Europe snaps up FSRUs to speed energy security

Using floating storage and regasification units, EU governments fast track plans for new LNG import terminals to replace Russian natural gas volumes

How does Europe spell ‘energy security’? F-S-R-U. Since the outbreak of the Russia-Ukraine war in February and the pivot away from Russian natural gas, at least 21 new or accelerated LNG import projects have been announced by EU countries, more than half supported by floating storage and regasification units (FSRUs), according to financial advisory group FTI Consulting.

In one of the latest moves to secure energy security in Europe, Italy’s Snam will acquire the 2015-built FSRU BW Singapore from BW LNG in a US$400M deal.

With about 40% of its natural gas imports coming from Russia last year, Italy is the second biggest European importer of Russian volumes to Germany.

“The FSRU would make a decisive contribution to Italy’s energy security and diversification”

The deal announced in early July will see Snam add its second FSRU for new LNG import terminal capacity. BW Singapore has a maximum storage capacity of 170,000 m3, and a nominal continuous regasification capacity of about 5 billion cubic metres (bcm) per year.

BW Singapore, which is currently bound by a charter agreement with a third party until November 2023, is expected to be installed in the upper Adriatic Sea, close to the coast of Ravenna. Operations are scheduled to start in Q3 2024, following completion of the authorisation and regulatory process as well as the finalisation of the works required for mooring and connection to the gas transport network.

Snam chief executive Stefano Venier said the FSRU would make “a decisive contribution” to Italy’s energy security and diversification. “The two FSRUs acquired in the last month by Snam will contribute 13% of the national gas demand alone, bringing regasification capacity to over 30% of demand, as soon as we will get the permits to position them and get them connected to the national transmission network,” said Mr Venier.

As LNG Shipping & Terminals reported in June, Snam acquired the FSRUGolar Tundrafrom Golar LNG for US$350M. Snam will install the FSRU in central northern Italy, where it is expected to start operations as an FSRU in Q2 2023, subject to regulatory approval and the construction of the necessary infrastructure connecting the terminal to the existing gas transport network.

Golar LNG, which is currently operating the vessel as an LNG carrier, will support Snam in making modifications to Golar Tundra for installation as an FSRU at the port.

Italy currently has three large LNG import terminals: Snam’s Panigaglia onshore LNG facility; OLT Offshore LNG Toscana; and the Adriatic LNG terminal.

Of the European countries that rely most heavily on Russian natural gas, Germany is the most vulnerable. About 50% of the country’s natural gas is supplied by Russia and it has no existing LNG import terminals. As a result, Germany has been on the fast track to LNG, enacting emergency energy measures, announcing seven LNG import terminals, including four based on FSRUs since the start of the war.

In April, the German Finance Ministry approved spending of €2.94Bn (US$3.09Bn) to fund the FSRUs, with Uniper and RWE signing 10-year charter deals on behalf of the German government to secure two FSRUs each from Höegh LNG and Dynagas.

Two Höegh LNG 170,000-m3 FSRUs will be deployed in Germany, one at Wilhelmshaven and another at Brunsbüttel as the country’s first LNG import hubs.

“Every cubic meter we save will help us get through the next winter”

State Trade Supervisory Authority Oldenburg gave the green light to officially start construction of the FSRU-based LNG receiving terminal at Wilhelmshaven on 4 July. Up to 7.5 bcm of natural gas per year will be handled by the terminal, meeting about 8.5% of the country’s current annual gas demand. Operator Uniper is aiming to commission the terminal in the winter of /2023.

“Every cubic meter we save will help us get through the next winter,” said Lower Saxony’s Minister for the Environment, Energy, Building and Climate Protection Olaf Lies, adding, “and every cubic meter we import to Germany via alternative routes in the future will help us free ourselves more quickly from Russia’s grip.”

Making the new LNG receiving terminal a reality so quickly was no small feat, noted Uniper chief executive Klaus-Dieter Maubach. “The rapid approval for the early start of construction shows the importance of the LNG terminal in Wilhelmshaven for the country’s security of supply. This cannot be taken for granted; above all, it shows what is possible when society, industry and politics pull together,” said Mr Maulbach.

During phase 1 of development, an FSRU will be moored to the existing Umschlagsanlage Voslapper Groden (UVG) sea bridge. There, LNG carriers will offload cargoes to the FSRU to be regasified into natural gas and fed into a new natural gas pipeline that will connect to the German gas grid. Niedersachsen Ports (NPorts) is modifying the existing UVG sea bridge — a 2.1 km-long deepwater jetty — and constructing a platform, dolphins and pile moorings with rubbing paunches for the berth.

In May, Federal Minister for Economic Affairs and Climate Protection Dr. Robert Habeck and State Minister Lies were at the port of Wilhelmshaven to initiate the first official pile-driver impact for the start of construction of the jetty’s infrastructure.