Steep rise in the deployment and use of new Floating Regasification and Storage Units (FSRUs) – notably in Asia and sub-Saharan Africa – will substantially increase the supply of natural gas for decentralised power generation projects worldwide. From 2019 onwards, Energy Aspects anticipates the deployment of three to four new FSRUs per year, with a combined LNG import capacity of some 12-15mtpa, as “the maximum level of uptake.”
Depending on location, another 4-8mtpa of demand could be supported within two years of the currently deployed projects going operational. In total, new FSRUs are expected to make up 12mtpa of incremental gas demand in 2018, rising to 26 million tons by 2019.
Risk of underutilization of floating regas projects
In parts of South America, as well as in less developed gas markets, there is an utilisation risk of FSRU projects which makes it difficult to get such ventures financed and built.
“Brazilian LNG demand looks tepid on hydro and wind power generation, creating a real risk that one of the current FSRUs is replaced by the new project when the existing tender ends in 2018.
“This would tie the LNG into a region with less existing gas infrastructure, making it highly dependent on the associated project to build a CCGT,” analysts commented.
High price sensitivity of FRSU demand
By contrast, in the South Asian markets of Bangladesh, India (northwest coast) and Pakistan the FSRU demand is focused on very price sensitive markets. According to Energy Aspects, this is “creating a big risk that demand might fail to materialise if LNG prices go much above the 5–6 $/mmbtu level.”
While India does not have an operational FSRU yet, it does have one of the more developed projects globally and another eight announced projects in different stages of development. The most advanced of these appears to be the H-Power project in Jaigarh that is about to award its tender. Some others also look likely, including Haldia (H-Power), Kakinada (GDF Suez) and Gangavaram (Petronet).
India added two onshore terminals in 2013 – Dabhol and Kochi – but these two additions have been poorly utilised so far. The pressure on Dahej, now somewhat relieved as the capacity expansion there is completed, mostly came as LNG prices fell to levels that were competitive enough to get into Indian power.