4.3.26Provisions

The movement and type of provisions during the year 2018 are summarized as follows:

Provisions (movements)

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 (please refer to note 4.3.9 Net Financing Costs ).

Expected outflow within one year is nil and amounts to US$ 31 million between one and five years, and US$ 65 million after five years.

Onerous contract

Onerous contract provisions related to lease contracts were derecognized following the adoption of IFRS 16 on January 1, 2018 (see note 4.2.7 Accounting Principles ). As per IFRS 16, right-of-use assets will be subject to impairment, if applicable.

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 of the warranty provision consists of warranty costs effectively incurred over the period as well as a release of the provision following the signature of agreements relating to warranty issues with customers.

Brazilian Investigation

Provision regarding the Brazilian investigation decreased during the year due to:

• Payment of US$ 196 million for the Leniency Agreement with the Brazilian authorities and Petrobras (see note 4.3.1 Financial Highlights );
• Reclassification of the future bonus reduction provided in the Leniency Agreement to ’Other non-current liabilities’ and ’Other non-trade payables’ for the remaining payment of US$ 103 million (see note 4.3.27 Trade and Other Payables).

The remaining balance of US$ 48 million as per December 31, 2018 relates to the agreement signed between the Company and the Brazilian Prosecutor for an amount of BRL 200 million which was approved by the Fifth Chamber of the MPF on the December 18, 2018 (see note 4.3.1 Financial Highlights ).

Other

The ’Other’ provisions utilized during the year mainly relate to a payment of US$ 80 million for the compensation payable to the partners in the investee owning Turritella (FPSO) following early termination of the lease contract (see note 4.3.1 Financial Highlights ).

Provisions arised during the year mainly relate to additional estimated insurance income to be shared with Repsol in accordance with the terms of the settlement agreement of March 11, 2013 which concluded the Yme project (see note 4.3.1 Financial Highlights). The Company has provisioned for a total cost of c.US$185 million as per December 31, 2018, covering payment to Repsol and other insurance related expenses, payable after signing of an agreement. The remainder of 'Other' provisions relate to commercial claims and regulatory fines related to operations.