Investing in liquefied natural gas shipping: A key overview (Part 8 of 12)
FLNGs
As costs rise on shore, though, energy companies in Australia are looking toward using FLNGs (floating liquefaction facilities at sea) to lower costs. Bernstein Research analysts have estimated the capital cost of FLNG facilities would range from $2,500 to $3,000 per metric tonne of natural gas capacity, which is lower than the $4,000 per metric tonne of capacity for Australia’s on-shore projects. These could also open up new LNG supplies in places like East Africa, where economical natural gas can be found off-shore.
FSRUs
FSRUs (floating storage and regasification units) are another technology that would likely aid the future LNG trade. Whether a country can import LNGs will depend on its regasification capacity. While regasification facilities are currently being planned years ahead and long-term LNG contracts remain dominant, these FSRUs will play more important roles in the future as the spot LNG market grows. Plus, these FSRU projects only require two to three years to complete (compared to four or more years for land-based projects) and cost about 20% to 50% less than land-based regasification plants, according to Golar LNG Ltd.
Note that FSRUs’ economic significance on the LNG trade and LNG carrier demand is probably less than FLNGs’, considering that liquefaction cost is more expensive than regasification, based on CEIS’s research that we showed earlier in this series.
Currently, Golar LNG Ltd. (GLNG) and Golar LNG Partners LP (GMLP) are two companies that are actively invested or looking to invest in FSRUs and FLNGs. Other peers such as Teekay LNG Partners LP (TGP) are also considering involvement. Though companies such as Gaslog Ltd. (GLOG) and Dynagas LNG Partners LP (DLNG) haven’t expressed interest, they’ll also be affected by the development of technologies in FLNGs and FSRUs. The Guggenheim Shipping ETF (SEA) is invested in Golar LNG Partners LP, Gaslog Ltd., and Teekay LNG Partners LP.
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