of US$66 million during the period which was included in the contract liabilities as per December 31, 2023.