India Petronet looks to Sri Lanka for future LNG sales

Thursday, 6 October 2011 00:00 -     - {{hitsCtrl.values.hits}}

(Reuters): Indian gas importer Petronet LNG Ltd., could supply liquefied natural gas (LNG) to Sri Lanka from its Kochi terminal in southern India, its head of finance said, as the island nation aims to convert all power plants to gas use.

Sri Lanka depends on fuel oil imports for over half of its power generation but it plans to convert all these units to LNG by 2013, its Energy Minister Susil Premajayanth said last year.

Last week the island nation announced its first gas discovery in a block, operated by Cairn India .

“Sri Lanka does not have an import facility and it does not justify building a large-scale LNG terminal there. Petronet can supply LNG to Sri Lanka in small ships to meet their requirements from Kochi,” Petronet’s R. K. Garg told Reuters.

Petronet LNG is in talks with some Sri Lankan firms to mainly meet requirements of gas for power firms from its Kochi terminal, which will be completed by December 2012, he said.

“This is an island closer to India so we see this as an opportunity other than supplying to our domestic market,” he said.

Sri Lanka aims to use LNG for 30 percent of power production by 2020 from nil currently, but does not have the infrastructure yet to make this happen, energy experts say.

India, which relies on imports for four-fifth of its oil needs, is scouting for overseas gas deals to lock supplies for its expanding LNG infrastructure and cushion against global price fluctuations.

India’s LNG import capacity will reach 47.5 million tonnes per annum (mtpa) in 2015-16 from 13.5 mtpa now.

Petronet has a variety of deals LNG supplies for its India terminals. The only supplier to Kochi so far would be from Australia’s Gorgon project with 1.5 million tonnes earmarked from 2014.