Höegh LNG halts its FLNG plans

Oslo-listed Höegh LNG has halted its floating LNG (FLNG) ambitions and will instead allocate “all resources and capital” to floating storage and regasification units (FSRUs), the company has announced today.

Höegh LNG says it “sees the highest return on invested capital and the most promising market prospects” coming from FSRU-based import terminals, reflecting “strong growth” in new LNG supply at “very competitive prices”. The company has a fleet of eight FSRUs and plans to increase this to 12 by 2019.

It says today’s decision “is a consequence of the oversupplied LNG market and deteriorating energy and financial markets, which mean that investment decisions for new LNG production facilities, including the FLNG segment, will continue to be challenging for the foreseeable future”.

Höegh has held advanced talks on FLNG projects, notably in Canada, where it planned to order in-shore barges able to process and deliver up to a million tonnes of LNG a year from offshore gas fields in British Columbia.

The company nevertheless was taking a low-key approach. Chief executive Sveinung Stohle told LNG World Shipping late last year that Höegh would take “a very low-risk approach to FLNG”.

“We are talking about a significantly higher investment than for FSRUs,” he said. “We’re talking about anything from US$700 million to US$1.5 billion. Therefore we need to balance the risks.”