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Floating LNG: Revolution and evolution for the global industry?

FLNG: Revolution and evolution for the global industry?

With security of energy supply one of the critical issues many countries face, floating liquefied natural gas (FLNG) is seen as an emerging technology for fast and cost-effective development of new gas resources. Expected cost savings and new confidence in floating designs are driving the first wave of project sanctions.


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Voyage to LNG

FLNG promises to unlock smaller, remote or environmentally-sensitive fields and numerous projects in Southeast Asia, Australasia, Africa, the Eastern Mediterranean and Latin America may benefit. Not just an offshore solution, developers in Western Canada and Papua New Guinea are considering it for onshore fields. 

Future FLNG development may either become a niche technology applied by a few companies to solve specific problems (with land-based configurations remaining the default) or if the first few projects are successful, FLNG can emerge as a standard approach that eases the industry’s problems with cost inflation and opens it up to a much wider range of fields and companies.


Global context of Floating LNG

Developers of onshore projects have become increasingly frustrated with budget blow-outs and slow time to market. Rising labor costs, workforce activism, community opposition, complex environmental approvals, infrastructure challenges in remote locations and unfavorable exchange rate movements have all contributed to cost over-runs. 


10 reasons to choose FLNG

  1. Unlock smaller fields
  2. Access remote fields
  3. Avoid onshore ‘no-go’ zones
  4. Reduce environmental footprint
  5. Develop projects cheaper and faster
  6. Avoid the gold-rush
  7. Put projects in a safe pair of hands
  8. Achieve peace of mind from security worries
  9. Mitigate political risk
  10. Access other financing options


Key considerations and risks for FLNG developers

FLNG presents some novel challenges and risks – less on the technical side and more to do with the supply chain, cost and project management, stakeholder engagement, financing, regulation and tax. Failure in one of the early projects could deter new developers, worry financiers and host governments and set the technology back years. 


Key actions for FLNG proponents

This KPMG International report discusses the key actions that FLNG proponents should undertake to assist floating plants to emerge as part of a more diverse, faster, cheaper -- and more agile global LNG industry.  And, if the front-runners in FLNG can meet a number of the key technical, commercial and financial challenges, we predict it will emerge as a key pillar of a 2020s LNG business that looks quite different from today.

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