Project developers said Britain was an ideal candidate for a new terminal to import liquefied natural gas given growing demand and a desire to move away from reliance on pipeline supplies from Europe.
Crown LNG Holdings, a Norwegian company that builds infrastructure in harsh weather conditions, is eyeing Grangemouth, Scotland, for its fourth British terminal, which would be operational by early 2027 and have a capacity of at least 2 million tonnes per year.
“It's a bold move, but the UK is too dependent on interconnection,” Chief Executive Swapan Kataria said in an interview. “If the interconnection stops working, what happens next?”
Britain has become more reliant on imports, including from the continent, as North Sea gas production declines, but competition for fuel could intensify as other countries try to fill the gap left by reduced supplies from Russia. Shortages typically occur on the coldest days of winter.
New LNG terminals are being built rapidly across the continent after Russia's invasion of Ukraine in 2022, and several projects are still underway. The Scottish facility was originally meant to be connected to a planned power plant, but Crown LNG sees enough demand without it, Kataria said.
“What's happened over the last two years has woken up a lot of people,” he said. “They have to be prepared.”
Britain has two LNG terminals on land, one in Wales and one east of London. Floating terminals like Crown's proposal are generally cheaper and quicker to build, with an estimated price tag of around $600 million (£473 million).
Kataria said Crown has discussed the project with potential clients in the local industrial and power sectors. A U.S. export facility developer looking to secure a large European market for shipments has also expressed interest, but Kataria declined to name the company.
The intermittent generation of renewable energy in Scotland was also a rationale in favour of its construction, he said.
“Given the decline in gas production, the UK's dependence on gas imports is expected to increase,” Kataria said.
The company has begun a preliminary application process, which will be followed by an environmental assessment and exploration for a floating storage and regasification unit (FSRU), which could take at least 18 months.
Demand for dedicated vessels to import LNG is high, and shipyards are busy filling orders as countries prepare for a new wave of supplies from the United States and Qatar starting around 2026.
“We are certainly concerned about the supply of FSRUs,” Kataria said. “Everyone is looking for a bargain, but the FSRU market is not a bargain.”
Crown LNG targets to make a final investment decision on the project in the second half of 2024.
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