Oman Shipping Moots Floating Storage LNG Regasification

Source: Oman Observer 4/5/2017, Location: Middle East

Wholly government-owned Oman Shipping Company (OSC) is mooting the possible use of a Floating Storage Regasification Unit (FSRU) to supply imported liquefied natural gas (LNG) to consumers in the Sultanate as a potential alternative to natural gas as a fuel and feedstock resource.

The concept of FSRU-based LNG supplies to the Sultanate was outlined by a top official of the company, a subsidiary of Oman Global Logistics Group (OGL) – the transportation and logistics arm of the Omani government – at the Oman Downstream Exhibition & Conference yesterday.

Floating regasification, typically involving a suitably customized vessel to store and regasify LNG, is seen as a flexible, cost-effective way to receive and process shipments of LNG. The concept is being used to meet natural gas demand in smaller markets, or as a temporary solution until onshore regasification facilities are built.

According to Tarik al Junaidi (pictured), CEO – Oman Shipping Company, FSRU based LNG shipments can help contribute to the goal of securing the energy and feedstock requirements of investors in the Sultanate. Tapping into diverse energy sources is also key to buttressing the Sultanate’s appeal as a destination for international investors, he stressed.

Any imports of LNG by the Sultanate, a longstanding exporter of the commodity, will also fit into a trend being witnessed around the world where LNG exporters are rapidly becoming importers as well, said Al Junaidi. “You have a lot of countries exporting LNG, but realize later that they need to import it as well. It’s already happening in Malaysia, Thailand and Indonesia – all LNG exporters which are now importing LNG.”

Citing recent projections of gas market dynamics, most countries of the Gulf Cooperation Council (GCC), with the possible exception of Qatar, are also expected to begin importing LNG as well, he said. Kuwait has already been shipping in some volumes, while Bahrain and the UAE are expected to follow suit as well.

FSRU based imports offer an economical alternative to land-based regasification terminals, said Al Junaidi. This is because the FSRU itself does not involve a significant investment. Further, it also offers the flexibility of being moved around to markets where there may be a demand for LNG, he noted.

“Thus, If you need LNG now, you bring the vessel alongside and move it to another location when necessary. On the shore side, we will need a jetty and pipeline connected to the grid. For the shipping side of things, Oman Shipping has a vessel that’s about 16 years old, which we can convert it with an investment of about $80 million, and have it deployed within six months. So if we want to import LNG, it will take us just about six months to achieve this objective.”

Although an exporter of LNG, Oman can take advantage of pricing dynamics to export the commodity at a higher price and import it at a lower price, thereby making imports economical, he added.

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