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Petronet, Japanese company to set up $300 million LNG terminal in Sri Lanka

   February 12, 2018        623        New Delhi

Petronet LNG Ltd, India’s biggest importer of gas, and its Japanese partners will invest USD 300 million to set up Sri Lanka’s first liquefied natural gas (LNG) terminal near Colombo, its CEO Prabhat Singh said.

The Indo-Japanese partnership will set up a 2.6-2.7 million tonnes a year floating LNG receipt facility off the island’s western coast, bigger than the previously envisaged 1.5-2 million tonnes a year facility.

Petronet will hold 47.5 per cent stake in the project while Japan’s Mitsubishi and Sojitz Corp will take 37.5 per cent stake. The remaining 15 per cent will be held by a Sri Lankan entity, he said.

“We are in the process of signing MoU with the Sri Lankan government for setting up of the LNG terminal,” Singh said. “Once the MoU is signed this month, some project related studies will be done before beginning work on the terminal.”
Explaining the reasons for setting up a bigger capacity LNG terminal, he said Sri Lanka requires 2.5-3 million tonnes of liquid gas to fire power plants. Besides, there is demand for CNG and smaller industries.

“Commercial details like exact size of the plant and investment will be worked out in the detailed feasibility report to be commissioned after signing of the MoU. Broadly, it would be about USD 300 million investment,” he said.

Sri Lankan government had in September last year issued a Letter of Intent to the company to build a floating LNG import facility to supply gas to power plants and the transport sector in the island nation.

The import terminal is to be set up at Kerawalapitiya on the west coast.

Sri Lanka has plans to build a 300-mw gas-fired power plant in Kerawalapitiya adjoining an existing power plant. The existing plant, which uses oil to generate power, will also be converted to LNG once the terminal is set up and gas imports start.

LNG has become significantly cheaper in the last year and many countries have started switching their power plants to LNG.

The LNG terminal, which will import super–cooled natural gas in ships, will take 2-3 years to build, the top executive said.

The terminal in Sri Lanka is part of Petronet’s vision to own 30 mt per annum of LNG import and re–gasification capacity by 2020.

Petronet already operates a 15 million tonnes per annum import facility at Dahej in Gujarat and has another 5 million tonnes terminal in Kochi in Kerala. It has signed preliminary agreement to build a 7.5 million tonnes tonnes LNG terminal in Bangladesh and is also looking at setting up a smaller facility in Mauritius.

Singh said Dahej is also being expanded to 17.5 mt over the next two years.

The India-Japan collaboration comes after a string of Chinese successes in Sri Lanka. China has managed to revive its flagship USD 1.4-billion Colombo Port City project and is also engaged in expansion of major infrastructure projects it built in the past.

From The Economic Times