The project to convert liquefied natural gas (LNG) carriers to floating storage and regasification units (FSRU) is emerging as a new market in the shipbuilding industry. An FSRU is a marine LNG terminal that stores LNG on a ship and then converts it to gas for onshore supply.
Progress of FSRU Conversion Projects
HD Hyundai Marine Solution has completed the main design of the FSRU conversion project, which it won last September, and is currently carrying out follow-up stages. The company is responsible for the overall conversion work to transform an LNG carrier into an FSRU.
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At Hanwha Group, Hanwha Power is aggressively expanding its FSRU conversion business. The company started its FSRU conversion activities in 2023 and currently has a project underway to convert an LNG carrier with a capacity of 145,000 cubic meters, which is expected to be completed by the end of this year.
Increasing Demand for FSRU Conversion
The FSRU conversion business is growing due to its short construction time. According to the International Gas Union (IGU), FSRUs have a shorter construction period compared to onshore LNG terminals and have a lower initial investment burden.
The increasing number of LNG importing countries in Asia and the reduced need for large-scale terminal construction are strengthening the FSRU conversion market. The IGU has announced that out of eight new LNG importers in the next three years, six countries intend to introduce FSRUs, and the number of LNG importing countries through FSRUs is expected to reach 20 by 2030.
Another factor contributing to the expansion of the FSRU conversion market is the increasing number of old LNG carriers that will soon need to be scrapped. LNG carriers are typically scrapped after 35 to 40 years of operation. For LNG carriers built in the 1990s to early 2000s, about 5 to 10 years remain until scrapping.
These carriers have become a heavy economic burden due to high fuel consumption and low energy efficiency compared to today's standards, which has increased the demand for conversion to FSRUs. Han Seon-gun, an analyst at SK Securities, stated that "converting to FSRUs is a better option compared to scrapping ships, so the demand for conversions is increasing.
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