ADB to Fund Sri Lanka LNG Terminal Feasibility Study

The Asian Development Band (ADB) will fund a study to assess the feasibility of developing an LNG import terminal in Sri Lanka, it said last week.

The feasibility study will look to identify the optimal LNG facility for Sri Lanka and the most suitable location for the development of new gas-fired power plants and its associated facilities. This will include detailed study by considering the demand for natural gas in Sri Lanka, global LNG market, LNG pricing and contracts, possibility of supplying LNG to regional markets, and other social and environmental aspects, ADB said.

According to ADB, the LNG facility in Sri Lanka could also serve the Maldivian market. “Maldives is considering importing LNG for power generation and other uses. LNG terminal in Sri Lanka with sufficient storage and adequate supply will benefit from lowering the energy cost of both countries,” ADB said.

Ceylon Electricity Board (CEB), a state-owned electricity utility, has already carried out a preliminary feasibility study with support from ADB exploring the possibility of LNG for Colombo-based power plants. The findings of the pre-feasibility study recommend the necessity to set-up an LNG terminal and other infrastructure on an expeditious basis for supplying LNG for power generation, ADB added.

The government of Sri Lanka, through the external resources department (ERD), requested ADB in March to support CEB in exploring LNG as a fuel for power generation. A small-scale technical assistance was preferred to initiate the necessary activities for LNG study quickly as requested by the government, ADB said.

ADB believes that CEB currently does not have in-house capacity to undertake these tasks since LNG is entirely new to Sri Lanka. The technical assistance will provide external consultants to assist in preparing the feasibility and survey report for LNG import, LNG terminal and sea side facilities, infrastructure and other allied facilities for LNG transmission to the prospective power plants, ADB said.

The Sri Lankan government has held talks with India and Japan to set up LNG infrastructure in the country so that gas-based power plants run smoothly. Last year, the Sri Lankan government said India's Petronet LNG would partner with Japan's Mitsubishi and Sojitz Corporation to set up Sri Lanka's first LNG terminal near Colombo. The government issued a letter of intent with the Indian government regarding the plan during the visit of Indian foreign minister Sushma Swaraj to Colombo in September 2017.