New Fortress Energy will build what looks poised to be Sri Lanka’s first LNG import terminal using a floating storage and regasification unit.
The US-listed company said it has signed a framework agreement with Sri Lanka’s secretary to the Treasury and the Ministry of Finance to construct an offshore regas terminal off Colombo to supply the country’s power plants, primarily located in the Kerawalapitiya Power Complex.
Under the agreement, the government will help the company obtain the necessary permits.
The facility — New Fortress’ first LNG terminal in Asia — will introduce natural gas to the country for the first time and assist its transition to lower-carbon energy sources, the company said.
It is expected to begin operations by the second half of 2022. Previous efforts to develop LNG imports for the country have stalled.
New Fortress said it 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 it.
It said the plant currently operates under a long-term power purchase agreement to provide electricity to the national grid that extends to 2035.
The company added that the Kerawalapitiya Power Complex is expected to grow to more than 1,000 MW by 2025.
New Fortress chairman and chief executive Wes Edens said: “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.”
The deal comes days after New Fortress announced it had reached an agreement on LNG supply that will cover its existing natural gas and electricity businesses through to the end of 2027.
“This transaction secures our LNG supply for the next several years across our existing portfolio of terminals and customers,” Edens said, without giving details of volumes or where they will be produced.
Edens has been trawling the market for LNG supply and invited companies to approach him with volumes during a recent investor presentation.
Mexican start-up
New Fortress, which acquired five FSRUs with its buyout of Hygo Energy Transition and Golar LNG Partners this year, operates three existing LNG terminals — two in Jamaica and one in Puerto Rico — and is bringing another pair online in Mexico and Nicaragua.
Edens said on Tuesday that commercial operations at its new terminal in La Paz, Mexico, are expected to begin “within days”.
“With this gas supply in place, NFE [New Fortress Energy] will have purchased LNG volumes equal to approximately 100% of its expected needs for its current portfolio of five terminals and assets across the Caribbean, Mexico and Central America for the next six years,” he said.
“The company anticipates securing additional LNG supply volumes later in 2021 to support NFE’s four terminals in Brazil, which are all expected to be operational in 2022.”
