Register for a free trial
LNG World Shipping

LNG World Shipping

Floating LNG regas and production vessels in the limelight

Wed 09 Jan 2019 by Mike Corkhill

Floating LNG regas and production vessels in the limelight
The Prelude FLNG vessel – the largest manmade floating structure ever built – receives a cooldown shipment of LNG in 2018

With 17 countries now utilising FSRUs and further regas vessel projects under development on six continents, the floating approach to storage and regas is growing in popularity

The flexibility inherent in the contractual arrangements and services offered by providers of floating storage and regasification units (FSRUs) means that FSRU project start-ups and expiries are in a constant state of flux.

This flexibility enables those gas importers not requiring a long-term charter to take on an FSRU for short periods, until a shore-based LNG receiving terminal has been constructed, say, or the need for LNG imports is eventually obviated due to the provision of either a new pipeline gas supply, sufficient domestic gas production facilities, or some other new source of energy.

FSRU operators, in turn, are able to manage charter periods of varying durations with relative ease because their vessels, on coming off-hire, can trade as conventional LNG carriers until such time that a new regasification project has been lined up. The fact that an FSRU jetty or buoy, with pipeline connections to the gas grid, can usually be provided at the receiving port quickly and at modest cost, facilitates the accommodation of short-term charters.

The other two key attributes of FSRUs – their ability to enable gas companies to commence LNG imports relatively cheaply and quickly – ensure that the overall global portfolio of FSRU projects continues to grow strongly.

Global market

To date, 14 countries have joined the LNG importers club as a result of FSRU projects, while another three nations have added FSRU-based terminals to their existing complement of shore-based facilities. Looking to the future, four countries are moving ahead with plans to implement their first FSRU scheme, while a further 12 are evaluating proposals prior to a final investment decision (FID).

The first FSRU project was inaugurated in 2008, and there are now 30 FSRUs in service and 12 on order. Just short of 35M tonnes of LNG was regasified by FSRUs in 2017, approximately 8% ahead of the previous year and equal to 12% of that year’s global trade in LNG.

Bangladesh became the world’s 42nd LNG import nation in August 2018, when the 138,000 m3, 2005-built FSRU Excellence began pumping regasified cargo ashore via a submerged turret loading (STL) buoy arrangement and subsea line. The vessel is stationed off Moheshkhali Island and is on charter to Petrobangla.

“The key attributes of FSRUs – an ability to enable gas companies to commence LNG imports relatively cheaply and quickly – ensures that the global portfolio of FSRU projects continues to grow strongly”

In December 2018 the 125,000 m3 Golar Freeze, a converted FSRU, was moored at its new home in southern Jamaica’s Old Harbour to take on regasification and distribution duties under a 15-year charter with New Fortress Energy.

In recent weeks Gazprom’s 170,000 m3 Arc4 ice class FSRU, Marshal Vasilevskiy, freshly delivered by Hyundai Heavy Industries, took up station at the Russian Baltic Sea enclave of Kaliningrad. Although Russia has been exporting LNG since 2009, Marshal Vasilevskiy provides Russia with the ability to import LNG for the first time.

Höegh LNG’s Neptune is one of two FSRUs that Turkey has in service, complementing the country’s original pair of shore-based LNG receiving terminals

Early closure

Despite these three recent success stories, several FSRU projects were brought to a premature closure last year, due to extenuating circumstances. Egypt Natural Gas Holdings (EGAS), for example, decided to dispense with the services of Hoegh Gallant and BW Singapore, the two FSRUs it had moored at the Red Sea port of Ain Sokhna since 2015, because substantial new domestic gas finds not only brought an end to Egypt’s need to import LNG but also supported a rebound in LNG export shipments by the country’s two idled liquefaction plants.

The solution to the cessation of regas services provided by Hoegh Gallant illustrates the flexibility inherent in the FSRU approach to LNG imports. Although the ship had been chartered to EGAS until April 2020, the availability of the vessel from October 2018 has meant that Höegh LNG has been able to redeploy Hoegh Gallant in the conventional LNG trades on a short-term basis. EGAS has agreed to pay Höegh the difference between its FSRU charter rate and what Hoegh Gallant will earn in global LNG trading between October 2018 and April 2020.

Excelerate, a regas vessel which came off charter to Abu Dhabi National Oil Co (ADNOC) in 2018, is earmarked for a new FSRU project, commencing in 2019. It will be utilised by Summit LNG to provide Bangladesh with its second FSRU-based LNG import facility. The bow moonpool arrangement on Excelerate, similar to that on Excellence, will also enable the use of an STL buoy to discharge regasified cargoes ashore via a subsea line.

In addition to early FSRU project expiries, some proposed regas vessel schemes never get off the drawing board. This is hardly surprising, given the large number of initiatives under development at any one time.

Often, it is not possible to finalise LNG sales contracts of sufficient volume to justify the necessary investments in an FSRU project. Schemes planned for Chile, Ghana, Ivory Coast, Croatia, Puerto Rico and the UK have been delayed, to the extent that several of the proposals now look stillborn.

For example, in recent weeks Excelerate Energy announced it is backing out of the proposed Aguirre Offshore Gas Port in Puerto Rico, citing changed circumstances and the current unfavourable financial situation on the island. Excelerate and Puerto Rico Electric Power Authority (PREPA) initiated talks on this proposed scheme as long ago as 2011.

New projects galore

However, for each FSRU setback there are at least two new regas vessel projects being tabled. The advantages of the FSRU solution continue to attract the attention of gas importers anxious to fast-track new supplies on the international market.

In El Salvador, the utility company Energia del Pacifico (EDP) has commenced construction work on a new gas-fired power station at Acajutla on the country’s Pacific Coast. The masterplan calls for the facility to be supplied by an FSRU moored offshore and BW LNG has been selected to operate the required regas vessel.

The conversion of an existing conventional LNG carrier to an FSRU is envisioned for the Acajutla LNG project, and EDP is said to favour a Moss spherical tank vessel for offshore mooring, as this containment system is not susceptible to cargo sloshing damage, irrespective of the tank fill level. Shell will supply the LNG volumes for the scheme and the company’s 137,000 m3, 2002-built Gallina has been mooted as a possible conversion candidate. An FID on the FSRU conversion is expected in spring 2019, to enable the project to commence operations in tandem with the power plant in May 2021.

Australia is on the cusp of moving ahead of Qatar to become the world’s top LNG exporter, thanks to the output of 10 liquefaction projects distributed between Western Australia, Northern Territory and Queensland. At the same time, three of the country’s southern states – New South Wales (NSW), Victoria and South Australia – are pushing ahead with plans to commence LNG imports based on the use of FSRUs. Four such proposals have been tabled.

“The advantages of the FSRU solution attract gas importers anxious to fast-track new supplies on the international market”

Two of the most advanced of these schemes are the Australian Industrial Energy (AIE) initiative to place an FSRU at Port Kembla in NSW by 2020 and the regas vessel that AGL Energy proposes to have in position at Crib Point in Victoria a year later. Both AIE and AGL have reached agreements with Höegh LNG, under which the shipowner will provide one of its 170,000 m3 FSRUs for each project.

Several proposals have also been tabled recently that will place Germany in the ranks of LNG importers for the first time, the most ambitious of which is the Uniper plan to charter a large FSRU newbuilding of 263,000 m3 from Mitsui OSK Lines and place it in service at Wilhelmshaven in the second half of 2022. Uniper has signed up for the purchase of 900,000 tonnes per annum of LNG from the Freeport export terminal in the US for 20 years; much of this volume would be used to supply Wihelmshaven.

BW Courage, seen here on float-out from its Daewoo building dock in 2018, is BW LNG’s third FSRU

Floating LNG exports

Although the capital cost of an FLNG vessel is likely to be at least 10 times that of an FSRU, floating LNG production offers advantages over shore-based liquefaction in certain scenarios. In recent years, the LNG industry has moved with alacrity to realise these FLNG benefits, not least in exploiting remote and inaccessible offshore gas reserves.

The first FLNG vessel to enter service was the 180,000 m3 Petronas-operated PFLNG Satu, a newbuilding unit which loaded its first LNG cargo from the Kanowit field off the coast of Malaysia in March 2017. The second floater to produce LNG was Hilli Episeyo, a converted Moss spherical tank 125,000 m3 LNG carrier which began commercial operations in Cameroon coastal waters in June 2018. Hilli Episeyo had dispatched 11 cargoes by the end of the year.

As 2019 kicks off, four new FLNG projects are moving ahead, while another has hit the buffers. Shell’s 488m Prelude FLNG vessel, which has the capacity to produce 3.7 million tonnes per annum (mta) of LNG at its location off Western Australia, will be the next FLNG project to come onstream. At the turn of the year the vessel began producing LNG from its offshore gas fields and commercial operations will commence within the first half of 2019.

Another FLNG vessel set to be producing LNG in 2019, within the second quarter, is Tango FLNG. The project will make use of a barge-based unit, owned by Exmar and formerly known as Caribbean FLNG, which was earmarked for a project in Colombia that fell through. Tango FLNG, which has the capacity to process 0.5 mta of LNG, will be positioned in the Argentine port of Bahia Blanca and utilised in the processing of shale gas piped across country from the Vaca Muerte source.

In December 2018 BP and its project partners gave the green light to the 2.5 mta Tortue scheme, which will utilise an FLNG vessel to develop the gas resources of the Greater Tortue Ahmeyim field, which straddles the offshore waters of Mauretania and Senegal. Golar LNG will provide the required FLNG vessel and will convert one of its older Moss spherical tank LNG carriers for the task, as it had done for the Hilli Episeyo project. BP is targeting a 2022 start for Tortue LNG.

Another African FLNG project targeted for a 2022 start-up is Eni’s Coral FLNG initiative in Mozambique. Samsung Heavy Industries (SHI) is building the 3.4 mta floating production vessel, which will go on station off the country’s northern coast for 25 years. BP has agreed to purchase the entire output of the Coral FLNG vessel.

SHI also has the other FLNG vessel currently under construction on its books. The 177,000 m3 PFLNG2 vessel will be the second FLNG for Petronas and service off the Malaysian coast, after PFLNG Satu. The 1.5 mta PFLNG2 project is set to commence operations in 2020.

Recent whitepapers

Related articles





Knowledge bank

View all