Giant corporations from the US, Switzerland and France are rushing into Vietnam to invest in promising liquefied natural gas-to-power projects, raising the question whether Vietnam’s gas sources and infrastructure will be up to the task of meeting the demand.
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Within just one year, a series of corporations such as AES, EDF, and Energy Capital Vietnam expressed their expansion strategies in Vietnam, boasting gas-to-power projects worth billions of dollars.
In a meeting with Prime Minister Nguyen Xuan Phuc last week, US-based Energy Capital Vietnam reaffirmed its plan on the construction of a $4 billion liquefied natural gas (LNG)-fuelled power plant, for which the company signed a memorandum of understanding with the Mekong Delta province of Bac Lieu in May this year. It is scheduled to start operation in late 2021 with the capacity of 1,000 megawatts (MW) in the first phase and offering a competitive tariff of 7 UScents per kWh, even lower than the current level of 7.8 cents for wind power projects and 9.35 cents for solar farms in the country.
This timeline would see the plant become operational slightly sooner than Vietnam’s state-owned oil and gas group PetroVietnam’s two 750MW combined-cycle gas turbine power plants Mien Trung I and II, which use natural gas extracted from the Blue Whale gas field, the largest of its kind in Vietnam with the estimated of 150 billion cubic metres of reserves. Located in the central province of Quang Nam, the two power plants will expectedly begin operations by 2023 and 2024, respectively.
The list of the proposed gas-to-power projects in Vietnam includes the US’ AES that has invested in the $2.1 billion Mong Duong 2 thermal power plant in the northern province of Quang Ninh, and looking to invest in the Son My 2 gas-fired power plant in the central province of Binh Thuan. The Son My 1 gas-fired power plant in Binh Thuan is also on the radar of France’s EDF. Meanwhile, Switzerland-based Astra Transcor Energy’s AOT Energy is seeking cooperation with PetroVietnam to build a $650 million LNG complex.
Gavin Smith, vice chairman of the EuroCham Green Growth Sector Committee, said that the energy security that Vietnam has enjoyed will be extended with the growth of the local gas supply, which is the natural partner of renewable energy, as well as greater energy efficiency. Gas is a flexible base-load power source with much lower emissions than imported coal and is abundant close to home, Smith said.
According to Ban Viet Securities, the supply of gas will grow during 2021-2025 due to the number of large gas fields put into operation as well as increased LNG imports for Nhon Trach 3 and 4 power plants, also invested by PetroVietnam, starting to operate from 2021.