Energy Minister warns New Fortress LNG deal could impede SL’s prospects in gas and oil production

• Foreign investors’ drilling activities to monetise US $ 267bn worth of oil and gas deposits in Mannar Basin
• New Fortress to supply LNG from 2023, up until 2028; Mannar Basin to start supplying from 2025 

Amid the alleged moves to hand over the monopoly to supply LNG for the electricity generation of the country to the US-based New Fortress Energy (NFE), Energy Minister Udaya Gammanpila warned that this would discourage foreign investors from investing in drilling activities to monetise the estimated US $ 267 billion worth of oil and gas deposits in the Mannar Basin. “Under the agreement, LNG supply from New Fortress is to begin from 2023, up until 2028. However, we can start supplying LNG from Mannar Basin from 2025 onwards. However, the agreement giving away exclusive LNG supply rights to New Fortress will become a major obstacle in attracting foreign investors for drilling activities of these deposits until 2028,” the minister told reporters in Colombo this week. 

Further, he noted that his ministry is yet to be consulted on the agreement. 

New Fortress recently claimed that the firm has entered into a definitive agreement with the government.

The Energy Ministry recently published a map of blocks for joint exploration for oil and gas in the Mannar Basin.

The map contains 873 blocks of 15x15 km each in the Mannar Basin and the ministry plans to attract the top 20 oil and gas companies in the world to invest.

Gammanpila noted that the Norochcholai power plant could operate for 120 years only from the gas in the Mannar Basin and the Sapugaskanda oil refinery could operate for 143 years with the oil alone.

Further, he estimated that the government could earn net US $ 133.5 billion from these oil and gas deposits.