South Korea-based GS Energy created a joint venture with VinaCapital last month in order to attain an investment certificate to develop a $3-billion liquefied natural gas-to-power plant in the Mekong Delta province of Long An. Lee Jungwook, vice president of GS Energy, shared with VIR’s Bich Ngoc his assessment on recycling energy development of the Vietnamese market, along with the company’s investment strategy in the country.
What got GS Energy interested in the Vietnamese market and how did you shape the partnership with VinaCapital?
|Lee Jungwook, vice president of GS Energy |
We had been considering opportunities to invest in Vietnam for some time, given its fast-growing and vibrant economy. Economic development requires a stable source of electricity to power growth, and the government of Vietnam has been very clear and focused on expanding electricity generation capacity using clean sources.
Clean energy, and liquefied natural gas (LNG) specifically, is our strength so we were very interested to participate.
That led us to VinaCapital, which for 18 years has been a leader in investing in Vietnam’s growth. A few years ago, they recognised that clean energy was going to be a critical part of economic development, and they created a team of experienced professionals to help focus on investment in that area.
We worked closely with them to determine where the opportunities were, and how we could turn our idea into reality thanks to their extensive experience and track record.
This is our first significant project in Vietnam, and we made the decision to move forward with it after more than two years of study.
We have extensive experience in LNG-to-power in South Korea, and we determined that this was the right opportunity for us to apply that experience and help meet the energy needs in the southern region of Vietnam.
What is your assessment of the potential of LNG-to-power in this country, and what advantages will the plant in Long An have compared to others?
We believe there is enormous potential for LNG-to-power in Vietnam. In Vietnam and around the world, there has been a move away from coal-power to cleaner sources, and LNG is able to produce electricity reliably, cleanly, and in large quantities.
Simply put, this is where we saw the greatest need for increased electricity capacity. The Long An plant is located 30km from Ho Chi Minh City, where more than 10 million people live and work. The location is also adjacent to the major southern industrial hubs. These will be our primary electricity customers.
Another factor we considered was infrastructure access and electricity transmission line capacity. It is still available and flexible, not like in some areas where curtailments are significant problems for some electricity producers in the region.
One final consideration was the fact that the Long An location is less vulnerable to severe weather phenomenon than other parts of the country, meaning that we can ensure the safety of the power plant and the supply of LNG.
What is the schedule of the Long An power plant, and do you foresee saturation in the market over that period as more plants come into operation?
The Long An power plant will become commercially operational over several phases, with the whole unit to be operational by 2027. At this point, it is too early to say where the LNG will be sourced, but we will determine that based on the actual LNG market conditions at a later stage.
It is of course difficult to predict the future, but the demand for electricity in Vietnam will be high for many years to come. Having a reliable source of clean energy is critical to the country’s continued sustainable economic development.
How will you deal with LNG-to-power plants costing more than other types, and will you take the opportunity to expand into any other fields in Vietnam?
The Long An plant will utilise state-of-art technology, and our experience will enable us to operate the plant efficiently and effectively over the lifetime of the venture.
All power plants are of course expensive to construct and operate, but the costs are spread out over a long period of time. LNG-to-power plants have proven to be a clean and reliable source of electricity.
As for expansion, GS Energy plans to serve as the backbone of Vietnam’s economic growth by becoming part of the local power market.
Apart from just providing electricity through our LNG-to-power project, we also want to share and pass on our capabilities and extensive know-how from South Korea.
Furthermore, we are naturally looking forward to investing our resources in the future sustainability of the local energy market – more specifically in renewable energy such as solar and wind power.