What price an FSRU?

The LNG shipping industry is super-excited about floating storage and regasification units (FSRUs) and the way they unlock new import markets.

At the end of last year there were 24 FSRUs in service and nine on order. This year, Hoegh has ordered two more and its rival Excelerate Energy wants to book up to seven – if it can raise the money to do so.

H-Energy boss Darshan Hiranandani has just chartered the first FSRU for India. GDF Suez Cape Ann will arrive in western India next June.

Mr Hiranandani tells us: “Two years ago, we couldn’t afford an FSRU because of the charter rates. Then, the charter rates were so expensive that only governments or super-majors could afford these ships, to support 20-year offtake contracts.” We don’t yet know what H-Energy has paid. There is no market yet for FSRUs; there is no liquidity – this is not a shipping market.

However, brokers tell us that FSRU charter prices are under growing pressure. Up to seven older vessels will come off-charter by 2020. And up to six new FSRUs will be delivered this year. Meanwhile, the huge FSRU that Mitsui OSK ordered for Uruguay needs a temporary home.

The more FSRUs hit the water, the more likely a market will emerge. One analyst tells us that the day rate for FSRUs is already down by a third.

Timing has helped H-Energy to land GDF Suez Cape Ann for a very good price.

Read the full interview with Darshan Hiranandani next week on LNGworldshipping.com