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The increasing governmental support for the use of natural gas as a cleaner energy source, surging use of FSRUs in remote locations and the ability of FSRUs to provide flexible and reliable LNG supply, cost competitiveness of FSRU's coupled with growing offshore gas production, and rising demand for LNG as a transition fuel are expected to drive the floating storage regasification unit (FSRU) market during the forecast period.
However, the high cost associated with the development and construction of FSRUs, regulatory and legal challenges, environmental concerns such as crude oil spills, and The availability of alternative solutions for natural gas storage and regasification, such as land-based storage facilities and pipelines, which can be less expensive and easier to develop in some cases are the major restraints to the global FSRU market growth.
Floating storage regasification units (FSRUs) are regarded as the fastest means to capitalize on low gas prices and its increased demand in various end-use sectors such as power generation, transportation, and industries. In 2023, a total of 45 FSRUs made up 6.7% of the active global LNG fleet.
It is anticipated that FSRUs will continue to be a popular option for storage and regasification during the forecast period. The conflict between Russia and Ukraine has further aroused interest in FSRUs across Europe. Shipowners have reported receiving a significant number of inquiries regarding the prospect of deployment in order to alleviate the supply crunch and reduce dependence on Russian gas.
FSRUs are on the path to becoming the "go-to" choice for countries to expand their existing regasification capacity.
The global FSRU market consists of establishments involved in operating the floating storage regasification unit either through long-term contracts or through spot chartering.
An FSRU is a special type of LNG tanker used to transfer LNG from one place to another, through sea routes. An FSRU acts as an interface between LNG Carriers and the local gas supply infrastructure, thus playing a vital role in the LNG industry.
FSRUs are utilized for LNG storage and regasification in addition to being ordinary LNG transporters. Compared to conventional onshore regasification facilities, FSRUs provide greater flexibility, reduced capital expenditures, and a quicker method of utilizing natural gas from LNG sources.
FSRUs play an important role in equipping new countries to quickly ramp up their regasification facilities because the time taken to construct an FSRU is just about half of that of an onshore terminal and offers flexibility with almost a "plug-and-play" kind of operations. Some of the benefits are listed below:
Furthermore, an FSRU has the flexibility to serve multiple purposes, such as storage, regasification, and power generation, all at the same time or sometimes separately.
During the first half of 2020, the global LNG market was adversely affected by the reduced demand for LNG due to a decrease in economic activity and the collapse in LNG prices.
The LNG price plummeted and recorded the lowest in the last 20 years. Following this, the price experienced a V-shaped recovery into 2021 due to an extreme winter, which increased demand for gas for heating. The LNG market experienced resilience during 2021 owing to the heavy reliance on LNG for power generation by many countries across the world.
Since 2015, the size of the world's FSRU fleet has more than doubled. The FSRU fleet consisted of 45 ships by the end of 2023. However, after a period of rapid deployment of FSRU-based import facilities between 2015 and 2018, the adoption of floating regasification terminals has slowed.
By the end of 2021, about a quarter of the fleet was either idle or working as LNG carriers, a less lucrative industry than serving as receiving terminals. Fleet operators' waning interest caused the FSRU order book to gradually decline from a peak of 12 outstanding orders in 2017 to only five by the end of 2021.
However, the Russian invasion of Ukraine and the subsequent rise in LNG demand in Europe to replace declining Russian pipeline gas supplies have contributed to a resurgence in interest in FSRU-based terminal projects.
These projects have much shorter lead times than land-based terminal infrastructure. A floating regasification terminal can begin importing LNG less than a year after project approval, whereas a land-based terminal requires three to five years to complete. This is because port facilities and pipeline connections are readily available, and the FSRU is chartered from the existing fleet.
Currently, the rising demand for Floating Storage and Regasification Unit (FSRU) vessels, particularly in response to heightened demand from the European region, is causing a global shortage, which is affecting regasification project plans worldwide.
(You can access a comprehensive list of both completed, under contruction, and upcoming FSRU projects, along with their current status, through our extensive Global FSRU Database)
The FSRU market growth rate is directly dependent on LNG market growth. In 2023, the worldwide demand for liquefied natural gas (LNG) soared to unprecedented levels, totaling 552 billion cubic meters (bcm). This marked a 1.8% year-on-year increase from the 2022 figure of 542.4 bcm. The growth was notable considering the constraints on new capacity additions and the prevailing lower spot prices, which contrasted with the historic levels observed in 2022.
The global LNG market volume is expected to double in the next decade because natural gas is touted as a key to the energy transition, decarbonization, and enhanced energy security, thus, driving the FSRU market during the market forecast period to 2029.
Amid the shortage of FSRU vessels, the number of new build FSRUs is expected to be limited as all the major ship builders are preoccupied with other projects. However, repurposing an LNG carrier into an FSRU represents a cost-efficient means of enhancing the energy efficiency of aging vessels.
In July 2023, the IMO revised its greenhouse gas strategy, setting an ambitious target for net-zero ship emissions by 2050, a major leap from the 2018 goal of 50% reduction. This change is expected to further drive the conversion of older LNG ships into FSRUs. However, there is some risk of over-build as plans continue to proliferate, with some operators reporting insufficient demand for additional longer-term capacity.
An FSRU costs about USD 300 million to build, which is roughly half the investment required for an onshore facility
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Also, these FSRUs can be made operational within a years' time, which is at least 6 times faster than an onshore facility of a similar scale, making them both cost-competitive and time-sensitive. This cost competitiveness is enabling both developing countries and established countries within the LNG market to rapidly expand their regasification facilities.
For instance, Croatia, a developing country in the LNG market, started to import LNG by deploying its first FSRU with a 1.9 MTPA capacity. Similarly, Brazil and India, already developed countries in the LNG market, have expanded their regasification facilities by commissioning two and one FSRU respectively.
Recently, India received its first FSRU, which arrived at H Energy Group's Jaigarh terminal in Maharashtra. The new FSRU has a storage capacity of 170,000 cubic meters and an installed regasification capacity of 750 million cubic feet per day.
However, shipbuilding and delivery delays due to COVID-19, decreasing charter rates seasonally, and enhanced regulations could restrain the FSRU market.
In response to concerns about energy security, a number of European nations, particularly the Netherlands and Germany, are turning to floating storage regasification units (FSRUs). Since Vladimir Putin's invasion of Ukraine, European nations have leased at least 25 FSRUs, and more are likely to do so as the area strives to find alternatives to Russian gas.
With the lockdown measures in place, the FSRU industry has transformed to accept digital documents in several operations, including terminal operations and cargo loading and unloading.
Remote inspections and digitally signed and vetted documentation have become the norm and will continue to be so in the coming years, thus encouraging transparency in the FSRU market.
The cloud-based solutions have enabled the ship-building training to take place remotely via simulators, which in turn has helped various marine engineering teams of companies such as Hanwha Ocean Co., Ltd. (formerly known as Daewoo Shipbuilding and Marine Engineering), Hyundai Heavy Industries Co., Ltd., and Samsung Heavy Industries Co., Ltd., continue working amidst the pandemic.
To combat the ill effects of climate change and secure a reliable power supply, various countries in Asia-Pacific and Europe are looking to invest in Floating LNG Power Plants.
Floating LNG power plants in combination with FSRUs are very competitive because of their low construction costs and faster deployment.
For example, Japan's FSRU operator Mitsui OSK and the Netherland's Karpower International BV entered a collaboration under the brand name 'KARMOL' to produce reliable electricity.
Asia-Pacific is expected to be the leading region in the FSRU market during the forecast period, followed by Europe, North America, and rest of the world (includes, South America, the Middle East and Africa).
Indonesia, Pakistan, China, Bangladesh, India, and Thailand are the major countries in Asia-Pacific with existing FSRU terminals along with a strong orderbook, while Italy, Turkey, Croatia, and Russia are a few emerging markets within Europe's FSRU market.
The Asia-Pacific region has countries that have both developing and established LNG markets. For instance, countries such as China, India, South Korea, Japan, and Australia have an established LNG market, while Indonesia, Pakistan, and Bangladesh are developing their LNG markets.
Asia-Pacific is expected to be the largest region for LNG imports during the forecast period. With a target to reduce emissions, LNG demand will rise in the power generation sector, especially in China and India, along with other countries in Southeast Asia such as Thailand, the Philippines, Indonesia, and Malaysia.
Indonesia, Pakistan, and Bangladesh have started importing LNG via FSRUs. Indonesia has three FSRU-based LNG terminals, while Pakistan and Bangladesh have two each.
India is the latest entrant into the FSRU market, with its two new FSRU-based terminals under development in Jaigarh and Jafrabad. While Pakistan is in the process of replacing the existing FSRU with one with a larger capacity.
The global LNG carrier fleet grew steadily in the last twenty years, with the rapid increase in liquefaction capacity being the key factor. About 90% of the LNG vessels are less than 20 years old, and the order book for these vessels remains strong during the forecast period.
The FSRU market is currently in an early stage of development, and the competition within the market is not much. However, major oil and gas companies, marine transportation companies with strong reputations and extensive resources and experience are expected to enter the FSRU global market, thus intensifying the competition.
Excelerate Energy LP and Hoegh LNG Holdings Ltd., which own the FSRU, continue to maintain the largest fleets of active FSRUs. Some other market vendors are Golar LNG Ltd (New Fortress Energy Inc.), BW Group, Bumi Armada Berhad, Flex LNG, Gazprom, Eagle LNG, LNG Croatia, Exmar NV, Dynagas, Mitsui O.S.K. Lines (MOL), etc.
COVID-19 has had an adverse impact on the overall LNG market, in general, and the FSRU market, in particular.
The regasification facilities expansion plans of several countries were delayed and, in some cases, even cancelled. For instance, in India, 3 large-scale onshore regasification facilities and 1 FSRU-based regasification facility were delayed by at least one year due to financing issues.
Also, the steep drop in the LNG prices during the pandemic caused a decline in LNG freight prices, which, in turn, led to deferring deliveries of newly built FSRUs. For example, Flex LNG, a major player in the FSRU market, had to delay two FSRU orders due to the pandemic.
Blackridge Research's Global FSRU Market research report provides an FSRU market overview, comprehensive qualitative and quantitative analyses along with a deep insight into the current and future of the market.
The market report analyses the annual trends of FSRU contracts, FSRU order book, the capacity of FSRU projects and investments into the sector; provides market size and forecast in terms of Capacity (MTPA); provides the list of upcoming LNG projects; details the markets' drivers and restraints; discusses growth challenges at various levels; provides supply chain analysis; provides company profiles and competitive market analysis including FSRU market share; discusses various market-specific scenarios and much more.
Analysis of the Covid 19 and Russia-Ukraine conflict impact on the global FSRU market is an integral part of the report, which helps companies navigate a rapidly changing market landscape.
The study covers all the major underlying forces that help the market develop and grow and the factors that constrain growth.
The report includes a meticulous analysis of each factor, explaining the relevant, qualitative information with supporting data.
Each factor's respective impact in the near, medium, and long term will be covered using Harvey balls for visual communication of qualitative information and will functions as a guide for you to analyze the degree of impact.
This report discusses an overview of the market, the latest updates, important commercial developments and structural trends, and government policies and regulations.
This section provides an assessment of the COVID-19 impact on global floating production storage and offloading market demand.
The report provides global FSRU market size and demand forecasts until 2029, including year-on-year (YoY) growth rates and CAGR.
The report examines the critical elements of the global FSRU industry supply chain, its structure, and the participants.
Using Porter's five forces framework, the report covers an assessment of the global FSRU industry's state of competition and profitability.
The report dissects the Global Floating Storage Regasification Unit (FSRU) Market into various segments based on construction type (new build ship, converted ship/hull).
Further, market size and demand forecasts will be presented, along with various drivers and barriers for individual market segments.
Effective market segmentation enables you to identify emerging trends and opportunities for long-term growth. Contact us for "bespoke" market segmentation to better align the research report with your requirements.
The report covers detailed profiles of major countries across the world. Each country's analysis covers the current market scenario, market drivers, government policies & regulations, and market outlook.
In addition, global market size, demand forecast, and growth rates will be provided for all regions.
The global FSRU market report is segmented based on geography into:
North America: United States, Canada, Mexico, and the Rest of North America
Europe: Spain, France, the United Kingdom (UK), Italy, Russia, and the Rest of Europe
Asia Pacific (APAC): China, India, Japan, South Korea, Australia, Indonesia, and the Rest of APAC;
Rest of the World: South America, Middle East, and Africa.
This report presents detailed profiles of major market players in the global FSRU industry. Some of the major companies covered are Excelerate Energy, HÖEgh Lng As, BW Group, etc. Generally, each company profile includes an overview of the company, relevant products and services, a financial overview, and recent developments.
The report provides a comprehensive list of notable companies in the global market, including mergers and acquisitions (M&As), joint ventures (JVs), partnerships, collaborations, and other business agreements.
The study also discusses the strategies adopted by leading players in the industry.
The executive summary will be jam-packed with charts, infographics, and forecasts. This chapter summarizes the findings of the report crisply and clearly.
The report begins with an executive summary chapter and ends with conclusions and recommendations.
Subscribe to our new global FSRU market report based on a thorough global industry analysis to get insights on the global FSRU industry outlook.
Get a free sample copy of the global FSRU market report by clicking the "Download a Free Sample Now!" button at the top of the page.
Also, check out our detailed analysis of the FSRU market in various regions (which covers key countries in each region):
1. Executive Summary
2. Research Scope and Methodology
3. Market Analysis
4. Industry Analysis
5. Regional Market Analysis
6. Key Company Profiles
7. Competitive Landscape
8. Conclusions and Recommendations
List of Tables & Figures
Abbreviations
Additional Notes
Disclaimer
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