Page 13: of Maritime Reporter Magazine (September 2019)

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INSIGHTS: FSRU to onshore regasi? cation, opening new LNG supply: there needs to be a com- ers is to develop small-scale LNG proj- speculative ordering of FSRUs is slow- markets the possibility of importing liq- mitment to provide minimum volumes, ects that meet all these requirements ing, although there is likely to always be ue? ed natural gas (LNG). but the asset owner also needs to operate simultaneously. Without the ability to room for taking a longer-term view of

According to the International Gas at the economically attractive rates that bene? t from economies of scale, they the market. It is likely that a good por-

Union’s annual report, as of February are more easily achievable at larger scale must ? nd ways to build these complex tion of new orders may be underpinned there were 12 FSRUs on order (includ- projects. units in ways that are simple enough to by speci? c project needs.

ing conversions) at world shipyards. The Also, the unit costs at which suppliers lower the overall cost of delivery. With the era of the very big ? oating existing ? eet is largely supporting de- can deliver LNG are not always straight- In technical terms, there is not a huge exploration and production-related gas velopment projects across the world and forward. difference between providing classi? ca- projects slowing, there are questions prospects for them are growing stronger, Whether the gas is being sold as a tion for a full scale FSRU and a small- about LNG’s role in the world’s decar- particularly in Asia, the Middle East, Af- measure of energy content (MMBtu) scale unit, but smaller units can be more bonization efforts.

rica and South America. or weighted volume (tonnes), the in- complex in execution. Many governments have identi? ed

As demand for LNG rises (Clarksons frastructure and transport costs are not For these, designers need to think LNG as part of the solution. Senti- forecasts an 8% jump in LNG trade this linear and can be a challenge to attain a more closely about hazards, since there ments like these have forecasters such as year), the improving business case for delivery price that suits the market. is much less space for escape routes or Clarksons’ estimating that the LNG ? eet supplying it on a ‘small scale’ is moving Operators must also navigate local blast walls; comprehensive safety stud- will outnumber very large crude carri- more projects to the stage of ? nal invest- conditions. Since power markets are ies are even more essential. ers by 2026. But others see it more as ment decisions (FID). subject to regulation, price ? uctuations Only a handful of shipyards can build a transition fuel, with demand gradually

Any FSRU project – small to full scale and national laws may make it more dif- at the level of complexity that is required strengthening until the production of re- – requires a proven business case. How- ? cult to operate some types of vessels in for FSRU units. These yards tend to be newable fuels can be established at af- ever, small-scale endeavors also need to price-sensitive markets. in South Korea or China. Of current full- fordable prices. balance the risks associated with nation- Markets such as Asia, the southern scale FSRU projects, ABS is classing a In this market uncertainty, short-term al legislation, base load cargo volumes hemisphere or the Caribbean may be 170,000m3 unit under construction for spikes in demand can be expected, and whether the economics of supply demographically suitable for small scale Turkish operator Botas at South Korea’s though perhaps the ? rst generational can provide adequate returns on invest- LNG, but the relationship has to be based Hyundai Heavy Industries, and another model of take or pay over 20 years is ment. on long-term government commitment Dynagas order under construction at behind us. But, clearly, designers, build-

While individual owners and operators and access to ? nance. Hudong Zhonghua Shipyard in China. ers and operators of small-scale FSRUs will make decisions on a case-by-case The challenge for designers and build- In general terms, it appears that the need to think smarter, not bigger. basis, in the full scale FSRU market, the trend is towards ownership of the assets rather than chartering; economics and politics are the main in? uencers.

Among notable small-scale projects, the Bali LNG terminal was an early mover, comprised of a ? oating regasi? - cation barge and a 26,000 cu. m. ? oat- ing storage unit. It has been operational since 2016.

Exmar ordered a 26,000 cu. m. re- gasi? cation barge speculatively, rather than against speci? c projects. This unit has since been chartered by Gunvor to- wards a targeted project but is not yet operating.

Other vessels are under construction in

China for planned use in Africa.

Elsewhere, a tender for small-scale energy supply in Indonesia, including regas units and storage barges, has been offered on more than one occasion, but has not yet materialised.

Indonesia has approximately 7,000 islands that need electricity. For those locations, LNG is the logical answer, being cheaper and cleaner than the coal- ? red alternatives, and offering the added potential to be used as a fuel for local transport.

These types of projects illustrate the economic challenges of small-scale www.marinelink.com 13

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