Commodity Market Report

Global FLNG Overview 2021

Giles Farrer

03 August 2021

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What's the key takeaway of this year's report?

A change of course is likely as FLNG players take a second look at financials. Questions remain over cost and project economics.

What's inside this report?

Get answers to all your questions about FLNG including:

What do I need to know about FLNG?
How does FLNG stack up against LNG?
What's the FLNG industry doing to overcome challenges such as the reduction in exploration expenditure and the poor economies of scale?

Report summary

FLNG is still working on its reputation. The first FLNG cargo was shipped in 2017 and five FLNG vessels are now in operation (PETRONAS FLNG 1 & 2, Cameroon GoFLNG. Tango FLNG and Prelude). However, the formative projects Shell Prelude and PETRONAS FLNG 1 & 2 suffered considerable delays and cost-overruns and performance-wise, FLNG still has a patchy record. Yet, operators and developers have learnt lessons quickly. Recently commissioned projects have performed well and although some of the FLNG projects under construction have been delayed, the delays have been related to upstream infrastructure and the FLNG projects themselves remain on track. FLNG, particularly offerings from Golar, is showing it can be a cost-competitive and reliable option for small scale developments. And with some companies looking to lower capital outlay, the lease or tolling model offered by some FLNG providers is also attractive in the current environment.

The lack of economy of scale is likely to limit FLNG projects to small-scale and remote developments as it competes for buyers, financing and partners in a busy LNG marketplace.

Liam Kelleher, global LNG research analyst, quoted by oilprice.com

Chart showing capex per tonne by date of FID

Sample data point

What do I need to know about capital expenditure of FLNG projects? And how does this compare to LNG?

In this report, we present the CAPEX of all LNG and FLNG projects worldwide, illustrated in the graph above by year of which they took Final Investment Decision (FID). Since the year 2000 to date, the average cost of LNG projects sanctioned has been $1000/tonne. However from 2009 to date, the cost of LNG projects rose to an average $1,400 per tonne. The sustained high oil price between 2008 and 2014 – which peaked at $147/bbl (Brent) – caused a major escalation in project costs of both oil and gas projects. A number of high cost Australian projects were also sanctioned, with an average cost of $2,400/tonne.

Global FLNG Overview 2021: Cost cutting increases interest in FLNG
Near-shore Developments
Open-Sea developments
Economics
Capital Expenditure (CAPEX)
- Location and CAPEX
Operating Expenditure (OPEX)
Breakeven Costs
- Construction Time
Financing and Commercial Structure
Commercial structure
Cost Risks - Escalation and Deflation
Supply and Demand
FID Outlook
- Exploration - a dwindling number of new gas finds
Project Cancellations and Postponements
Advantages and Disadvantages of FLNG
- Advantages
- Disadvantages:
Remaining Issues
- Fiscal requirements and local content
- Economy of scale in a competitive market
- FLNG gravitating towards a fixed offshore concept
Liquids Processing and Storage
LNG Offloading & Transfer
Liquefaction processes and capacity constraints
Vessel life
LNG storage and containment type
Capacity
Utilisation
Safety
Key players
- Upstream companies
- Majors
- Asian NOCs and IOCs
- Mid and Large-Caps
- Other
- Mid-stream operators
- Golar
- Exmar
- SBM Offshore
- Hoegh
- Excelerate Energy
- New Fortress Energy
EPC contractors and shipbuilders
- EPC/Technology Companies
- Shipbuilders
Key Projects
- Australia
- Prelude
- Malaysia
- PETRONAS FLNG 1 (Satu) - Operational
- PETRONAS FLNG 2 (Dua) – Operational
- Cameroon
- Cameroon GoFLNG – Operational
- Mozambique
- Coral FLNG – Under Construction
- Mauritania/Senegal
- Tortue FLNG - Under Construction
Americas
- US Gulf Coast
- Canada
- Colombia
- Caribbean FLNG – Cancelled
- Argentina
- Tango FLNG