4.3.15Finance Lease Receivables

The reconciliation between the total gross investment in the lease and the net investment in the lease at the statement of financial position date is as follows:

Finance lease receivables (reconciliation gross / net investment)

As of December 31, 2018, finance lease receivables relate to the finance lease of:

• FPSO Cidade de Marica, which started production in February 2016 for a charter of 20 years;
• FPSO Cidade de Saquarema, which started production in July 2016 for a charter of 20 years;
• FPSO Cidade de Ilhabela, which started production in November 2014 for a charter of 20 years;
• FPSO Cidade de Paraty, which started production in June 2013 for a charter of 20 years;
• FPSO Aseng, which started production in November 2011 for a charter of 20 years;

The decrease in finance lease receivable is driven by the Turritella (FPSO) purchase price payment of US$ 987 million received from Shell on January 16, 2018 (please refer to note 4.3.1 Financial Highlights ), redemptions of other finance lease receivables as per the payment plans and to a lesser extent by the end of the contract term for FSO Yetagun (ended in May 2018). 

Included in the gross receivable is an amount related to unguaranteed residual values. The total amount of unguaranteed residual values at the end of the lease term amounts to US$ 61 million as of December 31, 2018. Credit losses related to finance lease receivables based on an expected credit loss model are less than US$ 1 million for 2018.

Gross receivables are expected to be invoiced to the lessee within the following periods:

Finance lease receivables (gross receivables invoiced to the lessee within the following periods)

The following part of the net investment in the lease is included as part of the current assets within the statement of financial position:

Finance lease receivables (part of the net investment included as part of the current assets)

The maximum exposure to credit risk at the reporting date is the carrying amount of the finance lease receivables taking into account the risk of recoverability. The Company does not hold any collateral as security.

Purchase and termination options

The finance lease contract of FPSO Aseng, where the Company is the lessor, includes call options for the client to purchase the underlying asset or to terminate the contract early. The exercise of the purchase option for FPSO Aseng as of December 31, 2018 would have resulted in a gain for the Company while the exercise of the early termination option, in which case the Company would retain the vessel, would have resulted in a break-even result.

The finance lease contract of FPSO Liza Destiny (under construction as per December 31, 2018) also contains call options for the client to purchase the underlying asset or to terminate the contract early. These options are exercisable at any time starting from the delivery date of the vessel.

Please refer to note 4.3.1 Financial Highlights for the impact of Shell exercising the purchase option on the finance lease contract of the Turritella (FPSO) in 2017.