After an Indian business group's plans to set up a 6
MMTPA Floating Storage Regasification Unit (FRSU) mainly as a captive gas
supply source, there is a heightened interest in India about FRSU-based
terminals.
The website carries here a very comprehensive template on how an FRSU concept can work in India.
The biggest advantage for an FRSU is that it can typically represent just 60% of an onshore terminal cost and can be delivered in a shorter time. An onshore 3 mtpa terminal with one 180,000 m3 storage tank is likely to cost Rs 3500 to Rs 4000 crore, compared to Rs 2000 to Rs 2500 crore for a similar capacity FSRU.
A component wise comparison of the cost differential is carried here.
What is more, an FRSU can be delivered quicker: an onshore terminal is driven by the construction of the tanks which is typically 36-40 months. New build FSRUs take 27-36 months to delivery but a conversion of an existing Indian LNG projects carrier to an FRSU would be less at typically 18-24 months.
However, the real schedule advantage is if an FSRU is readily available, either reassigned from another project or constructed on a speculative basis.
A recent example of this is the second FSRU for Ain Sokhna which commenced operation in just 5 months after the issue of tender documents. This was possible because the onshore handing infrastructure was already available.
At the buyer end, however, the setting up of onshore infrastructure will have to be taken into account while looking at shorter timelines.
The website carries here a very comprehensive template on how an FRSU concept can work in India.
The biggest advantage for an FRSU is that it can typically represent just 60% of an onshore terminal cost and can be delivered in a shorter time. An onshore 3 mtpa terminal with one 180,000 m3 storage tank is likely to cost Rs 3500 to Rs 4000 crore, compared to Rs 2000 to Rs 2500 crore for a similar capacity FSRU.
A component wise comparison of the cost differential is carried here.
What is more, an FRSU can be delivered quicker: an onshore terminal is driven by the construction of the tanks which is typically 36-40 months. New build FSRUs take 27-36 months to delivery but a conversion of an existing Indian LNG projects carrier to an FRSU would be less at typically 18-24 months.
However, the real schedule advantage is if an FSRU is readily available, either reassigned from another project or constructed on a speculative basis.
A recent example of this is the second FSRU for Ain Sokhna which commenced operation in just 5 months after the issue of tender documents. This was possible because the onshore handing infrastructure was already available.
At the buyer end, however, the setting up of onshore infrastructure will have to be taken into account while looking at shorter timelines.
OPEX breakup: For buyers of gas, a clear
understanding of operating costs is also very important even though the
eventual pricing or tolling model can be different.
The website carries here a component-wise breakdown of operating costs, including:
Provision of personnel – onboard and located on the onshore interface
Ongoing head office support to operations
Fuel gas and oil for power generation and steam generation
Maintenance and inspection
Spare parts
Chemicals and lubricants
Insurance
Harbour fees
Tugs for supply tanker manoeuvering
Service boats for offshore located FSRUs
Dredging
Financing costs
OPEX costs are normally at around Rs 15 lakh per day
The website carries here a component-wise breakdown of operating costs, including:
Provision of personnel – onboard and located on the onshore interface
Ongoing head office support to operations
Fuel gas and oil for power generation and steam generation
Maintenance and inspection
Spare parts
Chemicals and lubricants
Insurance
Harbour fees
Tugs for supply tanker manoeuvering
Service boats for offshore located FSRUs
Dredging
Financing costs
OPEX costs are normally at around Rs 15 lakh per day
The right business model: Indian LNG projects Import terminal business models usually take the form of
Integrated, Merchant or Tolling arrangements. Full details of how these models
work are carried here.
FSRUs are functionally identical to onshore terminals and can use any of these models.
The tolling model seems to be the most popular as it provides a simple arrangement directly with the buyer and the leasing option fits well with shorter term contracts.
The website carries here full details of possible contract structures.
As for the contract period, the first FSRUs were typically leased on a 10-15 year basis. This gave the owner some reassurance of recovering the capital cost of the vessel and finance charges over the lease period. Analysis of the early FSRUs would indicate that 10 years was the minimum lease period and the day rate was calculated on the basis of recovering the capital costs and finance costs over 8 years with the remaining 2 years as profit.
The range of lease periods now spans 5-20 years and is really driven by the gas market demand period.
Leasing charges are typically in the range $110-160,000/day and with an OPEX in the range of $20-45,000/day, the total cost can vary between $130-205,000/day.
Industry standard FSRUs are essentially limited to 173,000 m3 storage and nominal 6 mtpa throughput. Storage of 263,000 m3 can be offered but this has to be a bespoke model
Capacities of up to 330,000 m3 FSRUs are also available.
Whilst FSRUs are normally leased there is an opportunity to purchase outright subject to Contract arrangements.
FSRUs are functionally identical to onshore terminals and can use any of these models.
The tolling model seems to be the most popular as it provides a simple arrangement directly with the buyer and the leasing option fits well with shorter term contracts.
The website carries here full details of possible contract structures.
As for the contract period, the first FSRUs were typically leased on a 10-15 year basis. This gave the owner some reassurance of recovering the capital cost of the vessel and finance charges over the lease period. Analysis of the early FSRUs would indicate that 10 years was the minimum lease period and the day rate was calculated on the basis of recovering the capital costs and finance costs over 8 years with the remaining 2 years as profit.
The range of lease periods now spans 5-20 years and is really driven by the gas market demand period.
Leasing charges are typically in the range $110-160,000/day and with an OPEX in the range of $20-45,000/day, the total cost can vary between $130-205,000/day.
Industry standard FSRUs are essentially limited to 173,000 m3 storage and nominal 6 mtpa throughput. Storage of 263,000 m3 can be offered but this has to be a bespoke model
Capacities of up to 330,000 m3 FSRUs are also available.
Whilst FSRUs are normally leased there is an opportunity to purchase outright subject to Contract arrangements.
Selection criteria: What are the key considerations which will have to be kept in mind to
determine whether an import terminal is best suited for an FSRU or an onshore
option?
Looking at the decision factors a FSRU is likely to be preferred over an onshore terminal if the following applies:
There is short term market need – leasing cheaper than sunk cost, FSRU reassigned
There is fast track need to supply gas – onshore terminals take 3-5 years to construct
Capacity is less than 6 mtpa or if it is greater it would need 2 FSRUs
Send out capacity not likely to increase – much easier to add extra vaporizers onshore
No need for strategic storage - largest vessel Qmax 266,000 m3
Major permitting issues for onshore terminal
No space available for an onshore terminal
Offshore FSRU if entrance to harbour too shallow requiring dredging (dredging is an ongoing maintenance cost too)
Looking at the decision factors a FSRU is likely to be preferred over an onshore terminal if the following applies:
There is short term market need – leasing cheaper than sunk cost, FSRU reassigned
There is fast track need to supply gas – onshore terminals take 3-5 years to construct
Capacity is less than 6 mtpa or if it is greater it would need 2 FSRUs
Send out capacity not likely to increase – much easier to add extra vaporizers onshore
No need for strategic storage - largest vessel Qmax 266,000 m3
Major permitting issues for onshore terminal
No space available for an onshore terminal
Offshore FSRU if entrance to harbour too shallow requiring dredging (dredging is an ongoing maintenance cost too)
More data: The
FSRU business has grown rapidly since the first vessel was installed in 2011 –
just 16 years ago. There are now 27 vessels of which 23 are in operation as
terminals and 4 currently assigned to LNG tanker service. A further 10 are
currently under construction with options placed with the shipyards for 10
more.
The estimate is that there can as many as 50 vessels in operation by 2025 offering an FSRU-based regas capacity in excess of 200 mtpa, which is 60% of the world’s LNG production in 2016.
That the future is bright is endorsed by the fact that FSRU service providers are ordering new vessels at a cost of around $250m on a speculative basis and that established LNG tanker owners are now entering the market.
The website carries here a detailed list of information on
-- Current FSRU fleet in operation or delivered and pending start up and operation, including photographs of the vessels
-- Ships ordered or likely to be ordered.
The estimate is that there can as many as 50 vessels in operation by 2025 offering an FSRU-based regas capacity in excess of 200 mtpa, which is 60% of the world’s LNG production in 2016.
That the future is bright is endorsed by the fact that FSRU service providers are ordering new vessels at a cost of around $250m on a speculative basis and that established LNG tanker owners are now entering the market.
The website carries here a detailed list of information on
-- Current FSRU fleet in operation or delivered and pending start up and operation, including photographs of the vessels
-- Ships ordered or likely to be ordered.
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