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FSRU: underpinning LNG's expansion

Tue 11 Jun 2019 by John Snyder

FSRU: underpinning LNG's expansion

Floating storage and regasification units (FSRUs) have been an important bridge for LNG to quickly reach new clean energy-thirsty markets, serving a valuable niche in the LNG value chain.

Clearly FSRUs are not the perfect solution for everyone. As critics point out, they have storage and send-out capacity restraints, space limitations, onloading and technical hurdles and face all the weather- and sea-related  challenges of any vessel.

But FSRUs can offer a number of attractive advantages over onshore facilities, all of which have made them a popular market solution. They are flexible – either as fast-start or long-term solutions – require less capital expenditure, have better cost control, are less space intensive and are built or converted by skilled labour at a shipyard facility and by their nature are mobile.

To cite real-world successes, FSRUs have been instrumental in quickly ramping up regasification capacity to meet the clean energy demands of the growing economies of Pakistan, Egypt, Colombia, Bangladesh and India.

In India, FSRUs are helping to meet the country’s demand for LNG, which is expected to rise by 10% this year. In line with the country’s policy of meeting the Paris Agreement and cutting emissions by one-third, LNG import capacity is expected to rise to 41.5 mta up from 35 mta by the end of 2019. The capacity, however, remains underutilised because of bottlenecks in India’s gas infrastructure.

Of the 36 existing LNG import markets as of February 2019, 16 had FSRU capacity, and five of those had onshore capacity as well, according to IGU World LNG Report. Five FSRU projects were under construction and have announced plans to come online by the end of 2019, totalling 15.4 mta.

The FSRU market is also continuing to mature. Experienced FSRU players Golar LNG, Excelerate Energy and BW Group are taking more responsibility in developing import capacity and the market has attracted new investors, such as Qatar’s Nakilat.

In addition, with the surge in orders for LNG carriers, older vessels in the fleet could become available candidates for conversion to FSRUs, providing a ready-made capacity pool, if needed.

Notwithstanding their limitations, FSRUs will continue to be an invaluable tool in the toolbox to get new LNG import markets up and running quickly and they figure to underpin the expansion of LNG for years to come.

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