2004-built vessel getting new lease on life as LNG FSU in Central America after European firm taps Korean shipbuilder for retrofit

South Korea’s HD Hyundai Marine Solutions, HD Hyundai’s comprehensive marine solutions arm, has been hired by an undisclosed European shipping player to undertake its first conversion of a liquefied natural gas (LNG) carrier into a floating LNG storage unit (LNG FSU).

HD Hyundai Marine Solutions’ new contract award, worth $30 million, will enable the firm to carry out the work of converting a 138,000-cubic-meter (cbm) LNG carrier built in Spain in 2004 into an LNG FSU. The firm will be in charge of carrying out the entire construction process, including design, purchase, production, transportation, installation, and test operations in a turnkey manner, which is seen as a way to maximize profitability.

The South Korean player plans to complete this vessel retrofit project by the first half of 2025. Afterward, the revamped LNG FSU will be installed in Central America and supply LNG to nearby thermal power plants. As the unit is seen as a type of ‘offshore LNG terminal’ that stays in a specific location for a long time, receives and stores LNG periodically, and then delivers it to onshore power plants and storage facilities when required, it is gaining attention as an alternative to seaborne LNG, especially in Europe due to the Ukraine crisis.

Aside from recycling old LNG carriers, the LNG FSU conversion project is evaluated as an economical and eco-friendly solution as it can be moved and installed in different areas depending on demand. Another benefit of the LNG-FSU conversion is perceived to be the possibility to install and operate the unit within a year at the earliest, unlike traditional onshore and offshore LNG plants, which usually take more than three to four years to build.

A spokesperson from HD Hyundai Marine Solutions highlighted: “The LNG-FSU conversion project is one of the most difficult projects as it does not have a standardized design and requires a high level of technology and know-how. We plan to expand our market share in eco-friendly ship conversion based on the experience and capabilities accumulated through various retrofit projects.”

HD Hyundai Marine Solutions sees this LNG FSU retrofit as a stepping stone to anticipated large-scale orders in the second half of the year in eco-friendly gas solution modifications, such as LNG-LPG-methanol dual fuel engine modifications and repurposing of floating liquefied natural gas storage and regasification units (LNG FSRU).

With the spotlight on Europe’s liquefied natural gas ramp-up in the aftermath of its decision to wean itself off Russian pipeline gas, the shipping market player is anticipating more LNG-related vessel orders and retrofits. The company recently inked an agreement on the application of AI-based solutions with Pan Ocean, POS SM, and the American Bureau of Shipping (ABS).

The ‘AI Shipboard Safety Management Package Solution’ developed by HD Korea Shipbuilding & Offshore Engineering (HD KSOE) will be applied to Pan Ocean’s 174,000 cubic meter LNG carrier currently under construction at HD Hyundai Heavy Industries and verify its effectiveness. The ship is slated for delivery to Pan Ocean by year-end.