Wes Edens-led New Fortress Energy said it has signed a framework agreement with the government of Sri Lanka to build the country’s first LNG import terminal.
The US firm plans to construct an offshore liquefied natural gas receiving, storage and regasification terminal, it said in a statement late Thursday.
Moreover, the terminal will be located off the coast of Colombo to supply gas to the country’s power plants, primarily located in the Kerawalapitiya power complex.
The power complex consists of 300 MW in operation today and could grow to over 1,000 MW by 2025, according to NFE.
As part of the deal, NFE will supply natural gas to the existing 300 MW Yugadanavi power plant and is negotiating the purchase of the government’s 40% stake in the company that owns the power plant.
This power plant is currently under a long-term power purchase agreement (PPA) to provide electricity to the national grid that extends through 2035.
Also, the plant consists of General Electric turbines and was configured to run on natural gas in combined cycle.
“We are excited to support the transition of Sri Lanka to clean, reliable and affordable energy,” said Wes Edens, chairman and CEO of NFE.
“This investment in Sri Lanka’s first LNG terminal will advance the country’s clean energy transition and support sustainable development for this vibrant economy. This is the first of what we think will be a number of investments in power and infrastructure in the country,” he said.
Operations could start in the second half of 2022
This new LNG terminal would introduce natural gas to Sri Lanka for the first time and would assist the transition to lower-carbon energy sources, NFE said.
According to the Sri Lankan authorities, NFE’s investments are in line with the government policy of accelerating the transition to cleaner but also cheaper energy sources and signify that the country is open to investments and business.
As part of the agreement, the government would facilitate the obtainment of necessary permits and entitlements by NFE to construct the LNG terminal, it said.
Furthermore, NFE expects the terminal to begin operations by the second half of 2022.
“This investment in Sri Lanka, a diverse and vibrant island nation with over 21 million people, represents NFE’s first LNG terminal in Asia,” the firm said.
In addition, the purchase of the government’s interest in the company owning the power plant is subject to final documentation.
NFE said the parties would work together to finalize their commercial agreements. The US firm signed the agreement with the Secretary to the Treasury but also the Ministry of Finance.