Floating liquefied natural gas contractors are ready to pounce on fresh opportunities in the growing sector after a clutch of eye-catching developments in Asia, Africa and beyond have proven the technology.

Originally envisaged and developed to exploit remote or stranded gas resources, FLNG is currently being deployed in both deep and shallow waters and has even been used to produce from onshore fields.

The technology is also gaining increasing traction as a development option where onshore liquefaction may prove challenging due to security issues, a lack of infrastructure or other factors.


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Operating FLNG units is no more challenging that operating onshore liquefaction facilities, Amir Hamzah Ghazali, head of floating LNG at Malaysia’s national oil company Petronas, told Upstream's "The Future of Floating Liquefied Natural Gas" digital event last week.

Petronas is currently the only operator with two FLNG vessels in operation. Both the PFLNG Satu and PFLNG Dua are currently producing offshore Sabah, East Malaysia, with the Satu having already been moved from its initial deployment on Petronas’ Kanowit field offshore Sarawak.

“Basically... we’re not seeing any specific challenges just because we’re offshore. I would say that operating a floating LNG facility is practically — in terms of the experience — no different than operating an onshore plant," said Hamzah.

“When we talk operationally, I think the only challenge might be on the slightly higher costs of sending manpower to the offshore facility.”

Petronas’ experience gained from the two FLNG units — which were built by different contracting consortia at separate yards and have different nameplate capacities and water depth capabilities — has not dented its enthusiasm for future projects, provided the economics stack up.

Hamzah said that FLNG remains an option for Petronas to exploit both its own and third-party fields in the future, but cautioned that the company would only move on additional units after studying the economics of the entire gas supply chain of any potential project.

Financing challenges

“I might be biased… but definitely moving forward, if somebody gives me a choice of constructing an onshore plant versus floating LNG, floating LNG would definitely be my choice,” he added.

Petronas had the financial clout to fund both its FLNG vessels, as did Anglo-Dutch supermajor Shell for its Prelude unit. However not all prospective resource owners have that luxury.

That is one reason collaboration and partnerships will be key to optimising the success of future FLNG projects, attendees heard.

The FLNG concept might have been somewhat de-risked but operational challenges — such as those initially experienced by Shell with its 3.6 million tonnes per annum Prelude FLNG unit offshore Australia — can deter project financiers that must also now contend with the energy transition.

Another issue for banks can be off-takers’ reluctance to commit to long-term LNG purchases, which has seen industry heavyweights such as BP and Eni absorb volumes into their global trading portfolios.

As securing traditional financing could prove more challenging for FLNG projects going forward, other players have stepped in to offer different development solutions.

China’s Wison is one such player that has ambitious plans to expand within FLNG. The company is constructing modules for Novatek’s Arctic 2 LNG project in Russia that will see the liquefaction trains installed on concrete gravity based structures.

Wison’s range of technologies — which include a standardised FLNG unit — are complemented with innovative financing solutions that could help operators to exploit their gas assets, said Antony Fitzgerald, Wison’s FLNG solution director.

'Committed to FLNG'

“Wison is really much committed to FLNG... what we're focusing on is getting it flexible to be deployed in multiple locations, to be quick at that deployment and to be cost efficient," he said.

The contractor is targeting projects with gas resources of between 2 trillion and 5 trillion cubic feet, nominally in West Africa in mild marine environments.

“Our designs as part of a core LNG programme are developed in-house — off the cuff, it’s a speculative design — but we see sufficient opportunities in the marketplace to build units between 1.3 million and 3 million tonnes per year [capacity],” said Fitzgerald.

Fitzgerald added that Wison also could offer resource owners access to financing, although those stumping up the capital would likely need to assess the upstream asset — namely the reservoir — before committing.

This potential financing solution whetted the appetite of at least one event attendee who remained anonymous but indicated that their company is sitting on a 1 Tcf gas resource.

Another innovative player is Australia’s Transborders Energy, which offers clients the potential for the production of carbon-neutral LNG, noted managing director Daein Cha.

One business proposition for resource owners is that Transborders would purchase their gas, liquefy it on an FLNG unit, then Transborders would sell the LNG to customers on a free-on-board (FOB) basis.

Differentiators key as low cost is a given

“The first focus is to differentiate your proposition to the LNG buyers who would underpin the project where, from an LNG buyer perspective, low cost is a given.

“Those blue-chip LNG buyers are spoon fed with many project opportunities because LNG buyers are the linchpin to make things viable,” said Cha.

“The job as project proponents — it’s almost like entering into ‘America’s Got Talent’, where you have to show what your differentiators are very clearly and have yourself shine for those buyers to underpin your project.

"That might be about differentiating on price structures, heating value, providing investment opportunities, new structures and partnerships,” he added.

“But at the end of the day, your project needs to provide strategic rationale for those very LNG buyers.”

Global hot spots

Africa looks set to be a global hot spot — at least in the short term — for future FLNG projects, said Kaushal Ramesh, LNG and power market research analyst at Norwegian consultant Rystad Energy.

Eni’s under-construction 3.4 million tpa Coral Sul unit, set to be deployed offshore Mozambique, is currently under construction at Samsung Heavy Industries in South Korea.

In addition, the unit destined for BP's 2.5 million tpa first phase Greater Tortue Ahmeyim (GTA) project offshore Mauritania and Senegal — being supplied by Golar LNG — is being converted at Keppel Offshore & Marine in Singapore.

One existing unit, Exmar’s Tango FLNG, could be redeployed in Africa following the termination of its contract in Argentina.

Global interest in Tango FLNG

Jonathan Raes, Exmar’s managing director infrastructure, said the company is in active talks with upwards of a dozen prospective clients for its 500,000 tpa Tango FLNG.

The unit became unexpectedly available after YPF pulled the plug on its charter to exploit reserves from its assets in Argentina's core Vaca Muerta shale patch.

Raes said that Exmar expects to have lined up Tango’s next job before the end of this year, with potential projects being in Africa, Southeast Asia, the Middle East or South America.

Exmar is in the “probably unique” situation, Raes said, of having an FLNG vessel available when such projects typically can take four to six years from the “first conversation” with a client to production start-up.