NEW DELHI: Sri Lanka has invited Petronet LNG to set up a liquid gas import terminal in that country, marking a major success for the Narendra Modi government's energy diplomacy and signalling India’s emergence as a gas bridge for South Asia.
The LoI (letter of intent) for the project was handed over during external affairs minister Sushma Swaraj’s visit to Colombo on September 1. The deal has been in the making for over a year, as part of oil minister Dharmendra Pradhan’s efforts to quietly weave a web of energy relationships in the extended neighbourhood -- spanning Myanmar in the east to the Gulf in the west -- by suitably leveraging India's position both as a large consumption centre and a major source of petro-products and expertise.
For Petronet, the LoI is a recognition of its prowess in the area of liquid gas and paves the way for its first overseas liquid gas project, an area that has traditionally been dominated by global majors such as Shell and BP. The Lanka invite will also add wind to Petronet's efforts to expand in Bangladesh, where the company last week submitted its bid for building a terminal with a capacity of handling 5 million tonne of gas shipments a year.
India has been a major player in Sri Lanka's fuel retail business for many years through Lanka IOC, a subsidiary of IndianOil. The LNG terminal will help it straddle the gas sector, the dominant fuel for future economic growth. With rising demand, Sri Lanka and Bangladesh offer an expanded market for large volumes of gas separately tied up by Petronet and state-run GAIL, one of its main promoters, from Qatar, Australia, the US and Spain’s Fenosa.
Petronet MD Prabhat Singh told TOI, the Lanka government is currently in the process of identifying a Japanese partner for the project. “Sri Lanka government is examining 2-3 Japanese companies. We are debating a project capacity of 1-2 million tonne,” he said but declined to give details of the proposed equity and investment structures for the joint venture.
The company also proposes to sweeten the deal by offering end-to-end solutions ranging from fuelling power stations to setting up retail networks for automobiles and kitchens on the lines of CNG and PNG services.
The project will be set up on the west coast of Sri Lanka in close vicinity of Colombo where most of the power stations, burning costly liquid fuels, are located. The Colombo Metropolitan Area is inhabited by more than 5 million people, or roughly 25% of Sri Lanka's population, generating over 50% of the country's GDP. The LNG terminal near Colombo would improve economics of various power plants and also generate immense direct and indirect benefits for vast majority of Sri Lankan population.
Source: energy.economictimes.indiatimes.com