A Greek offshore FSRU project with a European dimension

There is wide consensus throughout Europe that the climate challenge and the Ukraine war call for a fundamental change of energy policy. Liquefied natural gas (LNG) has quickly moved centre stage as a feasible alternative to pipeline-delivered natural gas, offering the great advantage of independence regarding the delivery route and gas source.

An LNG terminal for Southeastern Europe

The Alexandroupolis LNG floating storage and regasification (FSRU) terminal project in Greece, scheduled to start operating on 1 January 2024, is remarkable in several respects. When the supply of Russian gas to Europe was halted in 2009 in the wake of the Russia-Ukraine gas dispute, the natural gas suppliers and infrastructure operators in Greece realized that dependence on a single source and delivery route harboured unacceptable risk. This prompted the formation of Gastrade in 2010 intending to establish an offshore LNG terminal for Greece and its neighbouring countries.  

Diversifying energy supply routes and sources

Konstantinos Sifnaios, Vice President and Managing Director at Gastrade S.A., recalls the beginning of the project: “We realized how vulnerable Southeastern Europe was to a disruption if only one source for gas supply was available, and how important it was to have alternatives in terms of both supply routes and sources.” From a geostrategic viewpoint, he says, the situation clearly showed that investing in an LNG terminal was realistic: “We knew that the demand would be there because the markets were interested in having a wider range of energy sourcing options.”

The groundwork: educating the public sector

Installing an offshore LNG terminal in the form of an FSRU was a total novelty for Greece, Sifnaios points out. “We had to educate the public sector and the competent authorities about what we were trying to do,” he recalls. “We had to explain what the proposed terminal would physically entail. There was no legislation or regulatory framework for such an installation, so we helped the authorities develop the framework for handling an FSRU.” 

From the early planning stages, Gastrade partnered with DNV as a source of comprehensive international expertise in LNG transport and FSRU technology and best practices. “DNV has been at the forefront of FSRU development since the world’s first floating storage and regasification unit commenced operations in 2009,” says Leonidas Karystios, Regional Business Development & Gas Segment Director at DNV in Piraeus. “A lot has happened in the years since Gastrade began planning for the Alexandroupolis project. Today, we can implement such projects much more rapidly thanks to a complete system of regulations and standards, and we can offer a set of class notations for FSRUs that covers every technical aspect. All that was still in its infancy when Gastrade decided to create a framework for FSRU operations in Greece.” 

DNV provides key FSRU expertise

“DNV has been extremely responsive and quite educational in getting us to understand a lot of things involved in procuring and operating an FSRU,” confirms Sifnaios. “They went with us to the different authorities to work with them in developing the required legal and regulatory framework addressing safety, operations, inspection regimes, environmental issues and certification requirements. It has been a very constructive cooperation that continues today.”  

DNV’s involvement included preparing and submitting a study and proposal to the responsible authorities regarding the minimum safe complement of the planned FSRU, Karystios points out. During the FSRU tendering process, DNV reviewed the specifications submitted, followed by the provision of class, approval and statutory services during the current conversion phase. 

LNGC refitting project in progress

The Alexandroupolis, the former 153,500-cubic-metre LNG Carrier GasLog Chelsea built in 2010, is the first FSRU conversion project under the Greek flag for operation in the Aegean Sea. Owned by GasLog, a partner in the Gastrade consortium, she entered Keppel Shipyard in Singapore in early February 2023 for the regasification equipment to be installed, much of which was assembled in advance, and is scheduled to exit the yard on 8 November. A few weeks later the vessel is expected to arrive near the northeastern Greek port city of Alexandroupolis. 

Following the commissioning tests, the FSRU should be ready to operate by the end of December, says Sifnaios. The ship will be moored about 10 kilometres offshore. The permanent infrastructure, including the mooring system and connecting pipeline, is currently under construction. The FSRU will have an annual regasification capacity of around 5.5 billion cubic metres. 

Enough capacity for several countries

“The rated supply capacity of the vessel is equivalent to the energy need of about seven large gas-fired power plants,” explains Sifnaios. “The entire energy demand of all households in Greece amounts to about 10 per cent of that capacity.” As an international consortium, the future FSRU operator Gastrade not only includes DEPA, the public gas company of Greece, and the Hellenic Natural Gas Transmission System Operator DESFA, itself a multinational company, but also Bulgartransgaz, the Bulgarian transmission system operator. A major portion of the gas provided by the FSRU will be exported to Bulgaria and Romania.

Next FSRU project planned

Southeastern Europe is expecting major economic growth in the coming years. With such an extensive market to serve, Gastrade is already preparing its next FSRU project. Now in the licensing stage, the second FSRU will have roughly the same technical capacity as the Alexandroupolis and could begin operating in 2025. 

While renewable energies are being pushed all across Europe, Sifnaios believes it will take several decades before the energy demand of Southeastern Europe can be satisfied without fossil fuels. For the time being, he says, the task is to replace high-pollution coal and oil with much more eco-friendly natural gas and achieve a level of energy security in the region that can withstand major political shake-ups.  

LNG will play a key role in supplementing the gas volumes imported via the Southern Gas Corridor from Azerbaijan to Europe, which also connects to the subsea Trans Adriatic Pipeline (TAP) to Italy, while reducing dependency. “LNG gives the natural gas market the geographical flexibility it urgently needs,” says Sifnaios. 

Strong national and EU support

As the first FSRU project and one of the first natural gas infrastructure projects in all of Southeastern and Central Europe, the Alexandroupolis FSRU project fits well into the ongoing efforts to integrate the European gas markets, Sifnaios points out: “We have received broad support from both the Greek national government and the European Union. The EU has assigned high strategic priority to the project, recognizing its geopolitical and strategic relevance. It is referenced in practically every EU statement relating to gas.”  

Declared as an EU Project of Common Interest since 2013, the Alexandroupolis FSRU has been included in the National Energy and Climate Plan for Greece and receives EU co-financing within the Operational Programme “Competitiveness, Entrepreneurship and Innovation 2014–2020”. 

DNV expertise instrumental in project’s success

Navigating the complex processes at the EU level was a challenge, says Sifnaios, and being able to rely on DNV’s experience in dealing not only with EU institutions but also with the IMO proved invaluable: “During all these years DNV has helped us interact with the EU commission, understand the logistics and how to improve the financing, optimize the tax regimes, and address maritime legislation. Furthermore, as our class society, DNV is part of the conversion works and has supported us with details such as when to change the class from ‘ship’ to ‘offshore’.” 

With about two thirds of the global FSRU fleet in DNV class, DNV has been able to provide comprehensive guidance in this project. Being based in Europe, DNV also has “native” expertise with European institutions as well as national particularities, including in the field of industrial certification in the gas segment, says Sifnaios. “DNV understands our project. They know all about the legislative and regulatory frameworks which apply to other EU states and can bring in their experience from other FSRU projects, saving us the effort of having to reinvent the wheel.” 

Choosing DNV was a matter of trust, stresses Sifnaios. “We have seen the greatest value in the support we have received, in structuring the framework around safety, operations and regulations, through to crewing and marine services. It is a partnership we value a lot and we are confident it will continue.” 

A project that promotes solidarity

The wider implications of Gastrade’s LNG terminal projects cannot be overemphasized, says Sifnaios. “This is a project that can contribute to a lot of causes. It demonstrates that energy can be a tool for regional cooperation and solidarity. To me, this is its greatest value by far.”  

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