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Sri Lanka to strike LNG deal with Qatar

LNG Industry,

Close understanding was reached on mutual co-operation between the Emirate of Qatar and Sri Lanka when President Mahinda Rajapaksa had bi-lateral discussions with His Majesty Sheikh Hamad bin Khalifa Al-Thani, Emir of Qatar, in New York this week.

In discussing current developments in the fields of power and energy, the Emir of Qatar responded favourably to a request by President Rajapaksa for Qatar to supply LNG to Sri Lanka for development needs. An official statement released yesterday announced that, ‘The head of state of Qatar has agreed to extend fullest support to commence LNG projects in Sri Lanka.’

Qatar is an obvious partner for such a venture as it is the world’s largest exporter of LNG, with capacity reaching 77 million tpy of LNG this year. The Sri Lankan government set up a high level inter-ministerial committee to discuss the use of LNG. This committee concluded that Qatar would be the most appropriate partner in an LNG venture.

Sri Lanka is hoping to become a regional energy hub, although there is still some debate about the viability of an LNG terminal on the island due to the astronomically high cost of building LNG terminals. Three studies carried out by separate international organisations have concluded that LNG is not an economical fuel for Sri Lanka, in spite of its green credentials and good safety record. However, Sri Lanka is keen to push ahead with the project and develop itself into a major regional energy hub. If it can achieve this, then the costs of building an LNG terminal could potentially be justified.

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