Evaluating Feasibility of

Small-scale FSRUs in
Meeting Asia’s LNG
Demand
FSRU Asia Summit 2018

21 June 2018

Kelvin Li

Transaction Services Lead, South East Asia & China

www.advisian .com
DISCLAIMER
This presentation has been prepared by a representative of Advisian.
The presentation contains the professional and personal opinions of the presenter,
which are given in good faith. As such, opinions presented herein may not always
necessarily reflect the position of Advisian as a whole, its officers or executive.
Any forward-looking statements included in this presentation will involve subjective
judgment and analysis and are subject to uncertainties, risks and contingencies—many
of which are outside the control of, and may be unknown to, Advisian.
Advisian and all associated entities and representatives make no representation or
warranty as to the accuracy, reliability or completeness of information in this document
and do not take responsibility for updating any information or correcting any error or
omission that may become apparent after this document has been issued.
To the extent permitted by law, Advisian and its officers, employees, related bodies and
agents disclaim all liability—direct, indirect or consequential (and whether or not arising
out of the negligence, default or lack of care of Advisian and/or any of its agents)—for
any loss or damage suffered by a recipient or other persons arising out of, or in
connection with, any use or reliance on this presentation or information.
Contents

Introduction of Advisian

Introduction of Small Scale FSRU

Potential Applications

Make Economics Work

Stakeholders’ Key Consideration Factors

Potential Technological Advances

Conclusion
We are the independent advisory and consulting arm of the
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30
London

1,2 6
14,15,16
10 12
27
Houston
11
13 23,24
3, 36 25,26,34
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31 35, 37 19
7
Singapore
21,22

Centres of Excellence 9 17,18,20

32
4
Project locations 5 8 Melbourne

NOT EXHAUSTIVE LIST

1. Cabrillo Port FSRU 12. Cyprus FSRU Project 21. Jakarta West Java Bay FRSU 29. FSU & offloading facilities LNG
2. Oceanway 13. Bahrain LNG Import Terminal 22. West Java LNG Import Terminal Receiving Terminal
3. Jamaica LNG Storage and Project and Power Plant Feasibility Study 30. LNG PMC Services
Regasification 14. India East Coast Floating LNG 23. Bangladesh FSRU 31. FEED and Owners Engineer
4. FSRU Due Dilligence Regas 24. LNG Import Terminal Feasibility 32. LNG terminals studies and
5. Mejillones Bay GNL 15. Kakinada FSRU Study development (3 of)
6. WorleyParsons Marinised Regas 16. FSRU Economics India 25. Philippines FSRU 33. LNG Project Feasibility Study
Module, France 17. Pre-Feasibility 1MDB 26. LNG Regasification and Storage 34. Due diligence project
7. Quantum LNG Metaocean Study 18. Melaka Jetty Island Regas Study 35. LNG regasification terminal
8. PetroSA FSRU Terminal (Lekas) 27. Pre-Feasibility Study for feasibility study
9. Mozambique Nearshore Regas 19. LNG Import and Regasification Regasification Terminal 36. Feasibility Study for LNG
10. Malta FSU Project Facility with Power Generation 28. Myanmar/Thailand FSRU, two regasification terminal
11. Egypt FSRU Project 20. Bumi Armada FSRU projects 37. Feasibility Study and Pre-FEED
LNG Import Terminal Project

Advisian has executed more than 50% of the world-wide

nearshore regasification projects (planned and in operation) 6
Contents

Introduction of Advisian

Introduction of Small Scale FSRU

Potential Applications

Make Economics Work

Stakeholders’ Key Consideration Factors

Potential Technological Advances

Conclusion
Small-scale FSRU

Small-scale FSRU is the combination of two hot topics recently

Small Scale LNG FSRU

Source: Linde Source: Excelerate

Small-scale LNG

Transport fuel

Power generation

Onshore or floating

Regas capacity < 1 mtpa

Storage < 30,000m3
Drivers: LNG as a transport fuel, fuel switching small diesel power plants
FSRU

30
New Build Converted

25

20
Number of FSRUs

15

10

0
2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020
Source: GIIGNL, various FSRU manufacturers

Conventional FSRUs have storage capacity from 150,000 to 263,000 m3

Use increasing rapidly
Driver: Low-cost and quick-win solution for rapidly power demand growth
 Small-scale FSRU

History First used in Bali, 2016

Storage <30,000m3
Source: JSK Regas <1mtpa
Draft <8m
Usage Power generation (<200MW)
• Integrated FSRU
Configuration • FSU + onshore regas terminal
• FSU + FRU

• No propulsion
Design Features • Type C tanks
• Jetty-moored
Large vs Small, Onshore vs Offshore
Onshore
• In use for over 50 years
• Can accommodate very large supply
capacity, say 50 Bcma
• For countries with large and stable
demand
Large-scale • For power and non-power
• Long lead time and large upfront
investment
• Markets – Japan, Korea, China, Taiwan
• In use for over two decades
• For small and scattered demand
centres along the coasts and inland
• Mostly for transportation and power
• Higher unit cost (USD/MMBtu)
• Markets – China, Japan
Small-scale
FSRU
• In use for over a decade
• For rapidly growing demand along the
coasts
• For power and non-power
• Shorter lead time and lower upfront
investment
• Markets – Pakistan, China, Indonesia
(large islands), Malaysia, [Hong Kong],
[Vietnam]
• In use for two years
• For small power demand centres
with shallow waters along the
coasts
• Short lead time and low upfront
investment
• High flexibility
• Higher unit cost (USD/MMBtu)
• Potential markets – Indonesia (small
islands), Myanmar, Philippines,
Bangladesh, Sri Lanka
Contents

Introduction of Advisian

Introduction of Small Scale FSRU

Potential Applications

Make Economics Work

Stakeholders’ Key Consideration Factors

Potential Technological Advances

Conclusion
Key Advantages
Small Size
• Lower draft
• Simpler systems and components
• Lower shipbuilding cost
• Shorter shipbuilding time
• Can reach small demand centres that
cannot be reached by conventional LNG
Shorter Lead Time
• Shorter shipbuilding or conversion time
• Shorter permitting – No onshore permits
required for small-scale FSRU
Lower Investment
• Lower shipbuilding cost
• Conventional 170,000m3: ~USD210M
• Small scale 12,000m3: ~USD50M
• Cost is even lower for conversion
• No dredging cost
• Lease rather than own
High Flexibility
• Easy conversion from existing small
barges/vessels
• Capacity can be scaled up with multiple
small-scale FSRUs
• Relocation for
• Seasonality
• Decline in gas demand
• Accommodate different configurations:
• Integrated FSRU
• FSU + FRU
• FSU + onshore regas terminal
Value Proposition

Small Demand
Emerging economies with
shallow waters and rapidly
growing power demand
Shallow Waters

• Emerging economies
• Prefer a low-cost solution
Quick-win and Low-cost • Small but growing power demand
• Shallow waters
Solution • Archipelago
• Can accommodate small scale
FSRU but not large
• Rapidly growing power demand
Need of Flexibility •
•
Needs a quick-win solution
Gas-to-power requires high
flexibility
• Small FSRU can only supply gas
for one type of use

Power Generation
First Use in Indonesia

Indonesia

Area for more

potential use of
small-scale FSRU

Bali

World’s first
small scale FSRU

• Archipelago, ~17,500 islands

• Small and scattered demand centres
• Shallow waters around small islands
• Rapidly growing power demand
• Fuel-switching diesel for power generation
• Electrification on small islands in eastern Indonesia
• Need of quick-win solution at low upfront investment
Other Potential Countries in Asia

Philippines Myanmar Bangladesh

• Archipelago • Shallow waters • Shallow waters

• Shallow waters • Rapidly growing demand • Rapidly growing demand
• Fuel-switching diesel • Electrification
 Challenges of Small-scale FSRU
Challenges
• Only be used on coastal areas
• No gas grids in place
Technical
• More susceptible to sea conditions
• Fuel competition, e.g. RE
Commercial
• Lack of experienced shipbuilders
currently
• Financing in countries with low credit
ratings
Financial
• How to make small-scale FSRU
economics work?
Solutions
• Value proposition for power
generation
• Use existing grids for transmission
• Mooring in an existing port with
shelters and breakwaters
• Value proposition of LNG as backup
fuel
• Be flexible in operation and contracts
• New market for non-traditional FSRU
shipbuilders
• Risk management
• Maximize economies of scale
• Optimize supply chain
Contents

Introduction of Advisian

Introduction of Small Scale FSRU

Potential Applications

Make Economics Work

Stakeholders’ Key Consideration Factors

Potential Technological Advances

Conclusion
We already know well that…

Unit cost of small-scale LNG

>
Unit cost of large-scale LNG
To Make Small-scale FSRU Economics Work…

Create large-scale from small-scale

And
Optimize the supply chain
Ways to Make Economics Work

• Engage a number of LNG offtakers in the supply chain

Build up
• Share utilization of facilities, e.g. LNG carriers
economies
• Form alliance or JV with other LNG offtakers for LNG purchase
of scale
• Leasing instead of owning key infrastructure

Optimize • Enhance fuel economy, e.g. optimize ship speed, upgrade engines
supply • Shipping distance within a range of 1,000nm
chains to • Mooring in existing ports with shelters and facilities
reduce cost • Make good use of conversion, if possible

• Relocate to another place for seasonal demand changes

Increase • Relocate to another place for demand decline
utilization • Mix and match of appropriate FSU and FRU for demand changes
• Add more functionalities, say bunkering

• The value of operational flexibility

Factor in
• The value of supply security
intangible
• The value of first-mover advantage
benefits
• The value of innovation
Contents

Introduction of Advisian

Introduction of Small Scale FSRU

Potential Applications

Make Economics Work

Stakeholders’ Key Consideration Factors

Potential Technological Advances

Conclusion
A Small-scale FSRU Project involves Parties of…

Different consideration factors

Key Consideration Factors of Charterers

• Newbuild or conversion
• Port conditions, e.g. draft, shelter, facilities
Technical • Construction risks, e.g. over-cost, delay
• Performance risks, e.g. adequacy, availability, reliability, safety
• Operational flexibility, e.g. quantity, relocation, functionality, scalability

• LNG demand and growth

• Fuel competition
Commercial • Existence of infrastructure required
• Credibility of gas offtakers or LNG suppliers
• Business model

• Shipbuilding/conversion cost
• LNG and power prices, i.e. revenue stream and cashflow
Financial • Equity/debt ratio
• Financing cost
• OPEX

• Permitting procedures
• Regulations, e.g. marine, environment
Regulatory • Tax incentive
• Government guarantee
Key Consideration Factors of Financers

• Newbuild or conversion
• Technical capabilities of financees
Technical • Construction risks
• Performance risks
• Project reference

• LNG demand and growth

• Fuel competition
Commercial • Credibility of charterers
• Business model of financees
• Key contracts signed by financees, e.g. SPA, GSA, PPA etc.

• Shipbuilding/conversion cost
• LNG and power prices
Financial • Debt required and Equity/debt ratio of financees
• Financial performance of financees, e.g. profitability, liquidity, insolvency,
efficiency etc

• Tax incentive
• Sovereignty risks
Regulatory • Country transparency
• Government guarantee
Key Consideration Factors of Owners

• Newbuild or conversion
• Modules/components on FSRU
Technical • Technical capabilities of shipbuilders
• Construction risks
• Operation risks

• Potential markets
• LNG demand and growth
Commercial • Competition with other shipowners
• Credibility of charterers
• Contingency plan in case charterers do not need the FSRU

• Shipbuilding/conversion cost
• Charter fee
Financial • Debt/equity ratio for shipbuilding
• Financers available

• Regulations, e.g. marine, environment

Regulatory • Government targets on emissions reduction
To Deliver Win-Win Outcomes…

Different parties should

Understand each other’s needs,
Align their goals,
Share risks
Contents

Introduction of Advisian

Introduction of Small Scale FSRU

Potential Applications

Make Economics Work

Stakeholders’ Key Consideration Factors

Potential Technological Advances

Conclusion
To Make Small-scale FSRU work…

Technological advances are needed to

Lower cost,
Bring in more value
Potential Technological Advances

FSU + FRU • A quick-win solution to supply power to a small demand centre

+ Power • Power output up to 200MW on a power barge
barge • Most existing power barges can fuel on gas or diesel

• Power is the major use of small-scale FSRU

• Many shipbuilders have good design, but none have built prototype
FSRU-P • FSRU-P can be equipped with:
• Gas engines (for 10 – 50MW), or
• Gas turbines (for 50MW – 200MW)

Container • Place LNG ISO-containers on a barge

barge as • Slight modify the barge to become FSU
FSU • Very low conversion cost by using existing barges

Equip with • One major use of small-scale LNG is bunkering

bunkering • When power output is not required, the FSRU can have another use
facilities • Bunkering facilities can be equipped on FSU or modularized on another barge
Contents

Introduction of Advisian

Introduction of Small Scale FSRU

Potential Applications

Make Economics Work

Stakeholders’ Key Consideration Factors

Potential Technological Advances

Conclusion
Key Success Factors for Development

Economies of Scale Aligned Goals

Create large-scale from small-scale Different stakeholders, same boat

• Multiple users • Mutual understanding

• Sharing economy • Shared risks
• Optimization • Necessary tradeoffs

Technology Advances Intangible Benefits

Keep the innovation engine running Benefits are more than money

• Modularization • Operational flexibility

• FSRU-P • Supply security
• LNG container FSU • First-mover advantage
DISCLAIMER
This presentation has been prepared by a representative of Advisian.
The presentation contains the professional and personal opinions of the presenter, which are given in good faith. As such, opinions presented
herein may not always necessarily reflect the position of Advisian as a whole, its officers or executive.
Any forward-looking statements included in this presentation will involve subjective judgment and analysis and are subject to uncertainties, risks and
contingencies—many of which are outside the control of, and may be unknown to, Advisian.
Advisian and all associated entities and representatives make no representation or warranty as to the accuracy, reliability or completeness of
information in this document and do not take responsibility for updating any information or correcting any error or omission that may become
apparent after this document has been issued.
To the extent permitted by law, Advisian and its officers, employees, related bodies and agents disclaim all liability—direct, indirect or consequential
(and whether or not arising out of the negligence, default or lack of care of Advisian and/or any of its agents)—for any loss or damage suffered by a
recipient or other persons arising out of, or in connection with, any use or reliance on this presentation or information.