(Bloomberg) -- As Europe scrambles to replace Russian gas with supplies from across the globe, producers are turning to a new technology to drill quickly and cheaply: small floating plants out at sea, often made out of old tankers.

While liquefied natural gas is conventionally made at large plants on the coast, connected by pipelines to production fields, companies are streamlining the process by using specialized ships and platforms that can produce the super-chilled fuel at sea. 

A floating plant started producing in Mozambique last weekend -- with the first cargo bound for Europe -- while another one may open in the US next year, showing that these projects are finally getting financing as a vital stop gap before bigger capacity comes online. Their rising popularity comes amid Europe’s efforts to find fast alternatives to Russian pipeline gas after its invasion of Ukraine. 

The trend coincides with a parallel interest in floating terminals to receive LNG, which Europe is also quickly setting up. The technology for making the fuel at sea has evolved over the last five years, but lower prices have held off numerous projects before this year’s demand craze for gas.

“The reputation of floating LNG is definitely improving,” said Fraser Carson, an analyst at the research firm Wood Mackenzie Ltd. “We are seeing lenders much more willing to provide financing for FLNG projects.”

Read more in our QuickTake: What LNG Can and Can’t Do to Replace Russian Gas

In so-called “floating liquefaction”, the fuel is typically produced on a newly built vessel or a converted LNG tanker. Both versions are receiving greater interest now, according to Juan Pablo Parodi, a business development manager at Exmar NV, a Belgian company that is working on several floating gas projects. 

Sitting above gas fields, FLNG projects pull out the fuel from the ocean bed via risers. The gas is then processed on-board and frozen to minus 162 degrees Celsius (minus 260 degrees Fahrenheit) to become liquid. The LNG is stored in tanks in the hull before ocean-bound tankers arrive to pick up the fuel and deliver it to global destinations.

Only four such vessels were operating until a project in Mozambique dispatched its first cargo last weekend. Another one is progressing in Africa, where a floating plant in Mauritania and Senegal is 85% complete. Nigeria signed an agreement this week to begin construction of a floating LNG platform that will supply gas to Europe. 

In the US, New Fortress Energy Inc. is developing a slightly different concept of floating LNG production, rapidly installing gas treatment and liquefaction equipment on top of fixed offshore platforms, with the first unit set to start already in the middle of next year, mainly targeting European gas demand.

The additional capacity from all proposed projects is equal to about a third of last year’s global LNG trade, according to the International Gas Union, a lobby group.

Advantages include quick time-frames for construction: converted floating LNG vessels can get to the market within just two years after the project’s approval, according to Exmar’s Parodi, while typical large onshore LNG plants usually need at least four years to build. 

They also compete on costs with larger projects, can access remote resources, and avoid geopolitical issues often associated with cross-border pipelines. One downside, however, is that operators have to deal with constrained space for technology on board, resulting in a limited processing ability.

With Europe’s gas demand highly uncertain after 2030 as it aims to phase out fossil fuels, a key advantage of the technology is that it can prevent energy infrastructure from becoming stranded. FLNG vessels can be easily relocated: Argentina, for instance, only temporarily used such a vessel to produce excess gas for exports.

“These projects can be re-deployed and move to emerging markets where demand is growing,” said Carson.

--With assistance from Sergio Chapa, Vanessa Dezem and Isaac Anyaogu.

©2022 Bloomberg L.P.