By Alessandro Speciale (Bloomberg) As Europe prepares for the prospect of losing Russian gas, companies are scrambling to get hold of a specialized type of vessel that can quickly handle imports of liquefied natural gas from other countries.
Interest in leasing Floating Storage and Regasification Units, or FSRUs, has surged recently in Europe, according to people with direct knowledge of the situation. The vessels, which offer a faster and cheaper alternative to land-based terminals, have been rapidly deployed over the last decade from Asia to Latin America.
The vessels are either built-to-order or converted from older LNG carriers, and can be installed in a matter of months, while onshore import terminals require existing infrastructure and take years to build. The rush to find alternatives to pipeline gas from Russia — which meets a third of Europe’s demand — was given fresh impetus Tuesday as the European Commission outlined a strategy to cut import needs from Russia by two-thirds this year, following Moscow’s invasion of Ukraine.
Also Read: Germany To Build LNG Terminal ‘ASAP’ to Reduce Russian Gas Dependence
Hoegh LNG AS, a major owner and operator of such equipment, has received “a number of inquiries from European projects that are being revived,” according to an emailed message.
In Germany, Uniper SE is looking to revive plans to build an LNG terminal as the country pushes to diversify away from Russian energy supplies. The utility has already undertaken preliminary work for a floating terminal at a location on the North Sea coast.
In Italy, a proposed terminal would be docked near the northern port of Ravenna, one person said, asking not to be identified discussing confidential negotiations.
“We are seeing increased interest in FSRUs, Italy and Germany being two examples,” said Paul Wogan, chief executive officer of GasLog Ltd., an LNG shipowner that is involved in a planned terminal in Greece.
“The desire in Europe to replace Russian pipeline gas will eventually remove the overhang of FSRU’s in the market,” he added. “But these projects will still take some time to materialize, even if they will be fast tracked.”(Updates with comment from GasLog CEO in last two paragraphs.)
By Alessandro Speciale and Chiara Albanese, With assistance from Alberto Brambilla.© 2022 Bloomberg L.P.
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