Qatar's Nakilat to Branch into FSRUs, with Hoegh
Qatari state-owned LNG tankers owner Nakilat said July 18 it signed a memo of understanding with Norway-based Hoegh LNG to look at collaboration in the floating regas terminals (FSRUs) sector as part of Nakilat's strategy to diversify its ways of delivering LNG to the global markets.
Hoegh LNG is one of a handful worldwide of leading specialist innovative providers of such Floating Storage and Regasification Units, with its FSRUs chartered out and operating as import terminals in Egypt, Lithuania, Indonesia, Colombia and Turkey.
Hoegh LNG CEO Sveinung J.S. Stohle expressed pride that his company is allying Nakilat, describing this as "a confirmation of Hoegh LNG’s leading position in the FSRU market." But neither company gave any indication in their joint statement where they might develop a first joint FSRU project.
"Among the significant benefits of FSRUs are their ability to serve attractive markets which would otherwise not be able to utilize natural gas, pose lesser transportation risks and have the flexibility to be relocated or used as an LNG carrier," noted Nakilat. Managing director Abdullah al-Suwaiti said: "Nakilat views this strategic alliance with Höegh LNG, a leading owner and operator of FSRUs, as a huge stepping stone for further growth...... Nakilat is always looking at opportunities of diversifying solutions to deliver clean energy worldwide, supporting the rising global demand of LNG.”
But it was Qatar Petroleum (QP), as majority owner of the ventures that make Qatar the world's largest LNG exporter, that acted first to identify a need to get involved in new growth markets for Qatari LNG: both in marine bunkering (with Shell), and fast-growing national markets like Pakistan. For instance, QP and Hoegh LNG are already partners in an LNG project in Pakistan with local developer Global Energy Infrastructure Limited (Geil).
Slow-footed Nakilat
In contrast, Nakilat is a latecomer to the notion that small can sometimes be beautiful. For the past decade, it pushed to maximise the size of LNG carriers first to Q-Flex (up to 217,000 m3 LNG capacity) and then even higher to Q-Max (up to 267,000 m3) sized supertankers. It has worked for Qatar's trade to distant markets such as northwest Europe and South America. But the new growth sector for LNG shipbuilding for ships no larger than 180,000 m3 that are fully able to transit the expanded Panama Canal that opened mid-2016 means Q-Max and Q-Flex ships can seem rather inflexible.
Golar LNG (Hoegh LNG's main rival) meanwhile is co-developing a novel FSRU-based power project in Brazil - due to start operating in 2020 -- which late last year signed that country's first ever LNG term import contract with a joint venture of QP and ExxonMobil.
QP, which faces increasing competition for global LNG markets from US and Australian export projects and isolation nearer home, earlier this month announced its intention to increase Qatari LNG export capacity by 30% within 5 to 7 years to 100mn mt/yr but will need to work hard to mobilise the investment capital, given a global glut of LNG supplies and competition for capital from an upcoming Saudi Aramco initial public offering.
Update: Following a NGW enquiry on where any joint Hoegh/Nakilat initial FSRU project might be and whether each or both companies would take equity downstream or simply be involved in the charter of an FSRU to a client, Hoegh LNG head of investor relations and press Erik Folkeson replied July 19: "An MoU has been signed to explore potential collaboration in the FSRU market, and the next step is to agree all details on the platform for the development for joint FSRU projects. Until then we are unable to comment on what markets will be targeted, or the structure of such developments."
Mark Smedley