LNG demand acts as catalyst for further economic growth

In early February, PetroVietnam Power successfully connected the Nhon Trach 3 power plant to the national grid for the first time as part of a testing phase, generating 50MW of electricity. The event marks an important milestone for Vietnam’s first liquefied natural gas (LNG) power plant.

Agreements have been made for study of various technical solutions regarding LNG imports in Vietnam, photo Le Toan

Le Nhu Linh, general director of PetroVietnam Power, said, “As of January, Nhon Trach 3 is about 96 per cent complete. We carried out the initial firing of the plant on January 11, followed by a successful no-load test at 3,000 revolutions per minute on January 29. With the current progress, it will be put into operation in July, while Nhon Trach 4 is expected to start operation in October.”

Located in the southern province of Dong Nai, the Nhon Trach plants are expected to add over 1,600MW of capacity to Vietnam’s electricity network. The plants play a crucial role in ensuring Vietnam’s energy security and will help meet the growing demand for power in the country.

Meanwhile, the $2 billion Thai Binh LNG power plant in Thai Binh province is expected to start construction in September 2025. The plant is slated to reach commercial operation for the first turbine in 2028 and the second turbine in 2029.

The plant is being developed by Tokyo Gas Group in collaboration with Kyuden International Corporation and Truong Thanh Vietnam Group. This is Tokyo Gas’ second LNG-to-power venture in Vietnam, following an onshore LNG receiving terminal and natural gas-fired power plant in the northeastern province of Quang Ninh.

Ramon Wangdi, vice president of Excelerate Energy in Asia-Pacific, told VIR, “Vietnam has ambitious plans to expand its LNG-based power generation capacity beginning with Nhon Trach 3, which will be supplied through the Thi Vai LNG terminal in southern Vietnam. As we have seen in other rapidly growing markets, the initial venture, which anchors long-term LNG demand, typically acts as a catalyst for further growth as it establishes the regulatory and contractual frameworks through which the industry can build and scale from.”

In September 2024, Excelerate and PetroVietnam Technical Services Corporation (PTSC) signed an agreement to jointly study floating storage and regasification unit (FSRU) based technical solutions for LNG imports into Vietnam. The studies aim to optimise existing natural gas infrastructure and augment domestic supply with regasified LNG to help meet the growing demand for natural gas and stimulate development of a regional gas market.

“We believe floating LNG infrastructure solutions will be a vital factor for Vietnam to successfully achieve its LNG objectives,” Wangdi said. “FSRUs provide import infrastructure reliably, affordably, and quickly to meet demand unlocked from the completion of the initial LNG-to-power projects. These solutions also have the potential to provide LNG to industries throughout Vietnam, who look to switch from dirtier and more expensive oil-based fuels.”

The strategic partnership with PTSC is an important next step in the company’s broader strategy to invest in the rapidly growing Vietnamese LNG market. In June 2024, Excelerate signed a term sheet with ITECO, a Vietnamese private development company, to co-develop a greenfield LNG import terminal in Haiphong in the north of Vietnam.

Commenting on the outlook of Vietnam’s LNG sector amidst the global uncertainty, Wangdi noted that the new US administration has made it clear that its LNG exports are a way to address bilateral trade deficits.

“As an American LNG company with a global presence, we look forward to collaborating with governments and strategic partners to find investment opportunities and promote a positive, mutually beneficial economic relationship. We look forward to advancing along this same approach in Vietnam,” Wangdi said.

Anh Nguyen, manager of Market Research and Consulting at FiinGroup, said investment opportunities in Vietnam’s LNG sector are promising, especially with projects like LNG Quynh Lap and LNG Ca Na still seeking investors.

“Among the 13 approved LNG power plants only Nhon Trach 3 has completed construction, while LNG Hiep Phuoc is currently under construction. The remaining 11 plants are still in the planning stage, with three LNG power plants actively seeking potential investors,” Nguyen said. “These opportunities present attractive prospects for both local and foreign investors, including ExxonMobil, Siemens Energy, General Electric, and Millennium Energy”.

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