FSRU S A REAL GAME CHANGER

1 FSRU S A REAL GAME CHANGER The first FSRU went into service in 2005. Today there are 25 1 operating in 19 countries, in every region of the world. In 2015, four of the five terminals that went into service were floating terminals. Country Project Vessel Storage m3 Owner/Operator Start up MTPA USA* Gulf Gateway, Louisiana Excelerate Excelsior 138,000 Excelerate Energy 2005 5.3 USA* Northeast Gateway Excelerate 138,000 Excelerate Energy 2008 3.0 UK Teesside Gasport Excelerate 138,000 Excelerate Energy 2006 3.0 Argentina Bahia Blanca Excelerate Express 150,900 Enarsa PDVSA 2008 3.8 Kuwait* Mena Al Ahmadi Excelerate Explorer 150,900 KNPC 2009 7.5 Kuwait Mena Al Ahmadi Golar Igloo from 2014 170,000 KNPC 2014 5.8 Brazil Guanabara Bay, Rio Excelerate Experience 173,400 Petrobras 2009 6.1 Brazil Guanabara Bay, Rio Golar Spirit from 2016 129,000 Petrobras 2016 2.8 Brazil Port Pecam, Ceara Golar Spirit 129,000 Petrobras 2009 2.8 Brazil Port Pecam, Ceara Excelerate Experience from 2016 173,400 Petrobras 2016 6.1 Italy Adriatic LNG, Rovigo GBS 250,000 Edison LNG 2009 1.6 USA* Neptune LNG SRV Cape Anne & Neptune 145,130 GdF Suez Energy 2010 3.1 Chile* Mejillones GDF SUEZ Brussels until 2014 135,000 Suez Energy 2010 1.5 UAE Dubai Golar Freeze 125,000 Golar LNG, Shell 2010 3.6 UAE Dubai Excelerate Explorer from 2015 150,900 Dubai Supply Authority 2015 7.5 Argentina Escobar, Parana River Excelerate Exemplar 150,900 ENARSA/YPF 2011 3.8 Indonesia Bojonegara Banten W. Java Golar Nusantara Regas Satu 125,000 PT Nusantara Regas 2012 3.0 Malaysia Malacca Tenaga Satu & Tenaga Empat 260,000 Petronas 2012 3.8 Italy Offshore Livorno Golar Frost (FSU) 137,500 LNG Toscana 2013 2.8 Israel Hadera LNG Excelerate Excellence 138,000 Excelerate 2013 2.8 Brazil Bahia Golar Winter 138,000 Petrobras 2013 3.8 China Tianjin FSRU GDF Suez Cape Anne 145,130 CNOOC, Hoegh 2013 2.2 Indonesia Lampung PGN FSRU Lampung 170,000 PGN Hoegh 2014 1.8 Lithuania Klaipeda Hoegh Independence 170,132 Klaipedos Nafta 2014 3.0 Pakistan Karachi Excelerate Exquisite 150,900 Engro Elengy 2015 3.5 Egypt Ain Sokhna Hoegh Gallant 170,000 EGAS 2015 3.8 Jordan Aqaba Golar Eskimo 160,000 Aqaba Development Corp 2015 3.8 Egypt Ain Sukhna BW Singapore 170,000 EGAS 2015 5.8 Colombia Cartagena Hoegh Grace 170,032 SPEC 2016 3.0 UAE Abu Dhabi Excelerate 138,000 GASCO 2016 5.0 Malta Marsaxlokk Armada LNG Mediterrana (FSU) 125,000 Enemalta 2016 2.0 Jamaica Montego Bay Golar Arctic (FSU) 140,650 Jamaica Public Service 2016 2.0 Indonesia Benoa, Bali FRU/FSU 26,000 PLN, PT Pelabuhan Indonesia 2016 1 * Retired Operating 94.6 FSRU floating storage and regasification unit in practice not all floating terminals are FSRU s. Most are, but some facilities consist of a floating storage vessel (FSU) with a separate regasification unit that can either be afloat (FRU), such as in Bali, or placed on the shore, such as in Malta and Jamaica. Adriatic LNG, offshore Italy is a huge Gravity Based Structure looking more like an oil rig than a vessel. Neptune LNG, offshore Massachusetts, USA, consists of a dual buoy system where specially designed shuttle and re-gasification vessels (SRV) moor and discharge the gas into a subsea pipeline. FSRU s have been a game changer. They have enabled far more countries to become LNG importers and enabled them to enter the market far faster and at a substantially lower cost compared with building a conventional onshore receiving terminal. A typical new-build 170,000 m 3 FSRU will cost in the order of US$250 million compared with US$1 billion+ for a similar sized conventional onshore terminal. An FSRU takes 2 years to build compared with 3-5 years for the onshore terminal and, as the operators tend to have at least one or two new builds already under construction, implementation 1 Floating terminals FSRU s or variations such as FSU and FRU.

2 can be faster. BW recently concluded a five-year charter with EGAS of Egypt which took five months from project inception to first gas being dispatched. Another significant benefit is that the floating terminal can be leased, thus substantially lowering overall project CAPEX. Three companies, Excelerate Energy, Golar and Höegh LNG, provide most of the FSRU s, but Mitsui OSK, Teekay, Gazprom, Dynagas and Maran Gas Maritime each have an FSRU on order. BW operates two FSRU s with a third on order. FSRU s are a flexible option. Initially charter periods were for 10-15 years, but now 5 years is the norm with short term charters also possible. In Kuwait, the Golar Igloo is deployed as an FSRU for nine months of the year and is free to operate as a spot carrier or take on other short term assignments, for the remaining three months of the year. They can be repositioned should the need for them disappear (as happened in the USA), or can be rotated with a larger unit being provided should demand increase (as has happened in Brazil, Kuwait and Dubai). They can also be a get you started solution enabling early imports of LNG whilst a larger onshore terminal is being constructed (e.g. Mejillones in Chile, Tianjin in China and Kuwait). Floating terminals When not being utilised as an FSRU, the vessel can operate as a conventional LNG carrier providing additional flexibility. 58 more floating terminals on the drawing board FSRU s proved themselves in their first decade of utilisation and became the favoured way for many countries to enter the LNG market. In the last year or so there has been an upsurge in floating terminal proposals, particularly in Africa, Indonesia, India and Pakistan. There are now 25 floating terminals in operation with another 58 proposals at various stages of development, from early concept to

3 implementation. Of these, 42 expect to be operating by 2020 and 12 of these projects have already chartered the FSRU. Four floating terminals came on stream in 2014, 6 in 2016 and 12 have been proposed for 2017. An ambitious total of 109 LNG terminals have been proposed for start-up between 2017 and 2020, with 42 of these being floating terminals. New LNG terminals Number of units 45 40 35 30 25 20 15 10 5 0 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e 2020e Onshore Offshore e = all proposed LNG terminals Should all 109 terminals go ahead they will add 305 million tonnes of regasification capacity, most of this in Asia. Proposed new LNG regasification capacity mtpa 2017 2018 2019 2020 Europe 8.7 21.2 15.7 10.9 Asia 38.5 71.25 40.9 20.6 N. America 9.9 C&S America 6.4 11.6 2.5 4 Middle East 5 3 3 16.5 Africa 5.7 8 1.6 64.3 115.1 72.0 53.6 Not all, by any means, will go ahead and, with even the better projects, we will see dates slipping. Many are very speculative but a significant number of the proposed floating terminals are to support existing or proposed power plants increasing the likelihood that they will go ahead. What next a more modular approach and smaller scale. Whilst FSRU s have tended to get larger over the last ten years we are now seeing demand for much smaller units. An FSU/FRU combination has recently entered service in Bali with 26,000 m 3 of storage a tenth of the size of Mitsui OSK s FSRU Max. Exmar has a 25,000 m 3 FSRU barge currently under construction. Twenty of the proposed floating terminals are for markets where the call on the FSRU will be 2 mtpa or less.

4 FSRU options FSRU can either be positioned against a berth or a dolphin within a port, or offshore when shore access is not possible perhaps due to restricted draft or inshore congestion. Examples of offshore terminals include an Excelerate Gateway terminal, which consists of a subsea buoy system anchored offshore and linked to a subsea pipeline to shore by a flexible riser. This buoy system is used as both the mooring mechanism for the FSRU and as the conduit through which natural gas is delivered to the subsea pipeline. The Hadera Deepwater LNG terminal utilises an STL buoy system located over six miles offshore Israel Excelerate LNG, Gateway FSRU Toscana The Excelerate Gateway system uses an integral turret whilst another option is an external turret. In Italy, the FSRU Toscana is located 19 kilometres off the Livorno coast and consists of an ex LNG carrier (Golar Frost) which has been converted into an FSRU by the addition of a bow mounted turret. The Excelerate buoy system can be disconnected whilst the FSRU Toscana is designed to be permanently connected, as is the Lampung FSRU in Indonesia. Inshore the FSRU is either moored against a berth or a purpose-built dolphin. The LNG carrier moors alongside the FSRU and side by side transfer of the LNG is made. Alternatively, the LNG carrier can moor on the other side of the dolphin and the transfer made across the dolphin. Excelerate LNG, Bahia Blanca, Argentina Excelerate Energy, Aguirre Offshore Gasport, Puerto Rico

5 Höegh LNG, PGN FSRU Lampung Höegh LNG, Hoegh Grace, Cartagena Petronas s Melaka LNG terminal, which started operations in May 2013 has a slightly different approach. It utilises two floating storage units (FSU) and a 3.8 mtpa jetty-based regasification unit. The facility uses two old LNG carriers (the 1981 built, 130,000 m 3, ex Tenaga Empat ; and the 1982 built, 130,000 m 3, ex Tenaga Satu ), for a combined LNG storage capacity of 260,000 m 3. Petronas Malacca LNG Terminal Bumi Armada, Armada LNG Mediterrana, Malta The recently commissioned Delimara LNG terminal in Malta, supplies natural gas to Enemalta s existing 149 MW power plant and an independent new 200 MW power plant. It consists of the FSU Armada LNG Mediterrana (the 1985 built, 127,000 m 3, ex Wakaba Maru) and an onshore regas facility. Jamaica uses an FSU (Golar s Golar Arctic, a 2003 built, 140,650 m 3 LNG carrier) and a small-scale LNG carrier (the Coral Anthelia, a 2013-built, 6,500 m 3 LNG carrier) to shuttle the LNG from the FSU to the onshore regas facility at Montego Bay (and potentially other locations in the future). In India, two FSU-based projects are being developed on the East Coast: At Kakinada Port, Andhra Pradesh the VGS Group is developing the Krishna Godavari LNG Import Terminal, an offshore unloading platform consisting of an FSU + FRU barge 8 km off the coast. The FSU will be able to accommodate LNG from carriers of up to 174,000 m 3 and the regas unit will dispatch gas into a subsea pipeline sized for the future maximum send out rate of 1,750 Mmscf/d. The LNG terminal was designed for an initial (Phase 1) annual output of 4.47 mtpa, and sized / fitted out for future (Phase 2) installation of additional equipment to increase the annual output to 8.94 mtpa.

6 At Krishnapatnam Port, Andhra Pradesh LNG Bharat has proposed a 5 mtpa terminal consisting of an FSU and onshore regasification unit. There are many permutations of FSRU/floating terminal able to meet all needs but it is essential that prior to making a commitment thorough analysis is undertaken of the market, the offtakers, offtake profile, onshore infrastructure, regulations and metocean conditions to ensure the optimum selection is made. Storage capacity LNG storage capacity of the FSRU is a key issue and should be sufficient to enable it to receive LNG from a fully laden LNG carrier. The average capacity of the LNG carrier fleet has been increasing and, with the exception of the Q-Flex and Q-Max classes, currently stands about 160,000 to 170,000 m 3. Storage capacity of the FSRU s has increased over time. Initially about 138,000 m 3 (a bit less for the converted LNG carriers) then 150,000 m 3, and now the norm is 170,000 m 3 although Mitsui OSK has a FSRU Max on order with 263,000 m 3 of storage. Evolution of FSRU's Vessel Excelsior Golar Spirit Explorer Golar Igloo Independence TBN Owner Excelerate Golar Excelerate Golar Hoegh Mitsui OSK Delivery 2005 2009 2009 2014 2014 2016 LOA m 277 289 290 292 290 345 Breadth m 43.4 44.6 43.4 43.4 46 55 Storage m 3 138,000 129,000 150,900 170,000 170,000 263,000 Regas Bcm/y 4 2.5 5 7.5 3 5.4 Employed: As an LNGC Brazil Dubai Kuwait Lithuania Uruguay Regasification capacity Regasification capacity has also increased. The Golar Spirit had 2.5 Bcm/annum of regasification capacity when it entered service in 2009, whilst the Golar Igloo (2014) has 7.5 Bcm/annum (5.5 mtpa) of regas capacity. Regas capacity can be sized to a project s needs and the recently upgraded Excelerate Explorer (new HP vaporizers and HP pumps increased regasification send-out capacity from 690 Mmscf/d to 960 Mmscf/d) is capable of sending out 7.5 mtpa of re-gasified LNG. How the regasification unit is operated will also influence send-out. Options include closed-loop mode (in which steam from the FSRU boilers is used to heat fresh water circulated through the shell-andtube vaporizers in the regasification plant), open-loop mode, in which relatively warm seawater is drawn in through the FSRU s sea chests. This warm seawater is used as a heat source and passed through the shell of the shell-and-tube vaporizers, causing the vaporization of the LNG, or a combination of the two. Which option is utilised can make a significant difference to send-out. Excelerate s Experience class FSRU s have a baseload send-out of 400 Mmscf/d in closed loop mode or 800 Mmscf/d in open loop mode. Supporting a single off-taker Floating terminals can match the capacity and efficiency of onshore terminals at a considerably lower cost. They also provide the option to support a single off-taker. Conventional LNG terminals usually send out gas to several end users (Guangdong Dapeng LNG terminal supplies three power generation and three city gas companies) but an FSRU can be sized to support a single end user, often a power plant. In 2017 Excelerate s Aguirre Offshore GasPort Project will start up with the FSRU providing gas to the Puerto Rico Electric Power Authority s (PREPA) Central Aguirre Power Plant.

7 We are now seeing power plant developers integrating the LNG terminal into their power projects, particularly in Indonesia. Small scale floating terminals The world s first small-scale floating regasification unit has also gone into operation at Bali in Indonesia. The small scale FRU is designed to regasify 50 mcf/d of LNG and will deliver 40 mcf/day to the Pesanggaran power plant. The facility is operated by PT Pelindo Energi Logistik (PEL), an affiliate of the state-owned port operator. The US$500 million project consists of a dedicated berth in the port at which a floating regasification unit (FRU) and floating storage unit (FSU) provided by Jaya Samudera Karunia (JSK) Group are stationed. Gas processed by the Benoa FRU will be piped 3.7km to a 200 MW diesel and gas-fired power plant in Pesanggaran owned by state electricity firm PT Perusahaan Listrik Negara (PLN). It will be accompanied by a small scale floating storage unit with a capacity of 26,000 m 3. The newbuilt unit is scheduled to be completed in the 2nd half of 2017 and pending its arrival, JSK, has chartered a carrier from CNOOC to act as a temporary FSU. FSRU Utilisation South America FSRU s have had particular impact in South America and all receiving terminals in Argentina and Brazil use FSRU s. They proved to be the get you started solution in Chile whilst permanent onshore terminals were constructed and the first terminal in Colombia utilises an FSRU, the new built Hoegh Grace. The US$800 million facility will process up to 2.6 mtpa of gas, destined mainly to fuel power plants serving northern and central Colombia.

8 The Punta de Sayago terminal in Uruguay will enter service in the second half for 2017 and will utilise a Mitsui OSK new build that will be the largest FSRU in operation, with storage capacity of 263,000 m 3. The next South American FSRU could be at Sergipe in Brazil. Golar Power recently took the final investment decision on the 1,516 MW Porto de Sergipe power project and entered into an agreement to charter to the project the new build Golar Nanook FSRU from November 2017. The Middle East Another region that has favoured the utilisation of floating terminals is the Middle East, where all of the terminals utilise FSRU s. Substantial expansion of regasification capacity is planned over the next few years. Egypt has tendered for its third FSRU and the UAE will have three floating terminals if Sharjah goes ahead. In view of this, plans to build a 9 mtpa onshore terminal at Fujairah have been put on hold. The first onshore regasification terminal in the region is currently under construction in Kuwait and, when it is commissioned in 2020, it will replace the current FSRU. Bahrain LNG will be a variation on an FSRU theme and will comprise a floating storage unit (FSU) and separate floating regasification unit (FRU). The 174,000 m 3 FSU has been contracted from Teekay and the vessel is currently under construction in Korea. Middle East - Planned & proposed terminals Country Terminal Developers Start Tanks Capacity Bahrain Bahrain LNG Nogaholding, Teekay, Samsung & GIC Planned 2019 FSU 3 Egypt FSRU 3 EGAS Planned 2017 FSRU 5 Kuwait Kuwait Onshore Terminal KBRC U construction 2020 8 11.5 Lebanon Beddawi Speculative 2020 FSRU 3 UAE Sharjah Sharjah National Oil Co Planned 2018 FSRU 3 Total 22.5 Africa Ten African countries are considering LNG imports, with all, except Morocco, planning to utilise FSRU s. The first FSRU (the Golar Tundra) is already onsite at Tema in Ghana and the second Ghana project (Quantum Power, Tema) has just concluded a 20-year lease of an FSRU from Höegh LNG. The Ministry of Energy & Petroleum in Kenya has launched a study into the possibility of a floating import terminal at Mombasa. The South African Department of Energy formed a Gas Industrialisation Unit in May 2016 to implement its 3,726 MW gas-to-power programme and has identified the need for two LNG import terminals to support a proposed 2,000 MW power plant at Richards Bay and a 1,000 MW power plant in the Coega industrial development zone. South Africa will announce preferred bidders for the gas-to-power projects by the end of March 2017. In November, the CI-GNL (Ivory Coast LNG) consortium led by Total was awarded the rights to build and operate an LNG re-gasification terminal in Ivory Coast with a capacity of 3 mtpa. The FSRU will be located at in Vridi, near Abidjan and is expected to become operational by mid-2018. Mauritius is studying importing LNG and two floating terminals have been proposed for Mocambique to receive LNG from Eni s planned Coral FLNG project. In Namibia, Xaris Energy is proposing to build a 250 MW power plant, supported by an FSRU, at Walvis Bay.

9 Africa - Planned & proposed terminals Country Terminal Developers Status Start-up Type mtpa Benin Gasol LNG Speculative? FSRU 3 Ghana Tema WAGL (NNPC, Sahara Energy) U. construction 2017 FSRU 3.4 Ghana Ghana 1000 GE, Endeavour Energy, Sage Planned 2017 FSRU 3.7 Ghana Tema Quantum Power, GNPC U. construction 2018 FSRU 2 Ivory Coast Songon Endeavour Energy, Star Energy Speculative? FSRU 2 Ivory Coast Vridi, near Abidjan Total, SOCAR, Shell, Endeavour Planned 2018 FSRU 3 Kenya Mombasa Min of Energy & Petroleum Study 2018 FSRU 2 Mauritius Port Louis Mauritius Ports Authority Study 2020 FSRU 2 MocambiquePemba Speculative 2019 FSRU 2 MocambiqueMatola Speculative 2019 FSRU 1 Morocco Jorf Lasfar/El Jadida SNI Planned 2018 Onshore 4 Namibia Walvis Bay Xaris Planned 2019 FSRU 1 Senegal Dakar Senelec, Mitsui, Nebras Power Speculative? FSRU 2 S. Africa Richards Bay TBC Planned 2020 FSRU 1 S. Africa Coega TBC Planned 2020 FSRU 0.6 S. Africa Saldanha Bay TBC Speculative 32.7 South Asia Pakistan Pakistan s first terminal, an FSRU, went into service at Port Qasim, Karachi in 2015. It has contracted for a second FSRU to be in place in 2017 and a third FSRU in 2018. It is also planning to build two import terminals at Gwadar, one a 4 mtpa FSRU at Gwadar-Nawabshah which it hopes to be operating in 2018. China has also begun work on laying 42-inch diameter gas pipelines from Gwadar to Nawabshah for supplying regasified LNG to new industrial estates planned to be developed along the China-Pakistan Economic Corridor. The Pakistan GasPort Consortium, a wholly-owned subsidiary of Pakistan GasPort Limited, is establishing the country s second LNG import terminal at Port Qasim utilising a BW Group FSRU. The government claims that the project will reduce the country s gas deficit by 30% and provide fuel for three regasified LNG power generation plants of 3,600 MW, being set up by the federal and provincial governments in Sheikhupura, Kasur and Jhang on a fast-track basis. In December, Höegh LNG signed an FSRU contract with Global Energy Infrastructure Limited ( GEIL ) for GEIL s LNG import project in Port Qasim. This will be the third FSRU to be located at Port Qasim and will be the first private LNG import terminal in Pakistan. The charter is for a period of 20 years with two five-year extension options for charterer. The construction of the terminal is planned to commence early 2017 and expected start-up is second quarter of 2018. Officials forecast that Pakistan will import 31 million tonnes of LNG in 2018. This is unlikely as its own plans that assume five import terminals will be built suggests that total potential import capacity will be only 20 mtpa by that time. When the third FSRU is commissioned in 2018 in Port Qasim, Pakistan will have 12 mtpa of import capacity.

10 South Asia existing, planned & proposed LNG terminals Bangladesh Petrobangla has contracted Excelerate Energy to supply an FSRU at Moheshkhali. The 5.4 mtpa floating terminal is scheduled to start up 2018. A further four terminals have been proposed in Bangladesh, all to support power generation. The government of Bangladesh has granted in-principle approval for the first phase of Reliance Power's project in Bangladesh. In the first phase a 750 MW power plant will be set up at Meghnaghat, around 40 km South-East of Dhaka, along with the FSRU terminal at Maheshkhali Island in Cox's Bazar. The Ministry of Power, Energy and Mineral Resources and Bangladesh Power Development Board expects a draft power purchase agreement, implementation agreement and land lease agreement to be signed in December. The power plant and the 2 mtpa FSRU are scheduled to go into operation in 2019. India India currently has four LNG import terminals with a total capacity of 28 mtpa. Petronet s Dahej terminal was expanded to 15 mtpa in 2016 and a further 2.5 million tonnes of capacity will be added in 2018. Shell is planning to add another 2.5 million tonnes to its 5 mtpa terminal at Hazira. Two more terminals are currently under construction and another 17 have been proposed potentially adding another 74 million tonnes of regasification capacity. Three floating terminals have been proposed at Kakinada in Andhra Pradesh. One, a 3.5 mtpa FSRU and the other two using FSU s plus either onshore or floating regas units. Hiranandani is planning a 4 mtpa FSRU at Jaigarh, Maharashtra and a 3 mtpa FSRU at Digha, West Bengal. Swan Energy is planning

11 a 5 mtpa at Jafrabad, Pipavav, Gujarat. Essar is reported to be considering a 5 mtpa floating terminal at Hazira. Not all will go ahead. Some are duplicates and some are highly speculative, making it likely that at least half of these projects will not go ahead. Despite this, developers are encouraged by government forecasts that India may need to import about 50 mtpa of LNG by the turn of the decade. In August the Oil Minister said the country plans to increase its LNG import capacity to 55 mtpa within five years, from about 28 mtpa now. Currently only one FSRU operates in the region, the 151,000 m 3 Excelerate Exquisite at Port Qasim in Pakistan. Of note therefore is the fact that 15 of the 28 proposed new terminals in South Asia are assuming utilising floating storage, either in the form of an FSRU or a FSU/FRU combination. Indonesia Developments in South Asia might rather overshadow activities in Indonesia which is the country with the most ambitious plans to develop a range of small and medium size terminals primarily to support power generation. Currently 22 more terminals have been proposed. Pertamina is currently developing 2 more FSRU projects (at Cilacap, Central Java and Cilamaya, West Java), 4 onshore terminals (in Bojanegara, West Java, Benoa (Bali), Porong, East Java and Makassar, South Sulawesi), and 3 mini LNG plants in Simenggaris and Nunukan, North Kalimantan and in Salawati in West Papua. Indonesia started up its fourth LNG receiving terminal this summer and ushered in the era of small scale floating regasification with the commissioning of a small-scale LNG receiving terminal at Benoa on Bali. In April Pertamina tendered for a third FSRU-based terminal to import up to 1.6 mtpa via Cilacap in Central Java. The Central Java FSRU will be a 25-year build, own, operate, transfer (BOOT) contract. Pertamina has also proposed to position a fourth FSRU at Cilamaya in West Java, 110km down the coast from Jakarta, to import 0.6 mtpa. The Natural Gas Infrastructure Road Map 2014-2030 provides for the construction of 9 mini liquefaction plans, 8 more FSRU s and 64 small onshore regasification units by 2020. Infrastructure in

12 the western region of Indonesia will be integrated with natural gas pipelines from Sumatra, Java to Bali whilst the eastern region will depend on a virtual pipeline with LNG being transported around the islands by ship and delivered to either floating or onshore terminals. Indonesia has ambitious plans for the development of small and medium scale terminals primarily to support power generation, particularly in eastern Indonesia, but the area that stands out as the epicentre for terminal development is South Asia where over 100 million tonnes of new capacity has been proposed. FSRU owners/operators Three companies dominate the FSRU market, Excelerate, Golar and Höegh LNG and between them they own 22 FSRU (with four more new builds on order). BW entered the market in 2013 and owns two FSRU s with a third on order. Recent entrants include Bumi Armada (FSU), Gazprom, Mitsui OSK, Teekay, Dynagas and Maran Gas Maritime. Exmar is building a small 25,000 m 3 FRSU barge. Golar initially converted LNG carriers into FSRU s but in 2012 ordered its first new build FSRU. 2011/12 saw a flurry of new build orders from Excelerate, Golar, Hoegh and BW which resulted in eight FSRU s being delivered in 2014/15. All of them were built at Korean yards (DSME, Samsung Heavy Industries, Hyundai Heavy Industry). Despite growing demand for FSRU s, new build orders have been relatively thin of late. However, in December all that changed with a flurry of new orders. Höegh LNG announce that it has signed a Letter of Intent for one firm and three optional FSRUs at Samsung Heavy Industries (SHI) in South Korea. The 170,000 m 3 FSRUs have regasification capacity of 750 MMscf/day and full trading capabilities. The vessels have scheduled delivery dates of two units in 2019 and two units in 2020. The contract for the firm vessel is expected to be signed by mid-january 2017. Two Greek ship owners also entered the FSRU market with Dynagas ordering two FSRU s (for 2019 and 2020 delivery) from Hudong-Zhonghua Shipbuilding Shanghai and Maran Gas Maritime ordered one FSRU from DSME, Korea. Exmar s small FSRU barge is being built by Wison in China, but the Korean dominance in FSRU construction has been broken by the recent order from Dynagas for two FSRU s from in H-Z Shanghai. Exmar s 25,000 m 3 FSRU barge is not their first foray into FSRU. It is a much more significant player behind the scenes. It is part owner of four FSRU s and operates and manages all of Excelerate s FSRU s plus the OLT FSRU Toscana.

13 The FSRU fleet FSRU Fleet Delivery Capacity Containment Peak send out Builder Deployed m3 MMcf/day Bcm/y mtpa Excelerate Excelsior 2005 138,000 M No 96 690 7.1 5.3 DSME LNGC Excellence 2005 138,000 M No.96 690 7.1 5.3 DSME Israel Excelerate 2006 138,000 M No.96 690 7.1 5.3 DSME Abu Dhabi Explorer 2008 150,900 M No.96 1000 10.2 7.5 DSME Dubai Express 2009 150,900 M No.96 690 7.1 5.3 DSME Argentina Exquisite 2009 150,900 M No.96 690 7.1 5.3 DSME Pakistan Expedient 2010 150,900 M No.96 690 7.1 5.3 DSME LNGC Exemplar 2010 150,900 M No.96 690 7.1 5.3 DSME Argentina Experience 2014 173,400 M No.96 800 8.2 6.1 DSME Brazil Golar Golar Spirit* 2009 129,000 Moss 250 2.5 1.8 Brazil Golar Freeze* 2010 125,000 Moss 500 4.9 3.6 LNGC Golar Winter* 2009 138,000 Membrane 500 5.1 3.8 Brazil Nusantara Regas Satu* 2012 125,000 Moss 500 5 3.7 Indonesia Golar Igloo 2014 170,000 Membrane 750 7.5 5.5 SHI Kuwait Golar Eskimo 2014 160,000 Membrane 750 7.5 5.5 SHI Jordan Golar Tundra 2015 170,000 Membrane 750 7.5 5.5 SHI Ghana Golar Nanook 2017 170,000 Membrane 750 7.9 5.8 SHI Brazil * Converted LNG carriers Hoegh Hoegh Gallant 2014 170,051 M Mk III 500 5.1 3.8 HHI Egypt Independence 2014 170,132 M Mk.III 384 3.9 2.9 HHI Lithuania PGN FSRU Lampung 2014 170,132 M Mk III 360 3.7 2.8 HHI Indonesia GdF Suez Cape Ann 2014 145,130 M Mk III 750 7.7 5.8 SHI China GdF Suez Neptune 2009 145,130 M Mk III 750 7.7 5.8 SHI LNGC Hoegh Grace 2016 170,032 M Mk III 500 5.1 3.8 HHI Colombia HN 2552 Q1 2017 170,032 M Mk III 750 7.7 5.8 HHI HN 2865 Q1 2018 170,032 M Mk III 750 7.7 5.8 HHI Chile Firm order 2019 170,032 M Mk III 750 7.7 5.8 SHI Option 2019 170,032 M Mk III 750 7.7 5.8 SHI Option 2020 170,032 M Mk III 750 7.7 5.8 SHI Option 2020 170,032 M Mk III 750 7.7 5.8 SHI BW BW Singapore 2015 170,000 M Mk.III 750 7.66 5.75 SHI Egypt HN 2118 Q4 2016 170,000 M Mk.III 750 7.66 5.75 SHI Pakistan HN 2489 2019 173,400 Bumi Armada (FSU) Armada LNG Mediterrana* 2016 125,000 Moss Mitsui Malta Gazprom Kalilingrad Q4 2017 174,100 500 5.1 3.8 HHI Kaliningrad Mitsui OSK FSRU Max Q4 2016 263,000 540 5.6 4.1 DSME Uruguay Teekay HN 2461 2018 174,000 800 8.2 6.0 DSME Bahrain Exmar 2016 25,000 600 6.1 4.5 Wison Dynagas TBN 2019 170,000 HZ China TBN 2020 170,000 HZ China Maran Gas Maritime Q1 2020 173,400 DSME

14 Owned and managed by Exmar Vessel Owner SDWT Capacity m3 Built Type Excelerate Exmar/Excelerate 77,263 138,000 2005 FSRU Excelsior Exmar/Teekay 77,287 138,000 2003 FSRU Explorer Exmar/Excelerate 83,301 150,900 2007 FSRU Express Exmar/Excelerate 82,277 150,900 2008 FSRU Managed by Exmar Excellence G.Kaiser Trust 77,349 138,000 2003 FSRU Exemplar Excelerate 81,124 150,900 2009 FSRU Expedient Excelerate 81,894 150,900 2008 FSRU Experience GBK Hull 2402 95,105 173,400 2013 FSRU Exquisite Excelerate 83,163 150,900 2008 FSRU FSRU Toscana OLT 79,894 137,500 2002 FSRU Project economics CAPEX CAPEX for regasification terminals typically consists of costs associated with vessel berthing, storage tanks, regasification equipment, send-out pipelines and metering of new facilities. CAPEX for floating terminals is considerably lower than onshore facilities, owing to the absence of storage tanks and a much smaller onshore footprint (if any). The cost of floating terminals varies considerably with one operating via an offshore buoy and submarine pipeline costing considerably more than an FSRU berthed inshore against a berth. A converted LNG carrier will be considerably cheaper than a new build FSRU (but probably less efficient and lower capacity). If a breakwater is needed this can add considerably to costs. The CAPEX for the Punta de Sayago project in Uruguay includes US$600-million for an offshore jetty and breakwater! The IGU 2 advise that the weighted average unit cost of onshore regasification capacity that came online in 2015 was US$245/tonne (based on a three-year moving average). New floating terminals CAPEX have remained roughly steady over the past three years, declining from a high of US$153/tonne in 2011 to a weighted average unit cost of floating regasification in 2015 of US$109/tonne, based on a three-year moving average. The rise in onshore regasification costs is closely associated with the trend of increased LNG storage capacity. However, several new onshore terminals with smaller storage units are expected online in 2016 and 2017, bringing down overall costs. CAPEX for onshore capacity under construction is set to fall to US$235/tonne in 2016 and US$172/tonne in 2017. OPEX Project developers usually charter in the FSRU at a daily hire rate and consider the vessel charter as OPEX instead of including it in CAPEX. OPEX for floating terminals can be higher than an onshore terminal due to greater manpower requirements having to maintain the vessel s crew and keep the vessel seaworthy. Fewer crew are needed if the vessel is permanently moored (and propulsion systems removed). 2 IGU World Gas LNG Report 2016 Edition

15 Existing, sanctioned & proposed floating terminals The wrap Floating terminals have proved to be cheaper and faster to implement than onshore terminals. They provide more flexibility and modularity, making it easier to find the optimum lowest cost solution. They can be located offshore where congestion, or limited draft, prevents the construction of either an inshore floating terminal or an onshore terminal. FSRU s can now match an onshore terminal in storage capacity and send out rates and can be sized to meet the needs of a single off-taker. CAPEX is much lower as project developers do not have to bear the cost of the terminal as they normally charter the FSRU. Short term leases make it possible to easily rotate vessels should demand increase (or decrease). An increasing number of countries solely use floating terminals for all of their LNG imports Brazil and Argentina have been joined by UAE, Egypt, Jordan and Pakistan. The permitting and approval process is generally easier than for an onshore terminal, but can become complex as marine operations may require a number of different licenses and permits and these can be more difficult to secure when regulatory authorities have no experience of handling such a project. The provision of the FSRU may be the simplest part of the project and easiest to implement. Permitting can take a considerable time particularly when a country has no experience of importing LNG. In some cases, it may have to pass new laws and fiscal regulations covering the use and import of LNG. Pakistan s second FSRU is scheduled to start up about two years after the first, but it took ten years to find the solution and deal structure that enabled to first one to go ahead. The FSRU will not be stand alone. It will need long term offtake agreements from credible buyers and may be dependent on other plant, such as a power station, being built. It may be part of a bigger

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 16 package where the gas fired power plant is in competition with other fuels, particularly renewables and could be vulnerable to changes in government energy policy. The offtake agreements will be critical to the commercial success of the project. The global average LNG terminal utilisation rate was only 33% in 2015, dragged down by particularly low utilisation in Europe and USA, rising to 46% in Asia. With floating terminal owners paying daily hire rates for an FSRU, high and consistent utilisation is often critical to ensuring the economic viability of a floating terminal. Even where the terminal is supporting base load power, the call on the generation unit can vary and therefore operators may need to have access to alternative offtakers to maintain high levels of utilisation. Environmental legislation has stimulated interest in using LNG as a transportation fuel, particularly the marine fuel sector. Rising crude prices are likely to widen the differential between LNG and diesel making LNG more attractive as a road fuel and as a diesel replacement in the industrial sector. These new markets take time to grow but a quick win for a terminal operator may be to provide truck loading facilities to support the transportation of LNG by truck to industrial, mining and power customers. There is also a strong price driver and low LNG prices have stimulated the development of new markets. LNG prices in Asia have fallen from an average of US$15/MMBtu for 2012-14 to an average of US$6.6/MMBtu for 2015/16. Key price markers US$/MMBtu Global liquefaction capacity Million tonnes 25 20 15 10 5 0 Henry Hub NBP 500 450 400 350 300 250 200 150 100 50 0 NE Asia Japan DES The availability of LNG to supply these new terminals is not an issue. LNG is available in all regions and substantial new liquefaction capacity is currently being brought on stream in Australia, USA and Russia. Liquefaction capacity due to increase from 273 mtpa to over 430 mtpa in 2020. The adequacy of supply has meant that major new entrants such as Egypt and Jordan have been able to secure all of their requirements from the spot market, ensuring access to competitive supply at any time. A floating terminal project should never be founded around the placement of an available FSRU and considerable time needs to be given to assessing the appropriate and optimum solution whether it be an FSRU or FSU/FRU, whether it is an integrated solution or components packaged specifically for that location. Studies are needed to establish appropriate solutions to reduce risk, minimise capex, and better manage cash flow financing requirements, availability and utilisation.

17 Planned & proposed floating terminals Country Project Vessel Storage m3 Owner/Operator Start up MTPA Puerto Rico Aguirre Offshore GasPort Excelerate TBN 150,900 Puerto Rico Electric Power Authority 2017 3.8 Ghana Tema Golar Tundra 170,000 WAGL (NNPC 60%, Sahara Energy Re 2017 3.4 Egypt Ain Sukhna TBN EGAS 2017 5 Pakistan Port Qasim BW TBN (HN 2118) 170,000 Pakistan Gas Port 2017 4.5 Uruguay Punta de Sayago MOL TBN 263,000 UTE, ANCAP, Enarsa 2017 2.6 Kalilingrad Kaliningrad Kaliningrad 174,100 Gazprom 2017 2.1 India Kakinada, A.P. APGDC 48%, Engie 26%, Shell 26% 2017 3.5 Indonesia Ciliacap, Central Java Pertamina 2017 1.6 Philippines Luzon 2017 Ghana Ghana 1000 GE, Endeavour Energy, Sage Petrole 2017 3.7 Ghana Tema Hoegh TBN Quantum Power, GNPC 2017 2 Greece Kavala, Aegean Sea DEPA 2017 4.5 Turkey Aliaga GDF Suez Neptune 145,130 2017 3.7 Brazil Sergipe Golar Nanook 170,000 Golar Power 2018 3 Chile GNL Penco Lirquin Hoegh TBN HN 2865 170,032 Central El Campasino, Cheniere Ene 2018 2.5 Bangladesh Moheshkhali Excelerate TBN 138,000 Excelerate 2018 5.4 Bahrain Bahrain FSU/FRU Teekay TBN (HN24 174,000 Bahrain LNG (Nogaholding 30%, Tee 2018 3.0 China Putian FSU Hanas 2018 2.8 India Jaigarh, Mahharashtra Hiranandani 2018 4 India Kakinada, A.P. FSU GMR Energy 2018 1.75 India Kakinada, A.P. FSU/FRU Krishna Godavari LNG Terminal (VG 2018 3.6 Pakistan Port Qasim FSRU (Hoegh TBN) Global Energy Infrastructure Ltd 2018 4.5 Pakistan Gwadar-Nawabshah Inter State Gas System 2018 4 Philippines Batangas Shell 2018 4 Sri Lanka Kerawalapitiya GAIL, Exmar 2018 1 UAE Sharjah Sharjah National Oil Co 2018 3 Ivory Coast Abidjan Total, Shell, Endeavour Energy, Petr 2018 2 Kenya Mombasa Min of Energy & Petroleum 2018 2 Chile Quintero Bay, Colbun SA, AES Gener 2018 1.5 UK Port Meridian Hoegh LNG 2018 3.5 Bangladesh Meghnaghat Reliance/Bangladesh Power Develop 2019 2 India Jafrabad, Pipavav, Gujarat Swan Energy 58% Exmar 31% GSPC 2019 5 India Digha, West Bengal Hiranandani Group 2019 3 India Hazira Gujarat Essar 2019 5 Myanmar Southern Myanmar FSRU PTT 2019 3 Myanmar Options (3) review MOGE/MOEE 2019 3 Thailand TBN EGAT 2019 3 Thailand Chana PTT 2019 3 Dom Rep San Pedro de Macoris BW, InterEnergy Holdings 2020 1 Lebanon Beddawi 2020 5 S. Africa Richards Bay Escom 2020 1 S. Africa Coega Escom 2020 0.6 126.6 Country Terminal Vessel Status Start-up Capacity MTPA Albania Levan, Energia Falcione Speculative Gruppo Falcione? 5.7 Greece Alexandroupolis Speculative Gastrade? 4.5 Turkey Yalova, Planned Maks Enerji? 4.5 Australia S.Australia or NSW Study AGL 2021 2 Indonesia Banten Southeast Sulawesi Planned? 0.5 Indonesia Pomalaa, Southwest Sulawesi Planned PGN? 0.5 Indonesia Ambon Maluku Planned? 0.5 Indonesia Halmahera, Maluku Planned? 0.5 Philippines Sual, Pangasinan Speculative Phinma Energy Corp.? 2 Benin Speculative Gasol LNG? 3 Ivory Coast Songon Speculative Endeavour Energy, Star Energy? 2 Mauritius Port Louis Study Mauritius Ports Authority? 2 Mocambique Pemba Speculative? 2 Mocambique Matola Speculative? 1 Senegal Dakar Speculative Senelec, Mitsui, Nebras Power? 2 S. Africa Saldanha Bay Speculative? 32.7

18 FSRU s are probably the most buoyant part of the LNG industry. 25 floating terminals are in operation today and 58 more are under consideration with 42 of these planning to start up between 2017 and 2020. 12 of these projects have already chartered the FSRU. The largest floating terminal is designed to handle 7.5 mtpa of LNG but we have just seen a smallscale FSU/FRU start up in Bali, Indonesia. Many of the proposed projects are relatively small (1-2 mtpa) supporting a single power producer and a new growth area could be small scale terminals, particularly in Indonesia. Small is not always beautiful as smaller scale FSRU s on a per unit basis are more expensive than conventional FSRUs. Whilst a new build 170,000 m 3 vessel capable of sending out a maximum of 800 MMscf/d is in the region of US$250 million (closer to US$100 million for a secondhand converted LNG carrier) it is estimated that the cost for a 20,000 to 50,000 m 3 FSRU sending out about 170 MMscf/d would be in the region of US$50 to US$70 million 3. However, early days and unit costs will come down as the small-scale sector develops and an FSRU may not be the right solution. Cheaper barges and modular construction may be favoured. Not all will go ahead. Some are very speculative but a significant number are to support existing or proposed power plants increasing the likelihood that they will go ahead. Demand from the power generation sector will underpin many floating terminal projects and this is a substantial advantage. However, gas fired power is facing increasing competition from renewables, in particular solar, and therefore in some circumstances a power offtaker may not be able to offer long term security making it essential the project has access to other markets such as industry. The availability of LNG will enable new markets to be developed such as LNG as a transportation fuel and LNG bunkering but this may require a commitment to market development by the project developer to ensure there is adequate offtake by the time the FSRU goes into service. The key challenge is not the technology, but how to structure and develop the project. Get this right, include best industry knowledge and practices from the outset, and the future looks very rosy for FSRU project developments. DataFusion Associates DataFusion is a Singapore based independent oil and gas consultancy focusing on natural gas markets in Asia Pacific, unconventional gas and the global LNG market. Clear analysis and strategic input is provided to business leaders and our work includes new market entry assessments, technoeconomic asset and market due diligence, detailed business cases and supply/demand and price forecasts. Managed by an LNG specialist who was first introduced to the world of LNG in the early 1990 s, Tony Regan has extensive international oil and gas experience, much of it gained during 25 years with Shell International and, more recently, with S&P Global, Platts and with Tri-Zen International, a Singapore based energy consultancy. Prior to that he was with Nexant where he was the Principal responsible for their gas practice in Asia. Research reports include a quarterly LNG Markets Update, China Gas Market Update and Indonesia Gas Market Update. Contact details apregan5@gmail.com, telephone 65 6254 4791, mobile 65 9862 0965. 3 Galway Group, IGU World Report 2015