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The relatively young industry using floating storage and regasification units (FSRUs) has been booming since 2015 as many new importers of liquefied natural gas (LNG) used these types of cheaper floating carriers But the golden years of the FSRU, the first of which was used in 2005, could be completed, at least for the moment, because voracious demand for Chinese natural gas has inflated the LNG market and rendered less urgent the need for FSRU projects in new and much smaller markets. Analysts say the FSRU market should continue to grow, but at a slower pace than the past two years.
Prior to 2017, the growing trend of emerging markets to seek cleaner fuel than coal has increased the number of LNG importers around the world, and many newcomers to the LNG Buyers Club were using Option FSRU.
At around $ 300-400 million, FSRU projects cost half the price of an onshore terminal. FSRUs are also flexible because the vessel can be used elsewhere once it is not needed.
But the winter of 2017-2018 was marked by the massive switch from Chinese coal-fired energy to natural gas energy and the increase in demand for LNG on the largest market in Asia. This has led China to reduce the global supply of surplus LNG and to make FSRU projects in other smaller countries less attractive.
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China urges China to become the second largest importer of LNG in 2017 , ahead of South Korea and Japan, according to the US EIA. February. China's LNG imports surged 46 percent last year. Despite the fact that China has increased domestic production and pipeline imports last year, natural gas shortages in northern China have resulted in record levels of LNG imports during the past year. ;winter. Overall, natural gas imports accounted for 40% of China's natural gas supply in 2017, and LNG accounted for more than half of these imports, according to EIA.
China is now looking to double its LNG import terminals. The change in the LNG demand market, particularly in China, has resulted in the slowdown of planned FSRU projects in countries such as Chile or South Africa
. Last winter, while there seemed to be an excess of LNG, creating new demand centers via the FSRU seemed a more attractive strategy than now, "WoodMac's Buckland told Reuters. "Which does not mean that they will not come back in the future," he added.
The main players in the FSRU market are seeking to combine FSRU with other business models such as LNG-to-power, or "gas stations" for ships that use LNG as fuel in the north of the country. # 39; Europe. Related: Houston obtains its own crude oil futures as US exports increase
"The old economic model" FSRU only "is becoming more and more urgent," One of the main sector, Golar, told investors last month, and said that he would turn to LNG-to-power projects to boost returns.
Nevertheless, FSRU technology will continue to unlock demand in new markets, particularly in South and Southeast Asia, according to Bloomberg New Energy Finance (BNEF) Outlook Global LNG 2018. Southeast Asia and Southeast is expected to become the main driver of LNG imports in the world by 2022-2023, said Maggie Kuang, head of Asia-Pacific LNG analysis and lead author of the report.
For the LNG market, this year's global imports are expected to reach a new record and grow "A new surge in demand by 2030 will be due to environmental measures in China, to an increase in production in South and Southeast Asia and a reduction in domestic gas production in Europe ".
Tsvetana Paraskova for Oilprice.com
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