By Rathindra Kuruwita

The Kerawalapitiya deal between Sri Lanka and US, based New Fortress Energy (NFE) had been finalised within three months and it was by far one of the fastest such deals in the world, Nimal de Silva, Consultant – Oil and Gas Exploration, yesterday said.

“This agreement is dubious and ambiguous. This is NEF’s first deal of this nature outside the Americas. They had earlier approached Ireland and the Philippines, but even after trying for a year, they couldn’t reach an agreement with those countries,” de Silva said.

Wes Edens, the CEO of NFE, was known as a ruthless go-getter, de Silva said. Edens visited Sri Lanka on 12 January 2021 and met then Finance Minister Mahinda Rajapaksa and others, according to de Silva.

“After the meeting, the Prime Minister’s Media issued a press release that Edens had shown interest in investing in tourism, transport and renewable energy. There was no mention that Edens had expressed interest in investing in an LNG plant. On 18 February 2021, the Ceylon Electricity Board (CEB) gazetted a tender for an LNG plant in Kelawarapitiya. On March 05, a foundation stone for the construction of Sri Lanka’s first LNG power plant was laid at Kerawalapitiya. Making an emotional speech there, then Minister of Power, Dullas Alahapperuma said that they could sell a unit of power at Rs. 15,” de Silva said.

However, according to a report by NFE on a meeting Edens held with his main investors, on March 16, the NFE CEO claimed that they had secured their first deal in Asia. Edens had also said that they can purchase a metric million British thermal units (mmBtu) of LNG at USD 3.50 and will sell at around USD 10, the energy consultant said. “Initially, it was said that NFE would sell a unit of energy at about nine cents (USD) but there are three pricing formulas in this agreement and prices can vary from Rs. 24 per unit to Rs. 42 per unit, based on the formula. If we have learnt anything from history it is that nothing good comes out of such a dodgy agreement. However, the real problem is not the sale of shares but the fact that we have given NFE the contract to supply LNG, usually the client keeps that part of the deal,” he said.

De Silva said that usually the LNG was not supplied by the contractor because that’s where billions of dollars were spent. He added that Qatar and Australia were the two leading producers of LNG in the world. Indonesia and Malaysia also produced LNG. Given that Sri Lanka was friendly with all those nations, it could have procured an mmBtu at around USD 7 through a direct agreement with any of those governments, De Silva said.

“NFE is to get the LNG from Cameron because US companies are now investing in African nations that have found oil. NFE will get an mmBtu at around USD 3.50 and will make a killing. This is the first LNG contract they got outside the Americas and probably the best one,” he said.