Ten outstanding events of Vietnam's energy industry in 2022

1/ Vietnam made a political declaration on the Fair Energy Transition Partnership (JETP) with G7 countries and partners.

After announcing of Vietnam Prime Minister to the international community about Vietnam's orientation towards carbon neutrality by 2050 at COP26 in November 2021, July 2022, the Prime Minister signed a decision on approving the national strategy on climate change [1], specifying Vietnam's roadmap to reduce carbon emissions to 2030 and reach net zero by 2050. The international community highly appreciated the responsibility of Vietnam, especially since the Government has legalized its declaration.

On December 14, representatives of Vietnam and G7 countries, and development partners of the European Union, Norway and Denmark approved a political declaration establishing JETP to support Vietnam's transition from fossil fuels to renewable energy for achieving net-zero emissions by 2050.

The program will initially mobilize a climate finance package with about $15.5 billion from the public and private sectors during the next three-five years to support some of Vietnam's new ambitious goals, including targets to reduce coal-fired power, accelerate deploying renewable energy projects and may reduce greenhouse gas emissions for 5 years earlier than planned.

Although there are mostly concessional loans should be favorable factors for Vietnam in the near future to promote the development process with a low-carbon roadmap.

2/ For the first time, in Vietnam, the renewable energy power output exceeds the thermal power output.

The domestic output and import electricity in 2022 was 268.4 billion kWh, of which hydropower output increased by 20.8% compared to 2021 due to good water in the lakes and the mobilization of power generation in accordance with inter-lake regulation. The stable operation of the wind and solar power plants and EVN managed to reduce the purchase of coal power due to high coal prices. In 2022 as a result, electricity output from renewable energy plants (including hydropower plants) exceeded thermal power.

Specifically, electricity output from renewable energy reached over 129.8 billion kWh, equaling 1.24 times compared to coal power output and over 96% compared to total coal and gas power output. Solar and wind power output accounted for 12.8% of the total power system.

The year 2022 also recorded the first time that electricity generation outside EVN reached 53% of the output of the whole power system.

3/ Completing energizing the longest sea-crossing transmission line in Southeast Asia.

The 220 kV Kien Binh - Phu Quoc transmission line has been technically energized. Currently, the project has been handed over to Power Transmission Company 4 (PTC4) to manage and operate. This is the first 220 kV line crossing the sea in Vietnam. The double line with a total length of 80 km with 169 pole positions, including 117 poles on the sea, further affirms the technical capacity of Vietnam's electricity industry in the ASEAN region. This line contributes to ensuring a safe, continuous and reliable power supply for the needs of economic and social recovery and development; ensure security and defense in Phu Quoc City (Kien province).

4/ Ho Chi Minh City Power Corporation (EVNHCMC) – the first state-own enterprise in Vietnam was certified for digital transformation and received the ASEAN Innovative Enterprise Award 2022 (2022 AIBP ASEAN Enterprise Innovation Award Winners).

Implementing the guideline of the Ministry of Information and Communication, EVNHCMC evaluated the level of digital transition for all 24 directly under units with 139 criteria in 6 backbones of the digital transition. Besides, there are 3/24 units of EVNHCMC as Electricity Dispatch Centers, Customer Care Centers and Information Technologic Companies have reached the advanced level of digital transmission (level 4/5) - The first state-owned enterprise to be certified for digital transformation: Following the guidance of the Ministry of Information and Communications on approving the project to determine the index to evaluate the level of enterprise digital transformation and support to promote the digital transformation of enterprises, EVNHCMC has conducted an assessment of the level of digital transformation of enterprises. digital transformation of businesses for all 24/24 dependent units based on 139 criteria under 6 digital transformation pillars. In addition, the Corporation also has 3/24 affiliated units, including the Power System Dispatch Center, Customer Care Center and Information Technology Company, which have been confirmed to reach an advanced level in terms of the digital transition (level 4/5).

This clearly demonstrates the spearhead strengths of EVNHCMC in the following aspects: Having a 100% automatic power grid, excellent customer service quality, and advanced and modern information technology telecommunication infrastructure to carry out important political tasks such as ensuring a safe, stable and continuous electricity supply with increasingly high quality in Ho Chi Minh City - the locomotive of the southern key economic region. This achievement of EVNHCMC also made an important contribution to the fourth consecutive year that EVN has been recognized as a leading corporation in the digital transition.

The Asian Innovative Enterprise Award was initiated by the Asia IoT Business Forum in 2017, for recognizing organizations to make digital transmission for their enterprises through by applying technological innovation. The awards are held annually in ASEAN countries as Indonesia, Malaysia, the Philippines, Thailand and Vietnam.

In 2022, for the 6th time organizing the award, there were more than 180 nominations from Indonesia, Malaysia, the Philippines, Thailand and Vietnam. 40 enterprises entered the final round choosing 10 enterprises to win the final round. In the list of 10 enterprises awarded the ASEAN Innovative Enterprise Award in 2022, Vietnam has 2 enterprises as Techcombank and EVNHCMC.

5/ Vietnam National Coal-Mineral Industries Group (Vinacomin) supplied coal to domestic consumers with a stable price (for the whole year) despite the increase in imported coal prices and mining costs.

Facing difficulties by the impact of the Covid-19 pandemic, Russia – Ukraine conflict and the weather change leading to an increase of fuel prices, while coal demand increased high, coal reserves were not much, increase of production input costs, the difficulties with investment projects, lack of manpower for underground mining ... but the miners overcame the difficulties and wrote the magnanimous historic pages of Vinacomin.

In 2022, Vinacomin achieved 39.4 million tons of crude coal, 42.2 million tons of clean coal, 4.75 million tons of imported coal and sold 46.5 million tons (with domestic for domestic consumption, 35.02 million tons for electricity gểnation) with a total turnover of 165.9 trillion VND (the turnover of 101.6 trillion VND and profit of 8.1 trillion VND).

The total turnover and the coal turnover mentioned above is the largest figure forever, the total profit and profit from coal mining and trading is the largest in about recent 10 years. Particularly, coal mining and selling is the largest in the recent 5 years. Especially, although the prices of imported coal and mining coal costs increased, the coal amount supplied by Vinacomin with the stable prices helped EVN reduce losses and stabilize the macroeconomic indicators of the country.

6/ The Petroleum Law (amended) was officially approved at the 4th Session of the 15th National Assembly (November 14, 2022) and should take effect from July 1, 2023.

The Petroleum Law (amended) with many breakthrough contents, detailed regulations and clearer responsibilities between state and business management and the roles of the Government, ministries, agencies and PVN.

In particular, the Law more clearly stipulates the role of state management and investors (contractors), thereby upgrading PVN's proactive role in investment approval and appraisal activities, including the technical and commercial approvals such as: exploration, drilling programs and field development plans (ODP/FDP), economic estimate and investment report. This is the premise for PVN to develop a series of national key projects and gather all offshore fields as soon as the Petroleum Law (amended) takes effect from July 2023, as a growth lever for the entire industry.

7/ "Resuscitating" is the main point of electricity projects. After many years of progress delay of the key power projects according to the National Power Development Planning in 2022, PVN has made efforts to put 2 projects into operation and create conditions for the power projects to contribute to energy security. In other words, in 2022, the power projects of PVN will be "Resuscitating", to partly meet the expectation of the Government, create great confidence to maintain the staff in the electricity sector and prove their capacity to overcome the challenges of the PVN leaders, managers and employees in the new period.

Specifically: Firstly, Inauguration and commercial operation of Song Hau 1 Thermal Power Plant with a total capacity of 2x600 MW using advanced technology and modern equipment, EPC general contractor is the Vietnam Installation Corporation (LILAMA). The project started construction in May 2015, and was recognized to put into commercial operation on May 6, 2022.

Secondly: In the Thai Binh 2 thermal power plant unit 1 (600 MW) will be power generating and unit 2 (600 MW) synchronizing with connecting to the power grid by oil.

For this project, the process of stopping construction, and waiting for the direction of the Government to handle some mistakes in management, the project agued into a deadlock and lost direction state, which required a mechanism and a legal corridor for the project to be implemented for the employees to feel secure and stabilize psychology for serving production.

After the conclusion of Permanent Deputy Prime Minister Truong Hoa Binh in December 2020, the legal obstacles of the project were gradually removed to continuously implement. In 2022, the biggest success of the Thai Binh 2 Thermal Power Plant was the first time its unit 1 burnt by the oil on February 23, 2022, and synchronized with the power grid by coal on June 16. Up to November 16, unit 1 successfully increased the maximum capacity to 602 MW (exceeding the nominal capacity of 600 MW). Unit 2, the first time was burnt by oil on August 27 and maintenance, repair and adjustment are implementing to move towards the first time for synchronizing by coal in early 2023.

Thirdly, There was a way out of Long Phu 1 Thermal Power Project.

Long Phu 1 thermal power project with a capacity of 1200 MW should be into operation wwith unit 1 in 2018 and unit 2 in 2019 according to Power Development Planning VII (adjusted). But in fact, the specific progress has not been determined since 2019 because the General Contractor as Power Machines (PM - Russia) has been included in the embargo list by the US government since 2018. On February 22, 2019, PM announced to terminate the EPC contract for this project. The project stopped in February 2019 although the volume was completed by about 77.56 %. The project came to standstill. But in the end of 2022, PVN Power company determined the rest works with a target to complete the project in 2026. PVN should develop a special mechanism to submit to the Government and complete a plan for selecting the new EPC contractors. At present, there are three contractors interested this project.

8/ Welcoming the first commercial oil flow from the RC-10 rig complex, the RC-RB1 rig at Rong and Ca Tam fields.

At 8:00 am on October 28, 2022, the Vietnamese-Russian joint venture Vietsovpetro was pleased to welcome the first commercial oil flow from the RC-10 rig at Rong field, with a total initial oil volume of 350 tons/day and night.

Receiving the first commercial oil flow from the RC-10 and RC-RB1 rig at Rong field 18 days earlier than planned has contributed to increasing Vietsovpetro's oil production in 2022. In addition, the success of the project complex once again proves the EPCI capacity of Vietsovpetro in the construction and installation of offshore oil and gas platforms, affirms the correct orientation of PVN, Zarubezhneft and Vietsovpetro's leadership on strengthening the development of small and marginal fields in the exploration phase of Block 09-1 with the aim of maintaining oil and gas production in the following years.

At the same time, at 8:00 a.m. on October 28, 2022, the Ca Tam 2 (CTC-2) rig of Ca Tam field, Lot 09-3/12, reached the finish line 47 days earlier than the target and officially started to developed the first oil flow.

The CTC-2 rig and internal connection items were built at Ca Tam field, Lot 09-3/12, about 160 km southeast of Vung Tau City. This is a small wellhead rig designed, procured, manufactured, installed, connected and tested by Vietsovpetro. The CTC-2 rig is built for oil and gas exploitation, with a total volume of about 2,380 tons.

The CTC-2 project affirms Vietsovpetro's internal strength, self-controlling and technology in designing, constructing, manufacturing and installing marine works.

9/ Approving the plan to develop Kinh Ngu Trang and Kinh Ngu Trang Nam groups and expand the Bach Ho group.

By design, the output of Kinh Ngu Trang and Kinh Ngu Trang Nam estimates to reach 12,000-15,000 oil barrels per day, in the early stages of the project's life. In the context where oil outputs in the existing groups seriously decrease, these approvals not only help PVN increase output when implementing commercial operation in early 2025 but also serve as a premise to increase projects for seeking, exploring and exploiting oil and gas in the neighborhoods. That is the strategy of PVN and Russian partners for restoring, maintaining and increasing oil and gas output, as well as contributing to ensuring maritime security through oil and gas cooperation in the Cuu Long and Nam Con Son oil and gas inter-zone.

10/ The Vietnam Oil and Gas Group (PVN) completed the crude oil exploitation target 2 months and 11 days before.

PVN completed the exploitation the crude oil with 8.74 million tons on October 20 before the plan by 2 months and 11 days. In the whole of 2022, PVN reached 10.84 million tons, exceeding 24% of the year plan, equivalent to the implementation level in 2021.

The oil refinery product from Nghi Son Refinery reached 5.97 million tons, equal to 88% of the annual plan and increased 27% over the same period in 2021.

With efforts in managing production and business, in the first 10 months of 2022, PVN exceeded the financial targets. The Group's total turnover in the first 10 months of 2022 is estimated at VND 782 trillion, exceeding 40% of the whole-year plan and increasing by 56% compared to the same period in 2021. The Group's budget payment in the first 10 months of 2022 was VND 112.2 trillion, exceeding 74% of the plan in 2022, equivalent to implementing a level of the whole year of 2021 (112.5 trillion dongs).

The epilogue:

In overall, in 2022, despite the heavy impact of the Russia-Ukraine conflict leading fluctuations to disrupt supply chains, science and technology applications and product lines, that high increased prices of the fuels in the world market, PVN and Vinacomin achieved high turnovers and profits exceeded the plan targets. Such achievements thank to the drastic and efforts of PVN and Vinacomin leaders on management and operation optimization (including fluctuation and risk management as well as production and business cost reduction).

Besides the outstanding successes of PVN and Vinacomin, there are still stagnations of the energy industry. Specifically, the business activities of EVN sustained a loss with a record high (over 31 trillion dong) due to soaring input fuel prices, as well as some shortcomings in macroeconomic mângement and the current regulations on renewable energy development, so the wind and solar power projects are stalling and waiting for a new mechanism. The delay in the progress of some gas-fired and coal-fired power projects and the delay in approving the Power Development Planning VIII (PDP VIII) also created and will creat challenges for the state management and for investors and businesses.

These inadequacies, if do not isolate and handle, will affect the general situation of all three economic groups. Therefore, in terms of state management, the Government, the Committee for the Management of State Capital at Enterprises and ministries and agencies should increase interface management, risk management in order to increase the connection and interaction between the economic groups, creating réonance for synchronous development in medium and long-term strategies.

Looking back at the past and present, from the 10 outstanding events mentioned above, we have a lot of hope for the bright future of the energy industry, from the strategic direction of the Party, from the flourishes in macroeconomic management and operation of the Government, as well as the main economic groups – the backbones of the country.