Floating storage and regasification units serve as an entry solution to the LNG market for smaller volumes of LNG imports, John Sattar, an LNG and natural gas consultant with Poten & Partners, said in an industry event Thursday.
"Given the physical scale of the FSRU solution, they are ideal for when small volumes need to be introduced to the market," Sattar said during his presentation at the Emerging Asia Small and Mid-Scale LNG forum held in Singapore.
He pointed out that the shift offshore, in terms of infrastructure to import LNG, has been taking place, and there are currently 13 operational LNG FSRUs across 10 countries.
Forty FSRU projects are being proposed and planned for startup by 2017, though not all will be realized, he added.
According to Sattar, the main factors driving the use of FSRUs for importing LNG are low costs, quick setup and flexibility. Conversion costs for FSRUs are significantly lower than capital costs for onshore storage and berthing facilities.
"You end up just paying a daily charter rate effectively to the provider of the [FSRU] solution, as opposed to putting down a billion dollars upfront [just as an example]," Sattar said.
Once the FSRU is in place, it can be used on a seasonal basis and moored at different places. And even when not in use, the FSRU can trade in the spot market.
"Often, FSRUs are seen as a bridging solution -- that is to get LNG into the country in a short period of time, but still recognizing that there may be significant demand growth down the road, and you can still engage in the process of building an onshore terminal," Sattar said.
Speaking on the sidelines, Glenda G. Martinez, from Philippine National Oil Company, said FSRUs are an attractive option besides pursuing an onshore import terminal, given the quicker setup and lower cost in the near term. In addition, the FSRUs could possibly better cater to the needs of smaller demand areas within the country, such as in Mindanao, she said.
INCREASING TREND TOWARDS NEWBUILD FSRUS
There is an increasing trend towards newbuild FSRUs, away from converting old vessels to these floating units, primarily due to larger storage capacilities and hence, higher throughput, Sattar said.
He noted that currently there is one vessel undergoing conversion while orders have been placed for eight newbuild FSRUs, of which only two have not been committed.
Existing converted vessels have a capacity of mostly less than 140,000 cubic meters and have a regasification capacity of 2.5 million-3 million mt/year, while the capacity of newbuild FSRUs are 20,000-30,000 cu m higher, resulting in a regasification capacity that is 1 million mt/year higher, Sattar said.
Previously, older first generation vessels were being converted to FSRUs to optimize their remaining value, given that they were likely facing a tougher charter market with their less efficient propulsion system.
Newbuild FSRUs take 25-28 months to complete, while modifications and additions of regasification equipment to existing vessels take 14 months, based on Sattar's presentation.
