Float On - Europe Seeks FSRUs to Boost LNG Import Capacity, and Fast

Europe’s push to reduce and eventually eliminate its reliance on Russia for natural gas has pushed LNG imports back into the forefront of Europe’s long-term energy plan. This year, with European natural gas prices trading above Asian prices, the continent has been able to attract an incredible amount of LNG, with imports at record levels this winter and sitting just shy of those records this spring. That helped mitigate some of the risks to energy reliability from Russian aggression, at least until the Freeport LNG outage and the latest Russian gas curtailments, but import capacity in Europe was maxed out last winter and more LNG imports can’t happen in the long term without more import capacity. Most of the LNG terminals in Europe are operating at full capacity or don’t have enough market access on the other side of the pipe to take more. While plans to build new import terminals are underway, those take time, and lots of it, so Europe is also pursuing a more immediate option, floating storage and regasification units (FSRUs) — basically, an LNG import terminal on a ship. In today’s RBN blog, we take a look at all things FSRU, from what and where they are to the recent deals with European offtakers.

FSRUs are large vessels that can be moored or anchored offshore, quayside or near-shore, generally close to a market access point. Some are installed as permanent fixtures, while some are moored on a short- or medium-term basis, even seasonally in a few cases. FSRUs are inherently flexible and can move from one market to another when needed, and when not used for regasification, many of them act as LNG tankers, transporting cargoes. For those being used for regasification, an LNG tanker docks alongside the FSRU and offloads its cargo using unloading arms or cryogenic hoses. The LNG is then stored in tanks on the FSRU and vaporized into pipeline-grade natural gas as needed, using the same technology as a traditional import terminal. The gas is offloaded via a subsea buoy or offloading arm with existing pipeline infrastructure as the end destination. Connecting to existing infrastructure does require some setup off or onshore, but while a traditional LNG import terminal can take two to three years to build, the connections needed to receive gas from an FSRU take just months. Given that lead time, it’s easy to see why this is an attractive option for European utilities right now, a subject we touched on recently in Lublin on the Edge. Both FSRUs and traditional LNG import terminals require permitting, and that adds additional time to the startup, but European governments are interested in securing more LNG right now and seem willing to fast-track projects.

FSRUs can also offload LNG, sometimes to smaller vessels to get LNG into difficult-to-navigate ports that larger ships can’t pass through, or to refuel LNG-powered ships. In some cases in Asia, FSRUs have been paired with floating power generation plants and serve those directly. FSRUs come in different sizes, but storage capacity ranges from 126,000 cubic meters (cm) to 173,400 cm. For reference, the U.S. export terminal Corpus Christi LNG has three 160,000 cm storage tanks. Gas sendout varies from around 200 million standard cubic feet per day (MMscf/d) to 1,000 MMscf/d.