The Outlook for Floating Storage and Regas Units (FSRU’s)
The floating storage and regasification (FSRU) business has accelerated at a rate that is unprecedented for the LNG industry with 21 projects completed in just 10 years. FSRUs provide a lower cost and faster regasification facility when compared to traditional onshore terminals which are essentially major civil engineering projects. FSRUs are a game changer for the LNG regasification industry and with many vessels currently being constructed on a speculative basis these schedules will remain short and likely set by the time taken to supporting infrastructure – installation of the jetty and pipeline connection. Open water developments may require a breakwater which will increase the schedule. The other major advantage is that units are normally leased in the same way as LNG tankers on a supply and operated basis by a service provider. This reduces investment cost (CAPEX) to just the supporting onshore infrastructure with resulting improvement in cash flow. The units are designed to be reused or returned tanker only operations providing commercial flexibility which is not the case with onshore terminals – which are a sunk cost. FSRUs have already proved to be instrumental in opening new markets for LNG and this is expected to accelerate in the future.