India, Japan JV to Build LNG Terminal in Sri Lanka

India and Japan will work together to build a $250mn LNG import terminal in Sri Lanka, according to a report by the Press Trust of India.

Last year, Indian Petronet LNG offered to set up a facility with a capacity of 2mn metric tons (mt)/yr, but Colombo reportedly wanted Japan to be part of the project as well.

“An agreement has been reached between the governments of India, Sri Lanka and Japan to set up the LNG terminal as a 50:50 joint venture by Petronet and a Japanese company,” Petronet CEO Prabhat Singh told the Press Trust May 24, adding that the import facility will be set up at Kerawalapitiya on the western coast and will take about three years to build.

Sri Lanka has plans to build a 300 MW gas-fired power plant in Kerawalapitiya adjoining an existing power plant. The existing plant will also be converted into a gas-fired one.

Japan is yet to identify the company which will form an equal joint venture partner with Petronet for setting up the terminal, the Press Trust added.

With the environment in mind, Sri Lanka is looking to promote greater use of natural gas. The government wants to move away from coal-based power plants to LNG-based ones. For the south Asian island nation, the sharp fall in LNG prices in the past year has made it attractive to pursue gas-based power generation. Last year, Colombo said it wants to source LNG from Qatar, the world’s biggest exporter of the super chilled fuel.

Shardul Sharma