By the start of 2020, the world’s first LNG-to-floating power project looks set to go into operation.

Japanese owner MOL announced its joint venture with Turkey’s Karpowership in March and has been converting the 127,000-cbm Dwiputra (built 1994) into a floating storage and regasification unit to supply a powership in Mozambique. The FSRU is due to deliver next month and be in position by the end of the year.

So now for us to have a presence in the market we cannot just do shipping. We now realise we have to go into the power side as well

York Ishibe

Last month, the two companies, which work together as KARMOL, cemented their relationship by further snapping up a second vessel, the 127,452-cbm North West Shearwater (built 1991), to convert for another power project.

Power element

It has been a long time coming, with concepts and projects discussed over the last 10 years where the power element is afloat.

That is not to say that FSRUs are not already in use supplying gas to power plants but these are land-based facilities. Barge-based power units have also been run on gas, although this has been pipeline gas rather than regasified LNG.

So far MOL and Karpowership have been fighting shy on the detail of their planned joint projects but those working on the business at the Japanese shipowner have given a flavour of what is needed to progress this kind of business.

London-based York Ishibe, head of the power group in MOL’s Offshore Projects Division, explains that power project organisers — often a country’s government — had historically tendered separately for different components but are now moving to bundle these together.

“So now for us to have a presence in the market we cannot just do shipping. We now realise we have to go into the power side as well,” Ishibe says, explaining that this is why MOL opted to team up with Karadeniz-controlled Karpowership.

MOL offshore director Christian Bale (left) with York Ishibe, who heads the power group, at the company's Offshore Projects Division Photo: MOL

Ishibe says the partners are seeing large numbers of potential 200-400MW projects in Africa, with South Africa — where many coal plants are being replaced — a particular focus. Asia is another demand area.

He explains that countries need projects that can obtain financing and gas or renewables fit the bill.

Ishibe says that it takes just three to six months to put one of Karpowership’s existing powerships into operation. MOL is working on bringing the LNG carrier-to-FSRU conversion time down to 12 months, but the powership can fire up using heavy fuel oil and swap over to gas when the regas unit is ready, if necessary.

He contrasts this schedule with the five to 10 years needed to plan, permit and build an onshore power plant.

Some design concepts have envisaged putting both LNG regasification, storage and power generation on one floating unit.

But Christian Bale, MOL director of offshore in Europe and Africa, says the safer solution is to put the regas on a storage unit with visiting LNG carriers discharging there, and locate the floating power plant nearer to the shore.

Once in place, the FSRU exports gas either via a subsea or floating pipeline to the powership, which uses this to generate electricity that is sent onshore through a power line.

Unique solution

“An LNG supplier can sell the LNG at the manifold and out comes the power contract at the other end,” Ishibe says. “This is a unique solution where they can come along and monetise their LNG straight away.”

Ishibe and Bale will not discuss project costs but say contract lengths can be from three to 20 years, and power project sizes from 50-400MW.

While LNG is currently cheaper than heavy fuel oil, the need to cost in an FSRU might mean that a larger generating capacity project will prove more economic.

"These powership projects are quite scaleable,” Bale says, explaining that extra units can be added on the regas or powership sides once the infrastructure is in place.

FSRU supply should not be a block.

Bale says MOL ranks as the world’s biggest LNG carrier owner with a vast array of stakes in many vessels. These include many old Moss-type ships, which make good conversion candidates, and that the Japanese company can try to purchase from their co-owners.

“I think the interesting thing for a shipping company is learning what a power contract is,” Ishibe says.

The MOL duo explain that the power buyer is simply interested in the price it will pay for the electricity, and not how the powership is fuelled and supplied.

“The contracting mechanisms are not standard charter parties — they are a power contract and a fuel sale contract,” Ishibe says.

Layout for KARMOL's first project in Mozambique Photo: KARMOL