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Vietnam signs up partners for gas and power projects
LNG imports on the rise as fast-clipped economy targets lower carbon emissions
Nguyen Tuong Thuy 19 Jan 2022

Three Korean companies – Hanwha Energy, Korea Gas Corp (Kogas), and Korea Southern Power (Kospo) – and Vietnamese conglomerate T&T Group have broken ground for a liquefied natural gas and power complex in Vietnam.

Meanwhile, Japan Petroleum Exploration (Japex) has joined a project to build an LNG receiving terminal in the Southeast Asian nation, which is increasingly relying on clean energy to fuel its fast-clipped economy while putting the brakes on hydropower and coal energy. Russia’s gas industry company Novatek is also present in the market.

Quang Tri Province, envisioned to become the energy hub in central Vietnam by 2030, is home to the LNG and power complex being developed by the Korean firms and T&T. The four partners began the construction of the first phase of the US$2.3 billion project on January 15, expecting to start commercial operations by 2026 or 2027. The three Korean companies will contribute 60% of the investment capital while Hanoi-based T&T is putting up the remaining 40%.

The project will cover 120 hectares in Hai Lang District, including a terminal for LNG imports and power plants. The terminal is designed to be able to handle vessels carrying up to 226,000 cubic metres of gas and receiving 1.5 million tonnes of LNG per year. The complex will have a capacity of 1,500 megawatts (MW) to be able to annually supply 8.25 billion kilowatt-hours to the national grid.

According to the Korean consortium’s own plans, Hanwha Energy will be responsible for the overall business development and supply of LNG, Kogas will take care of constructing and operating the LNG terminal, and providing technical support, while Kospo will provide its expertise and know-how in the construction and operation of LNG power plants.

T&T Group is focusing on clean energy as one of its key business areas. Last September, T&T and US wind and solar farm developer UPC Renewables signed a memorandum of understanding to jointly develop onshore and nearshore wind farms and solar power projects in Vietnam, with total investments estimated at US$2.5 billion.

The partnership envisages a combined capacity of nearly 1,500MW from their projects. Shortly before its partnership with UPC, T&T signed another MoU with Denmark’s renewable energy giant Ørsted to team up on wind energy projects over a period of 20 years. The alliance plans to develop almost 10 gigawatts of offshore wind projects off the coasts of Ninh Thuan province and adjoining Binh Thuan, also in central Vietnam. The projects will involve investments of up to US$30 billion.

LNG terminal

Tokyo-based Japex has joined a project to build an LNG terminal in the northern port city of Hai Phong, the company said on January 11, one month after Russia’s gas industry company Novatek signed a partnership agreement with PetroVietnam Power Corp (PV Power) on the development of LNG and energy projects in Vietnam.

Japex said it had signed a share-buying agreement with Ho Chi Minh City-based Iteco to promote the project. Both sides did not disclose the value of the share purchase, but Japex said it would proceed with the acquisition procedures.

The project, which has already received government approval, includes the construction of the LNG port in Nam Dinh Vu Industrial Park, and the procurement, storage, and supply of LNG. The initial development will include a 50,000 cubic metre storage tank and associated jetty facilities capable of handling up to 650,000 tonnes of LNG.

Japex said an additional gas storage tank of 30,000 cubic metres was planned for the latter half of the 2020s. A final investment decision on the initial development is targeted for the second half of 2022, with commercial operations expected to start in 2025.

Japex made clear that it would respond to the demand for natural gas and LNG as a lower environmental impact energy source in Japan and abroad, utilizing its capabilities in Japanese natural gas supply, such as LNG terminal operations and gas supply chain establishment.

In its announcement, Japex also said Iteco was pursuing discussions on LNG procurement as well as the Vietnamese firm’s offtake and distribution.

Lower carbon emissions

Vietnam, whose population is approaching 100 million, sees a growing need for renewable energy and LNG power plants as it seeks to minimize carbon emissions. The government expects to begin importing the first LNG cargoes this year, while wind and solar power projects have been booming in recent years.

The Ministry of Industry and Trade estimates that the demand for LNG imports will reach 5 million tonnes per annum by 2025, 10 million tpa by 2030, and 15 million tpa by 2035.

Last December, PV Power, a subsidiary of the Vietnam Oil and Gas Group (PetroVietnam) and Vietnam’s second largest electricity supplier after state utility Vietnam Electricity, embarked on a partnership with Novatek to develop LNG and power projects in the country.

At present, PV Power owns seven gas-fuelled power plants with a combined capacity of 4,208MW, contributing around 21 billion kWh of electricity to the national grid.

PV Power signed a deal last October with two Vietnamese banks – Techcombank and MB – for them to arrange US$1.4 billion of syndicated loans without government guarantee for two LNG and power projects it is developing in Ba Ria Vung Tau province, the hub of Vietnam’s oil and gas sector.

The funds will be used for the construction of the Nhon Trach 3 and 4 plants, the largest LNG and power projects in the nation to date. The two facilities, designed with a combined capacity of 1,500MW, will serve as load centres for southern Vietnam, which includes the economic powerhouse of Ho Chi Minh City and the surrounding provinces of Binh Duong, Dong Nai, Ba Ria Vung Tau, and Long An.

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