Fleet of floating storage and regasification units to grow to 50 as countries increase LNG imports to support switch to clean-burning natural gas and LNG as fuel
Demand for floating storage and regasification units (FSRUs) is expected to grow to 230 mta by 2023 – up from 85 mta in 2018 – as countries increase their imports of LNG to underpin their switch from coal power generation to cleaner-burning, gas-fired plants.
Bureau Veritas, which classed the first newbuild FSRU in 2005, says these floating regasification plants are cheaper and faster to build than onshore import terminals, offering an attractive option to countries seeking to import natural gas for the clean energy transition.
As of the end of 2020, the total FSRU fleet consisted of 43 vessels in operation with a total capacity of 6.4M m3, and seven under construction, five of which will be delivered this year, according to GIIGNL.
Among the notable deliveries in 2020 was the floating regasification unit (FRU) Torman, classed by BV for the TEMA LNG project in Ghana. Torman is a barge-type FRU with a capacity of 28,000 m3, built by Jiangnan Shipyard for Gasfin Development and Helios Investment Partners. Paired with a Moss-type LNG carrier floating storage unit (FSU) and permanently moored at a breakwater, Torman FRU regasifies LNG, sending the gas via a subsea pipeline for delivery to onshore consumers. The natural gas will be mostly used for power generation.
Major projects under construction include Mitsui OSK Lines’ FSRU for Indonesia’s Jawa 1 gas-to-power project. Built by South Korea’s Samsung Heavy Industries to BV class, the 170,000 m3 unit will be connected via pipeline to an onshore power plant in the country’s West Java province.
In April, Höegh Giant, India’s FSRU, arrived at H-Energy’s Jaigarh Terminal in Maharashtra, following a voyage from Singapore’s Keppel Shipyard.
Commenting on the delivery, H-Energy chief executive Darshan Hiranandani said: “This will be India’s first FSRU-based LNG regasification terminal, which marks a new chapter in India’s mission for accelerated growth of LNG infrastructure. FSRU-based LNG terminals enhance the pace of natural gas import capability in an environmentally friendly and efficient manner.”
Added Mr Hiranandani: “We are committed to the growth of the LNG market in India. We aim to contribute to the overall development of the natural gas value chain, aligned with the Prime Minister’s vision of increasing the share of natural gas in India’s energy mix from 6% to 15% by 2030.”
Under a 10-year charter from Hoegh LNG, the 2017-built FSRU Höegh Giant is expected to be commissioned in May.
“By utilising floating technologies, we are able to provide a solution that can be delivered with unique advantages”
One of 10 FSRUs owned by Höegh LNG, Höegh Giant has storage capacity of 170,000 m3 and installed regasification capacity of 750 million cubic feet per day (mcfd), which is equivalent to about 6M tonnes of LNG per year.
Höegh Giant will deliver regasified LNG to the 56-km Jaigarh-Dabhol natural gas pipeline, connecting the LNG terminal to the national gas grid.
In early May, a 50-50 joint venture between Leif Höegh & Co Ltd and funds managed by Morgan Stanley Infrastructure completed the acquisition of all of the issued and outstanding shares of Höegh LNG Holdings Ltd.
The joint venture Larus Holding Limited paid a cash consideration of Nrk23.50 per share.
The common and preferred units of Höegh LNG Partners LP will remain outstanding and continue to trade on the NYSE.
Larus Holding, together with units owned directly by Leif Höegh & Co Ltd, now owns and controls a 47.1% equity interest in Höegh LNG Partners.
Lithuania’s AB Klaipėdos Nafta (KN), which has a 10-year charter agreement with Höegh LNG for the 2014-built FSRU Independence, plans to start the procurement process to purchase an FSRU in H2 2021. The European Commission has approved, under EU State aid rules, a Lithuanian measure to issue a state guarantee to secure a loan not exceeding €160M (US$190M) for KN to purchase an FSRU for the Klaipėda LNG terminal. KN does hold an option with Höegh LNG to purchase Independence.
Barge-based FLNG technology
Other FSRU owners are looking for opportunities for their fleets. Antwerp-based Exmar is looking for re-deployment opportunities for both its floating storage and regasification barges FSRU S188 and Tango FLNG, following early terminations of charters for the vessels.
Exmar reported it received an earlier termination of the charter party from independent LNG trader Gunvor for the 2017-built, box-shaped FSRU S188. Following arbitration, Exmar said it received a termination fee equal to two years’ hire.
In May 2018, Gunvor had signed a 10-year charter for FSRU S188 for use in Bangladesh, but in September 2019 gave a notice of a dispute under the agreement. The contract had been locked in arbitration since the dispute arose. Bangladesh state energy company Petrobangla shelved a Gunvor-backed LNG project to focus on a larger LNG import receiving terminal.
Flying the Liberian flag, FSRU S188 was built by China’s Wison Offshore and Marine to BV class. With an overall length of 120 m, beam of 33 m and draught of 7.9 m, the FSRU has a capacity of 25,000 m3.
Meanwhile, in reporting its Q1 2021 results, Exmar said 51% of the US$150M settlement fee has been paid by Argentinian oil and gas company YPF, following its early termination of the 10-year charter of Tango FLNG.
YPF had inked the deal for Tango FLNG in November 2018 in order to liquefy the vast shale gas reserves from Argentina’s Vaca Muerta field for exports. YPF estimated the FLNG vessel would generate about US$200M per year in revenues from LNG production when it was fully commissioned.
From its arrival at the Bahia Blanca terminal in Argentina in Q4 2019 until May 2020, Tango FLNG delivered five shipments, or 624,000 m³ of LNG, to YPF with an availability of 99%. However, YPF declared in notice sent in June 2020 force majeure, claiming that effects of the Covid-19 pandemic had hindered its ability to perform its obligations under the charter and services agreements.
US startup eyes FLNG
In the US, Pilot LNG has proposed an LNG bunkering terminal at Galveston, based on a similar design box-shaped FLNG to the Wison Offshore-designed Tango FLNG. This would be the first such LNG bunkering facility based on a permanently moored FLNG vessel in the US.
In April, Pilot LNG awarded a front-end engineering design (FEED) contract for Wison Offshore & Marine for the floating LNG unit. Additionally, Wison Offshore & Marine has taken an undisclosed minority stake in the project.
A founder of Excelerate Energy and its one-time COO, Pilot LNG chief executive Jonathan Cook was “thrilled” to welcome Wison Offshore as a partner in the project. “Our selection of Wison is in recognition of their unparalleled expertise and commitment to delivering safe, highly competitive floating LNG projects,” said Mr Cook.
“By utilising floating technologies, we are able to provide a solution that can be delivered with unique advantages not available to traditional land-based facilities, as well as significantly reducing the infrastructure’s footprint and its associated impacts,” said Wison Offshore and Marine, North America head Vivian Li.
A FID on the facility is expected from the US startup in H1 2022, with possible commissioning in H1 2025.