The conversion of aging liquefied natural gas (LNG) carriers into floating storage and regasification units (FSRUs) is emerging as a potential growth market for the shipbuilding industry. FSRUs function as offshore LNG terminals, storing LNG onboard and converting it back into gas for delivery to shore.
HD Hyundai Marine Solution has completed the main design phase of an FSRU conversion project awarded previously and is proceeding with subsequent work. The company is responsible for the overall conversion of an LNG carrier into an FSRU.
Hanwha Power is also expanding its presence in the FSRU conversion sector. The company entered the market in 2023 and is converting an LNG carrier with a capacity of 145,000 cubic metres into an FSRU. The project is in its final stages and is expected to be completed within the year.
Demand for FSRU conversions is being supported by their relatively short project timelines and lower upfront investment requirements. Compared with onshore LNG import terminals, FSRUs can be deployed more quickly and generally require less initial capital.
Growing LNG imports across Asia are providing further opportunities, particularly in countries with relatively modest gas demand that may not require large onshore terminals. Of eight countries expected to begin importing LNG over the next three years, six plan to introduce FSRUs. The number of countries importing LNG through FSRUs is projected to reach 20 by 2030.
The increasing number of aging LNG carriers is another factor supporting the conversion market. LNG carriers typically operate for around 35–40 years before being retired. Vessels built during the 1990s and early 2000s are approaching the later stages of their operating lives, with some expected to have approximately five to 10 years remaining before retirement.
Many of these older vessels consume more fuel than newer ships and have lower energy efficiency. Converting them into FSRUs can provide an alternative to scrapping, potentially extending their commercial use and creating additional value from existing assets. Industry analysts have indicated that conversion can offer a more commercially viable option than retirement, supporting interest in the sector.
Despite the potential opportunities, South Korean shipbuilders have secured relatively few FSRU conversion contracts. Strong existing order backlogs can limit their capacity to undertake conversion projects, while international offshore infrastructure specialists have more extensive experience and established track records in this segment. These factors have contributed to overseas companies securing recent conversion contracts.
Nevertheless, the market’s potential for medium- to long-term growth is encouraging shipbuilders to develop their capabilities. As demand for FSRU conversions increases, South Korean shipyards could secure a greater share of projects. Building a track record of successful conversions will be important for strengthening their competitiveness in the market.
