FSRU’s share of the LNG import market is projected to double to 20% by 2030, according to Poten & Partners Majed Limam.
For example, he said that investing in FSRUs makes sense in the Mediterranean countries, if they are considering replacing diesel as an energy source.
However, he conceded that they were difficult projects to put together.
For countries new to the game, a lot of technical work will be needed - the economics needed to be studied, the siting of the project also needs to be taken into account with the geophysical and metocean environments studied. Local regulations could also cause problems by way of permitting.
In addition, the negotiations for an FSRU and the sales and purchase agreements (SPAs) will take time, as governments might not be familiar with the commercial and technical nuances of FSRU operations.
He listed the main criteria that need to be considered before opting for an FSRU, including the challenges particularly at the pre-FID stage (pre-feasibility), followed by a study of LNG feasibility, the unit’s engineering and design moving on to project procurement, construction and finally operations.
Limam urged those considering the use of FSRUs for LNG imports to concentrate on the project’s drivers and not just look at a line on a graph.
As for the possibility of FIDs taken on projects soon, he said that 2021 was going to be a year of transition. For those taken this year or next, operators will not see the benefit until 2025-2026, due to the length of time it takes to get a project fully online.
Project development movements could be seen during the second half of this year and in 2022, increasing to 2030, but projects will see competition coming from other energy sources in the long term.
Finally, he said that what is keeping LNG project developers awake at night was the global economic trends in a post-pandemic world, ie the timing and the magnitude of the recovery and the amount of energy growth to be seen in developing countries.
Other concerns included infrastructure bottlenecks, future oil price levels, the commercial structure of LNG projects and the long term market requirements versus the need for flexibility.
Returning to FIDS, Baker Hughes expected around four this year following last year’s pandemic-induced collapse.
The group’s unit that caters for LNG contracts was the only one of its four segments that boosted fourth-quarter sales from a year earlier, the company said in an earnings statement.
“By 2030, we still need to have capacity of approximately 650 to 700 mill tonnes of LNG in place,” CEO, Lorenzo Simonelli told analysts and investors during a conference call. “You’re looking at 50 to 100 mill tonnes FIDing over the course of the next three to four years.”
Only one project reached a FID last year.
However, the demand picture changed this winter when cold weather in Europe and North Asia sent spot prices soaring, raising the prospect of revived commercial talks with LNG developers worldwide, the company explained.