Europe Chooses LNG Over Russian Natural Gas... Will FSRU Rise Again?

Advantages of Rapid Natural Gas Supply Without Large-Scale Facilities

▲The 170,000㎥ class LNG-FSRU, the world's first built by Hyundai Heavy Industries in 2014 and delivered to Norway's H?egh LNG (Photo unrelated to the article content)

[Asia Economy Reporter Oh Hyung-gil] As European Union (EU) countries turn to LNG (liquefied natural gas) to reduce their dependence on Russian natural gas, floating storage regasification units (FSRUs) are gaining renewed attention. If the high value-added ship market revives, there is hope that the domestic shipbuilding industry can also expect new orders.

On the 15th, European countries are striving to secure not only LNG but also offshore LNG storage facilities (FSRUs) that can store and simultaneously regasify LNG to reduce their dependence on Russian natural gas.

Currently, Europe has an annual LNG regasification capacity of 253 Bcm, but most of it is concentrated in the UK and the Iberian Peninsula, which are far from Russia.

The problem is that the transportation capacity to supply regasified LNG from the Iberian Peninsula to inland areas such as France is minimal, so much of the LNG imported from offshore sources like the United States is not sufficiently supplied inland.

Because of this, interest in FSRUs is increasing, especially in Germany, which lacks LNG receiving terminals. FSRUs can be built in at least two years, which is shorter than the more than three years required to construct onshore receiving terminals. For now, as a temporary measure, efforts are underway to lease or purchase existing FSRUs.

The LNG-FSRU built by Daewoo Shipbuilding & Marine Engineering and delivered to Excelerate in 2014 is supplying natural gas offshore.
[Photo by Daewoo Shipbuilding & Marine Engineering]

The Netherlands has signed a five-year lease contract for one FSRU in addition to its existing onshore receiving terminals and plans to use it as an LNG receiving terminal starting at the end of the year.

Germany is pushing to lease up to three units, and France, which already owns four onshore terminals, is also pursuing additional leases. Finland and Estonia are jointly pursuing leases by leveraging their geographical accessibility.

Unlike general LNG carriers, FSRUs are expected to face fierce competition due to supply shortages.

If FSRU orders increase, it is highly likely to be an opportunity for the domestic shipbuilding industry to improve its performance. Despite sluggish global ship market conditions, domestic shipbuilders are recording outstanding order achievements in LNG carriers.

Last year, domestic shipbuilders secured 87% of the LNG carriers ordered worldwide, and as of the end of last year, out of 35 FSRUs worldwide, 33 were built by domestic shipbuilders.

An industry official said, "The introduction of LNG terminals or FSRUs is a field where Korea, a strong shipbuilding nation, has an advantage in terminal construction," adding, "It is necessary to pay attention to the movements of major countries within the EU, such as Germany."

This content was produced with the assistance of AI translation services.