Japanese giant strikes deal for Singapore’s first FSRU

Japan’s shipping giant Mitsui O.S.K. Lines (MOL) has won a long-term time charter contract for a floating storage and regasification unit (FSRU), which will be built by South Korea’s Hanwha Ocean for deployment in Singapore.

While confirming an agreement with Singapore LNG Corporation, Singapore’s state-owned liquefied natural gas (LNG) terminal operator, for the FSRU charter contract, MOL highlighted that an event was held on October 23 to launch the project. Once the FSRU has been built at Hanwha Ocean in South Korea and delivered to the Japanese player, the firm will own, manage, and operate the unit, which will be moored at the Jurong Port.

While being expected to play a central role in receiving, storing, and regasifying LNG, and sending gas to shore, this FSRU is planned to be introduced as an infrastructure project that will contribute to a stable supply of energy for the country, where about 95% of domestic power generation is fueled by imported natural gas.

According to Energy Market Authority (EMA) of Singapore, the Asian country’s energy mix has changed significantly over the decades, going from fuel oil to imported natural gas in the early 2000s, with 95% of its energy currently produced using natural gas as the country takes steps to transition to cleaner energy sources to combat climate change.

In a bid to mitigate the intermittent nature of renewable energy sources like solar, Singapore is pursuing the deployment of energy storage systems (ESS), which function like giant batteries that store energy for future use. With the power sector contributing around 40% of its carbon emissions, the country is actively exploring new energy technologies to reduce these emissions, such as hydrogen, geothermal, and carbon capture and storage (CCS).

Aiming to strengthen Singapore’s LNG supply and energy security, Energy Market Authority has expanded its partnership with Korea Gas Corporation(KOGAS), thanks to a memorandum of understanding (MoU) to collaboratively explore the joint procurement of LNG that would bring mutual benefits.

Meanwhile, MOL is operating FSRUs in diverse regions and environments, including Turkiye, Hong Kong, and Indonesia, where the firm launched commercial operations for an FSRU in West Java, part of a project described as Asia’s first gas-to-power project using FSRU, electric generation, and gas-related facilities developed in an integrated manner. 

Recently, the firm also entered into a deal for an FSRU project in Poland to bring a new floating LNG receiving terminal approximately three kilometers off the coast of the Polish port of Gdańsk. In addition, the Japanese shipping major joined others in a study that looked into dung power as a possible way to tap into the production and utilization of biomethane from animal manure.

MOL also boosted its stake in MODEC to 15% to build stronger ties between partners and enhance the competitiveness of their offshore businesses.