Höegh LNG is to build its first converted floating storage and regasification unit (FSRU), ordering ahead to cut the time needed to bring the vessel to market, and has signed agreements with Wärtsilä Oil and Gas and engineering firm Moss Maritime for the project.
By ordering the equipment in advance, the company says it will “reduce the conversion schedule by six months – from 18 to 12 months – giving a planned delivery date for the FSRU-conversion project [of] end-2017”, a date that is “in line with several of the group’s short-listed projects”.
The decision reflects accelerating interest in FSRUs as a faster, cheaper alternative to building land-based LNG-import terminals. It is also a significant U-turn for Höegh, which has previously ordered FSRU newbuildings. Its president and chief executive Sveinung Støhle told LNG World Shipping last autumn that conversions “are a thing of the past… It is always best to buy new. That way you get today’s technical advances and efficiency to deliver the best solution”.
Announcing the conversion this morning, Mr Støhle said: "By doing FSRU conversions Höegh LNG can capture additional business opportunities with start-up at the end of 2017 and in 2018, which our FSRU newbuilding programme cannot meet.
“Our strong in-house technical expertise and our ability to order critical equipment with limited risk due to our newbuilding programme, enables us to take advantage of the strong fundamentals in the FSRU segment."
Höegh has a fleet of six FSRUs on the water and two confirmed newbuildings. Its eighth FSRU, the 170,000m³ Hull 2685, is fixed to Penco Lirquen in Chile from second-quarter 2018. So far the 170,032m³ Hull 2552, due for delivery next summer, is unfixed. This spring, the company denied reports from brokers that it had booked its ninth FSRU newbuilding from Hyundai Heavy Industries, for delivery in mid-2018.
Interest is such that the company expects three to four FSRU contracts to be awarded every year to 2021.