Floating Storage-and-Regasification Market Attracting New Players

25 July 2016: Growing demand for floating storage-and-regasification units (FSRU) is primarily driven by the lower costs and shorter timelines in setting up offshore import terminals compared with an onshore terminal, attracting both experienced and inexperienced FSRU players. The latest entrant in the space is Gazprom, which will start operating the Gazprom Kaliningrad floating storage-and-regasification unit (FSRU) next year in the Russian Baltic. Kaliningrad, with capacity of 174,100 cu m and ice-class capabilities, will be the first FSRU to be fully owned and commercially controlled by a major energy company. Although dedicated for use in Kaliningrad, Russia, it could potentially be chartered out by Gazprom during off season. Meanwhile, existing LNG ship owners Teekay LNG, Dynagas, Gaslog, TMS Cardiff and Tsakos have all expressed interest in the FSRU space. Although none seems ready to order one speculatively, there are unconfirmed reports of orders. These existing ship owners seem to be looking at FSRUs to try to enhance their revenue streams beyond LNG shipping, which remains weighed down by low freight rates. The preferred route for most existing ship owners to enter the FSRU space seems to be converting one of their LNG carriers rather than ordering a purpose-built FSRU. It typically takes about two years to convert a ship into an FSRU, while it takes around three years to build a new one. That time estimate, however, can vary greatly depending on its size and complexity. Please fill out form to view article.