Sri Lanka Wants to Pursue Gas Based Power Generation as LNG Prices Remain Attractive

Sharp fall in LNG prices in last one year has made it attractive to pursue gas based power generation, a Sri Lankan government official said Thursday.

Saliya Wickramasuriya, director general of the Petroleum Resources Development Secretariat, told Lanka Business Online, a news portal, that there is a compelling case to initially start gasifying Sri Lanka using imported LNG and then move towards using domestic gas. He added that this move will also help the economy move away from coal. Ceylon Electricity Board and National Thermal Power Corporation (NTPC) of India are currently building a 500MW coal-fired power plant in Sampur.

“As a country our political leadership is strongly supporting conversion to gas at this point,” he said.

Now the task was to build infrastructure that supports power stations utilizing LNG, he added.

“The landed cost of gas via LNG import has become very competitive today, even including re-gas facility cost. This is not something we could have said two years ago,” Lanka Business Online quoted Wickramasuriya as saying.

Sri Lanka also has gas deposits off its eastern and western coasts. In February, French energy major Total signed an agreement with government of Sri Lanka to explore two ultra-deep water blocks off the east coast. The duration of this agreement includes a period of two years from the effective date for data acquisition and for processing and interpretation.

Last year, Cairn India which struck gas in Mannar Basin decided not to go ahead with further exploration. In July 2008, the government of Sri Lanka and Cairn India signed an agreement for exploration licence permitting Cairn India to explore oil and natural gas in Mannar Basin. The Block SL 2007-01-001, which is in offshore northwest Sri Lanka and covers approximately 3,000 Km2 in water depths of 200 to 1,800m, was awarded to Cairn India through a bid round held in 2008.