With the demand for clean energy growing, resulting in a decline for oil and coal, LNG is moving to fill the gap with the global LNG trade growing by four times in the last 20 years. The move by oil major Shell to buy BG Group underscores this shift.
Floating solutions provide both a cost effective and quick solution to importing LNG versus building an onshore terminal. According to Johan Petter Tutturen, business director gas carriers for DNV GL Maritime, a conversion of an existing LNG carrier to an FSRU costs in the range of $75m - $100m, a newbuilding $250m, while building an onshore terminal costs $800m upwards to develop.
The general public also often prefer floating solutions versus having a liquefaction plant as their neighbour.
Currently there are 24 FSRUs in operation with 15 on the orderbook, with a further 30 to 50 projects under discussion for the next three to five years. More countries such as Bangladesh and Pakistan are moving into using FSRUs and others such as Thailand, Vietnam and Myanmar are future possibilities in Asia.
As it stands FRSU owners remain a “very exclusive group” but Tutturen told a DNV GL FSRU seminar in Singapore there were quite a few “knocking at the door”.
The current FSRU fleet is dominated by four owners: BW, Golar LNG, Excelerate and Hoegh LNG, with Mitsui OSK Lines (MOL) also owning one FSRU – the largest at 263,000 cu m, and Gazprom also owning one unit.
Set to join this exclusive club with orders already placed are: Maran Gas with an order at Daewoo Shipbuilding & Marine Engineering (DSME), Dynagas with an order fro two FSRUs, and Kolin Kaylon in Turkey.
According to Tutturen GasLog, Knutsen Shipping OAS and Teekay are all considering entering the FSRU space, and he hinted that more companies were looking to follow but was unable to reveal names due to non-disclosure agreements.
With a surplus of LNG carriers in the market owners are finding that charterers, who pick-up the fuel bill prefer newer, more energy efficient vessels.
“Older tonnage has the possibility to be converted into either FSRUs or FLNG,” Tutturen said.
“There are owners with 10-year old LNG carriers that are not up to speed on energy efficiency so they would like to take this unit convert it into a FSRU and then order a new LNG carrier.”
DNV GL expects 170 – 180 cu m to be the standard size of FSRUs going forward, although also sees a demand for small-scale units. “We do believe small-scale FSRUs will be in demand. There are quite a few new concepts coming up,” he said.