How can Europe increase its access to gas? 

The search for ways to bring in more LNG has therefore been zeroing in on Floating Storage and Regasification Units (FSRUs), which have emerged in recent years as the quickest way to develop a gas import infrastructure. 

The technology – which involves using a modified LNG tanker that is moored in or just outside of a port to receive, store and regasify LNG – is already well-established. Italy has long used one in addition to imports into its two fixed land-based import terminals, while in Croatia and Lithuania, FSRUs represent the only import route for LNG. New projects are also in advanced stages of planning in Cyprus and Greece. 

Following Russia’s attack on Ukraine and subsequent European commitments to phase out Russian gas imports, mothballed projects are seeing the light of day again, too, as well as several brand-new projects that give off more than a whiff of panic.

Typically, interest in FSRUs is a lagging indicator to low global prices – that is to say interest is usually at its highest after a period when, globally, LNG is perceived as being cheap. The fact that Europe is looking to develop further FSRUs now is unusually counter-cyclical, since high prices usually tamp down demand. In theory, therefore, it could reduce interest from some of the markets that have been looking at developing new FSRU infrastructure beyond Europe. 

Indeed, given current high pricing and an outlook that does not look to promise a drop in LNG pricing for at least a couple of years, it remains to be seen whether projects scheduled in markets like Brazil, Panama, Nicaragua and Sri Lanka that are already in development will become unviable. Indian energy company H Energy’s project at Jaigarh, which was to use the Hoegh Giant, looks to be the first victim of the new extreme competition for FSRUs.

Any country seeking an FSRU would then have to decide whether to commission a brand-new vessel – incurring a wait time of probably three to four years, based on current lead times: new build LNG vessels are currently being offered with delivery times into 2025 and beyond.

Last year, one vessel owner changed down the specification of an FSRU it had ordered to be just an LNG carrier (LNGC) though, so in theory a vessel on order could potentially be upgraded to FSRU spec, if the money is there and the vessel is speculative. 

The quickest option would therefore be to charter an existing vessel, if charter availability permits. There were around 45 vessels capable of being used in this capacity, with about half already employed as FSRUs.

A handful more are already tied down and will soon start operations as new FSRUs, while a couple are more specifically FSUs – meaning they just store the LNG, with the regasification done on shore.

In March, ICIS calculated that there were about a dozen FSRUs currently trading simply as LNGCs, which would represent the quickest option. Since then however, the decks have been virtually cleared. With four signed up by Germany and the same again booked across Italy, France and the Baltics, all of the most modern vessels have found homes, with the few that are left less suitable.

The race for available FSRUs was intense but short-lived. Any new units will likely either have to be wrested from global operators with less deep pockets, or importers will need to wait for new builds to enter the market.

About the author

Rob is an LNG market analyst at ICIS, with a particular focus on updating and maintaining data integrity on the LNG Edge vessel-tracking platform. His principal responsibilities involve tracking and updating contracts, outages and voyages and integrating newbuild vessels into a global fleet that now stands at around 650 vessels. He also maintains a close eye on the developing LNG-as-a-fuel sector, both in the LNG bunker market and the trucked-LNG sector, and has been involved with ICIS’s outreach with other companies operating in this space.