FSRU: Risk and Opportunities

Author: Ashish Mohanty1

Co-authors: Sudhanshu Haldar1
Affiliations: 1Galway Group, United States
FSU/FSRUs: Risks and Opportunities Provided by Floating Regasification
In the context of rising global energy demand and abundant shale gas reserves,
governments across the world are considering natural gas as a viable fuel for
augmenting their energy portfolios. Increasingly, gas buyers are exploring floating
regasification solutions for their perceived speed of deployment, cost advantages,
and redeployment flexibility. FSRU solution comes in different configurations. For
example, Brazil has two out of three FSRUs converted from LNGC, whereas Uruguay
is going forward with worlds biggest new-built FSRU. However, the FSRU market is
in early stages and there is an increasing need for understanding the issues
associated with potential FSRU solutions.
These issues include the integration of the ship operations with LNG purchases
particularly when markets are highly seasonal or variable; LNG quality management;
Operational effects of metocean conditions; FSRU and LNG carrier charter rates; and
risks associated with different financial structure associated with fixed versus ship
assets.
This paper provides a framework for assessing the economic and technical viability of
floating regasification solutions in a variety of global contexts. The paper investigates
factors such as: downstream gas demand outlook, logistical issues, supply factors
and locational challenges. It also examines the limitations inherent in FSRU
deployment as a result of expansion constraints, shipyard and re-deployment as a
LNGC. The paper will include a scorecard that outlines and ranks the key risks, both
commercial and technical, to be considered by LNG buyers prior to committing to an
FSRU solution.