The Floating Storage and Regasification Unit (FSRU) has become a key innovation in the liquefied natural gas (LNG) industry. This technology allows LNG to be transported, stored, and then converted back into gas in the middle of the ocean. With these advantages, FSRUs promise faster and more flexible energy access.
However, does the presence of FSRUs really lead to lower LNG prices? Let’s discuss this.
What Is an FSRU?
An FSRU (Floating Storage and Regasification Unit) is a floating LNG terminal designed to:
- Receive LNG cargo from carrier vessels
- Store LNG in cryogenic tanks
- Regasify LNG and deliver natural gas into onshore pipelines
The primary advantage of an FSRU is efficiency. Compared to onshore LNG terminals, which require extensive land and lengthy construction times, FSRUs can be installed more quickly, flexibly, and cost-effectively.
These units can be converted into LNG carriers or new, purpose-built vessels.
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How Does an FSRU Work?
FSRU operations begin when LNG is transferred from carrier vessels into the unit’s cryogenic tanks using loading arms or specialized flexible hoses. LNG is stored in liquid form at around -162°C.
When gas is needed, LNG is pumped into the regasification system on board, where vaporizers heat it back into gaseous form.
The gas is then offloaded through the FSRU system and connected to onshore pipelines for use in power generation, industry, or households.
This process makes FSRU a practical solution that connects the global LNG market with domestic needs.
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Do FSRUs Make LNG Cheaper?
FSRUs do not change the price of LNG on the global market. LNG prices are determined by trade contracts and international market dynamics. However, FSRUs offer significant infrastructure benefits:
- Faster construction: operational in less than 2 years, compared to 4–5 years for onshore terminals
- Lower investment cost: typically 30–50% cheaper than land-based terminals
- Greater flexibility: countries can access LNG more quickly without waiting for large onshore facilities
So, while FSRUs don’t lower LNG’s global market price, they reduce infrastructure costs and speed up access, making LNG a more affordable energy option compared to other imports like crude oil.
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What Drives LNG Prices?
LNG prices are shaped by global dynamics, not by a single facility like an FSRU. The main factors include:
- Crude oil prices: Many long-term LNG contracts remain indexed to oil
- Geopolitics: Conflicts, sanctions, or instability in producing and transit countries affect supply expectations
- Global supply and demand: Winter demand surges in Asia and Europe, typically pushing prices up, while oversupply drives them down
- Logistics and infrastructure capacity: limited LNG carriers or receiving terminals can create bottlenecks, adding transport costs and influencing prices
In other words, LNG prices are the result of an interaction of global factors, not determined by a single facility like an FSRU.
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Why Are FSRUs Important?
FSRUs play a vital role in today’s energy landscape, particularly in energy transition efforts and strengthening gas supply security.
Faster and More Flexible LNG Access
For countries seeking to move away from heavy reliance on oil or diversify their energy mix, FSRUs are a strategic solution. With much shorter construction times than land terminals, they enable rapid entry into the global LNG market.
Their mobility adds another advantage, FSRUs can be relocated when needed (as long as basic infrastructure like a jetty and pipelines is available). This makes them ideal for temporary projects, land-constrained locations, or remote regions.
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A Bridge for Energy Transition
In many Asian countries, coal still dominates power generation, despite its high carbon and air pollution impact. FSRUs help these countries switch to natural gas, which emits about 50% less CO₂ than coal.
While FSRUs don’t lower global LNG prices, they significantly cut costs and time needed to access LNG, making it more competitive than other fuels in local markets.
With this strategic role, FSRU becomes an important element in supporting the energy transition towards cleaner, more affordable and sustainable energy sources.
References:
- U.S. EIA. Accessed 2025. Floating LNG regasification is used to meet rising natural gas demand in smaller markets
- IEEFA. Accessed 2025. Floating LNG Import Terminals Pose Cost and Climate Challenges for Asian Markets
- Greenpeace. Accessed 2025. Gas Power Plants Are Not the Solution to Energy Transition
