• FLNG model confers speed to market advantage

Sopuruchi Onwuka

With global campaign for climate action simultaneously driving a parallel movement for energy transition, gas which has fallen back into the bucket list of cleaner energy forms the new competition among world’s petroleum exporters. And the fiercest race is to arrive the market ahead of the crowd.

According to the recent briefing note by Rystad Energy, the risk of oversupply threatens promoters of new liquefaction projects with cost overruns and delayed market returns.

J.P. Morgan Research estimates global LNG supply capacity to increase by ~350 Bcm by 2030, up ~54% from 2024 levels, driven primarily by an increase in liquefaction capacity from North America and Qatar.

According to the International Energy Association (IEA), a total of nearly 295 bcm/yr of new LNG export capacity is expected to come online between 2025 and 2030 from projects that have already reached FID and/or are under construction, marking the largest wave of capacity additions to date.

And the new market reality and the associated race to commission new capacities are causing changes in project delivery strategies, as promoters of offshore gas liquefaction now prefer floaters for cost efficient and speedy execution.

According to the Head of Global Natural Gas and Natural Gas Liquids Strategy at J.P. Morgan Shikha Chaturvedi, LNG prices are expected to fall in the longer term with the prevailing increase in capacity.

“We see a downward global LNG price trajectory with increased volatility, driven by a structurally oversupplied market,” Chaturvedi said.

Rystad stated in its latest advisory to subscribers that “accelerating timeline is a key factor in the growing preference for FLNG, as developers seek to minimize exposure and accelerate returns.”

It also warned that “in the current energy environment, where markets remain tight but face the risk of oversupply, speed to first production is critical. Extended construction timelines delay revenue generation and expose projects to a higher risk of cost overruns.”

The Oracle reports that the Nigeria LNG (NLNG) Limited is currently diligent with the development of its seventh process train also called Train-7, but the timelines continue to be elastic following issues in the operating environment. The new plant promises to boost the liquefaction capacity of the company to 30 million tons per annum (mtpa) upon commissioning.

The NLNG is the gas business offshoot of the defunct Shell Petroleum Development Company (SPDC) Limited, a joint venture among the Nigerian National Petroleum Company (NNPC) Limited, Shell, TotalEnergies and Eni.

A new gas venture arrangement between the NNPC Limited and UTM FLNG is also progressing in project stages to also harness flare gas from offshore oil production sites for modular liquefaction and export.

Rystad stated that the FLNG model is gaining momentum on the global LNG market, with capacity expected to triple by 2030.

The FLNG projects once hindered by technical and operational challenges, Rystad stated, are now achieving utilization rates comparable to onshore terminals.

It noted that FLNG is emerging as a faster, more flexible and cost-effective solution capable of adapting to shifting market dynamics while unlocking previously stranded reserves.

The project model, according to the industry advisory firm, has become compelling with the prevailing rise in LNG alongside the growing viability of smaller gas fields,

Rystad Energy estimates global FLNG capacity will reach 42 million tonnes per annum (Mtpa) by 2030, climbing to 55 Mtpa by 2035, almost four times the 14.1 Mtpa recorded in 2024.

Terminals commissioned before 2024 achieved an average utilization rate of 86.5% in 2024 and 76% to date in 2025, figures comparable to global onshore LNG facilities.

“FLNG has come a long way in less than a decade. The only real roadblocks were early teething issues that come with any new technology, as seen with projects like Shell’s Prelude, which faced cost overruns and unstable output. But since then, the industry has matured significantly, including Prelude itself. Utilization rates are improving, the technology is proving reliable across a range of environments, and the economics are starting to make more sense. From navigating permitting challenges in Canada to unlocking remote offshore reserves in Africa and Asia, FLNG is finally going mainstream,” said Kaushal Ramesh, Vice President, Gas & LNG Research, Rystad Energy.

Without a prior blueprint to follow, early FLNG projects, such as Shell’s Prelude, built in South Korea by the Technip–Samsung consortium, became a negative demonstration of FLNG’s early limitations. Costs ballooned to $2,114 per tonne for liquefaction alone.

However, as the industry gained operational and construction experience, capital expenditure per tonne has declined significantly, bringing costs in line with onshore LNG projects.

Proposed developments along the US Gulf Coast now average around $1,054 per tonne. Delfin FLNG, a proposed project in the US, sits just above that average at $1,134 per tonne, while Coral South FLNG in Mozambique, which is similar in scale, reports a comparable liquefaction cost of $1,062 per tonne.

However, we note that project concepts are not entirely comparable. Some are complex integrated producers with upstream components as part of the LNG facilities, while others simply liquefy pipeline-spec gas.

In parallel, FLNG developers are increasingly turning to vessel conversions as a cost-efficient alternative to newbuild facilities. Projects such as Tortue/Ahmeyim FLNG, Cameroon FLNG and Southern Energy’s FLNG MK II have achieved notably lower capex levels of $640, $500 and $630 per tonne, respectively, by repurposing Moss-type LNG carriers.

These conversions benefit from the vessels’ modular spherical tank design, which allows for simpler integration of prefabricated liquefaction modules. With several Moss-type LNG tankers expected to retire in the coming years, more could be repurposed, expanding the pipeline of lower-cost FLNG solutions.

FLNG vessels are also proving their operational flexibility across diverse environments, from deepwater to ultra-deepwater fields and even onshore supply. Should certain projects stall, their vessel could be relocated or sold, demonstrating the inherent mobility and adaptability of FLNG assets.

In the current energy environment, where markets remain tight but face the risk of oversupply, speed to first production is critical. Extended construction timelines delay revenue generation and expose projects to a higher risk of cost overruns.

Rystad Energy data also shows that FLNG units can be delivered significantly faster than onshore liquefaction facilities, enabling quicker final investment decisions and more agile execution.

On average, newbuild FLNG projects are completed in approximately three years, compared to about 4.5 years (capacity-weighted) for operational onshore plants. For FLNG vessels currently under construction, the average projected build time is even lower at 2.85 years.