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 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 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 2022, a total of 45 FSRUs made up 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 supply chain.
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 operation. 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. Post that, the price experienced a V-shape recovery into 2021 due to extreme winter, which, in turn, 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 increased by more than twice as much. There were 48 ships in the fleet as of April 2022. However, following a period of rapid FSRU-based import facility deployment between 2015 and 2018, the adoption of floating regasification terminals has since 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, due to the Russian invasion of Ukraine and the sharp rise in LNG demand in Europe to replace declining Russian pipeline gas supplies, FSRU-based terminal projects have seen a resurgence in interest. 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.
The FSRU market growth rate is directly dependent on LNG market growth. The global LNG market increased by almost four times in the last twenty years. The volume of natural gas processed into LNG increased from 140.47 billion cubic meters in 2000 to 516.2 billion cubic meters in 2021. During the same period, the percentage of natural gas traded as LNG doubled. It increased from 5.85% in 2000 to 12.8% in 2021.
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 forecast period to 2028.
An FSRU costs about USD 300 million to build, which is roughly half the investment required for an onshore facility.
Also, these FSRUs can be made operational within a year's 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 (March 2022), India received its first FSRU vessel, 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 Daewoo Shipbuilding and Marine Engineering, Hyundai Heavy Industries, and Samsung 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 Netherlands' Karpower International BV entered a collaboration under the brand name 'KARMOL' to produce reliable electricity.
In Jan 2022, Wartsila announced the successful installation and operation of an FSRU vessel that will provide fuel for the 378-MW Energía del Pacifíco (EdP) power station in El Salvador.
Asia-Pacific is expected to be the leading region in the FSRU market during the forecast period, followed by Europe, South America, the Middle East and Africa, and North America.
Indonesia, Pakistan, China, Bangladesh, India, and Thailand are the major countries in Asia-Pacific with existing FSRU terminals along with a strong order book, while Italy, Turkey, Croatia, and Russia are a few emerging markets within Europe's FSRU market.
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;
South America: Brazil and the Rest of South America
Middle East and Africa: Saudi Arabia, Brazil, Nigeria, South Africa, and other countries.
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 market 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 impact on the global FSRU market is an integral part of the report, which helps companies navigate a rapidly changing market landscape.
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
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