Is Keppel Corp eyeing to build an FLNG base?

It could do so to generate a stable recurring income.

It would seem like the underlying theme behind Keppel Corporation's strategy appears to be building an FLNG asset base that generates a recurring income stream. 

According to UOB Kay Hian analysts Foo Zhi Wei and Andrew Chow, this could be achieved by selectively taking stakes in the FLNG orders it undertakes.

"Given the rising role of gas, this strategy provides Keppel with a highly scalable model to reap the benefits of higher FLNG vessel demand in the future," the analysts said.

They furthered, "The high yield and short payback period makes FLNGs highly suitable for packaging into a yield instrument. Keppel’s co-partner and client, Golar LNG, has already done this through the incorporation of Golar LNG Partners (GMLP)."

Here's more from the two analysts:

The economics of FLNG conversion projects yield a payback period of as low as 5-7 years. Using the Hilli Episeyo project as an example, we estimate an equity IRR of 14% (assuming 3-year construction time) and EBITDA yield of 14%. These numbers are even more compelling when accounting for the fact that these returns are based only on its initial 8-year contract, and half its processing capacity. Assuming the vessel’s full capacity, the equity IRR rises to an astounding ~40+% over its 8-year contract only (vessel has economic lifespan of 20 years). The high speed to market and short payback period makes FLNG a highly attractive investment class.