4.3.5Expenses by Nature
The table below sets out expenses by nature for all items included in EBIT for the years 2021 and 2020:
|
Note |
2021 |
2020 |
|
|---|---|---|---|
|
Expenses on construction contracts |
(1,732) |
(1,245) |
|
|
Employee benefit expenses |
(669) |
(614) |
|
|
Vessels operating costs |
(413) |
(378) |
|
|
Depreciation, amortization and impairment |
(88) |
(439) |
|
|
Selling expenses |
(16) |
(24) |
|
|
Other costs |
(114) |
(189) |
|
|
Total expenses |
(3,032) |
(2,891) |
In 2021, expenses on construction contracts significantly increased as a result of the further ramp-up of the activity on Turnkey projects since the Company has five FPSO’s under construction and FEED activities on the FPSO for the Yellowtail development project.
Vessel operating costs have increased mainly as a result of (i) an increase in the net incremental costs from the implementation of additional safety measures linked to COVID-19, (ii) some repair costs incurred in 2021 on damaged mooring lines on one Unit (for which compensation from insurance is not yet secured) and (iii) higher maintenance and repair activities, including maintenance campaigns postponed to 2021 due to the COVID-19 new pandemic context in 2020;
The significant decrease of depreciation, amortization and impairment in 2021 in comparison to 2020 mainly relates to the previous year specific events being (i) the full depreciation of Deep Panuke MOPU due to the redelivery of the unit, (ii) the requalification as finance lease of the FPSO Espirito Santo following lease contract extension and (iii) some impairments on one installation vessel and two units of the Company's fleet.
Expenses related to short-term leases and leases of low value assets amounted to US$4 million in 2021 (2020: US$5 million).
The decrease in Other costs is mainly driven by the prior year impact of restructuring costs of US$46 million.