High increasing LNG price affects the gas power development in Vietnam

In PDP VIII the Ministry of Industry and Trade (MOIT) reported to Government on February 02, 2022, the LNG power development should reach 38,830 MW (including 23,900 MW of new investment and 14,930 MW convented from the domestic natural gas) by 2030 and 56,300 MW (as 41,900 MW of new investment and 14,930 MW convented from domestic natural gas) by 2045. But a question is the above volume feasible, when the price of fuel including LNG immediately increases, especially due to the impact of the Russia-Ukraine war that has no signs of ending anytime soon.

In recent years, LNG prices very strongly fluctuated. From 2011 to 2014 it was a time, when LNG global average price reached 17.24 US$/MMBTU (Metric Million British Thermal Unit).

The LNG price was strongly reduced in 2019-2020 due to Covid 19 pandemic but the LNG price again increased to 8.21 US$/MMBTU in January 2021 and 24.71 US$/MMBTU in January 2022.

The global LNG price strongly changed, beyond the previous predictions from the Russian- Ukraine war breaking out at February 24, 2022.

According to Purva Jain – an Analyst of the Institute of Energy and Financial Analysis (IEEFA), the spot LNG price is forecasted at over $50/MMBTU from now to September 2022 and $40/MMBTU in the fourth quarter of 2022.

In Vietnam, at present, it is no LNG power plant operated. However, in accordance with Adjusted PDP VII, a number of LNG power projects have accepted investment policy and plan to be deployed. On March 14, 2022, Nhon Trach 3&4 LNG power projects with a total capacity of 1,500 MW, invested by PVN who signed the EPC contract with Samsung C&T and Lilama for preparing construction. At present, there are 9 LNG power projects that accepted the investment policy under Independent Power Producer (IPP) form, among them 5 projects already have investors and may go to PPA negotiation with EVN while for the large projects as LNG power Long Son, Ca Na and Quang Ninh there are not official investors or the official investors have been promulgated not long ago.

Bac Lieu LNG power project with a total capacity of 3,200 MW (including 4 x 900 MW CCGT) invested by Delta Offshore Energy PTE.LTD (DOE) and the parters. The project expects to be started in 2020 with unit 1 putting into operation in 2024, unit 2 in 2025 and units 3-4 in 2026 with an electricity price of 7 USCent/kWh.

However, on January 21, 2020 the Decision for investment policy and certificate for investment registering of the project were handed to DOE Singapore with starting the plan in the second quarter of 2022, but up to now, the electricity price of the project still not be negotiated between DOE Singapore and EVN. It is confirmed that for the electricity price of 8-9 USCent/kWh, the LNG price is only at 12 US$/MMBTU.

Developing LNG power and renewable energy projects for reducing CTPPs and preventing climate change and protecting the environment. However, LNG price in the world at present and in the future is very difficult to forecast that making a great challenge for project implementation. And in the case if LNG price increases to 40-50 US$/MMBTU, it may not be appropriate to choose LNG for fuel of power plants. Besides, dependence on LNG imports will weaken the security of Vietnam's energy system in the longterm course.

In such conditions, it should consider the possibility of developing more renewable energy projects (wind and solar power projects) available in our country, especially offshore wind power projects together with developing energy storage systems, pumped-storage hydropower projects and producing hydrogen.

Regarding hydrogen production, Enterprize Energy Group (United Kingdom - Singapore) and European investors have proposed to the Government to set up an investment project in Thang Long Wind 2 (TLW2) to produce hydrogen from electrolysis of seawater for exporting to the areas. The ​​Thang Long offshore wind power project (Ke Ga cape, Binh Thuan province) with a capacity of 2,000 MW, total investment of about 5 billion USD expects to be implemented from 2022 to 2030.