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Vietnam Energy Forum

The opportunities and challenges for LNG market development in Vietnam

 - In order to meet the increasing market demand from power plants, industrial and civil customers, while domestic gas sources are on the decline, the import of LNG to make up for the shortfall The shortfall is a necessary solution to ensure national energy security and serve the country's development.

Sing LNG is suitable for the general trend of the world:

LNG (Liquefied Natural Gas) is a colorless, odorless, non-toxic and non-corrosive liquefied natural gas with a firing temperature of about 2,340ºC and lighter than air. The main component of LNG is methane (about 95%) and small amounts of other gases. LNG is liquefied at a temperature of -162°C after removing impurities (depending on the ratio of mixture components in the gas), making it easier to store and transport. LNG is the cleanest fossil fuel without making carbon black, dust, or smoke in combustion. LNG emits CO2 for 30% less than oil and 45% less than coal energy with great potential. Because LNG is the cleanest fossil fuel. Natural gas combustion does not emit soot, dust or smoke. It emits 30% less CO2 than fuel oil and 45% less than coal, with a two-fold reduction in nitrogen oxide emissions and almost no harmful SO2 emissions. 1 LNG ton produces 7.1 MWh while 1 coal ton –produces 3 MWh when both fuels burn in the high effective boiler.

In Vietnam, LNG import is also an important solution to ensuring national energy security. In Resolution No 55 of the Politburo on Vietnam National Energy Development Strategy to 2030 and a vision up to 2045 was put forth LNG development strategy “Priority investment in technical infrastructure for LNG import and consumption” and “Focusing on the rapid development of LNG thermal power plants, gradually turning LNG power projects into an important electricity supply sources for supporting power system regulation.

Vietnam expects to use LNG for economic promotion with a growth rate of 7% per year in the coming decade in the context of reducing domestic natural gas, unstable condition of hydrological of hydropower plants, un-stabilizing of renewable energy projects, and concern about the consistency of coal thermal power projects as well as the commitment of the Prime Minister at COP 26 on carbon neutrality by 2050.

Draft Power Development Planning (PDP) VIII clearly defined a viewpoint on maximal reducing coal thermal power plants for reducing CO2 emissions, not to develop new coal thermal power plants after 2030, and considered the transition from coal to LNG.

Vietnam adhered LNG market as a new player in the market developed for over 50 years. This requires importing and trading LNG by general international practices. Today, Vietnam has no technical standards relevant to designing, developing and operating the infrastructures for LNG importing (in practice, the Government issued the Circular and Decree on resolving issues of LNG and LPG but the physical properties and save requirements of these products are quite different and their markets have very few common points). Besides, the current legal framework for power LNG in Vietnam has not been fully developed.

In two recent years, LNG prices very strongly varied due to the impact of Covid-19 and Russia – the Ukraine conflict. These events affect the consumption market with sensitive prices as Vietnam if the Government does not reasonably support in the specific conditions. On another hand, the LNG market is always impacted by political and social events with a long-term commitment and the global LNG market is currently in an unstable situation due to geopolitical events.

The LNG power projects with start-of-the-art technology needed large investment capital to require experience and financial ability additionally, the competent authorities have no experience in this field that impacts selecting investors for the project and there is no adequate mechanism for electricity prices for LNG power projects.

Recognizing LNG's important role in ensuring national energy security, the Party, Government, Ministries, and relevant agencies pay great attention to LNG market development. Vietnamese Government is developing and taking form on mechanisms and policies as accepting market-based floating price mechanisms with great volatility, and long-term underwriting commitments.

Mr. Hoang Van Quang, the General Director of Vietnam PV GAS –Representative of the main field in the Vietnam gas industry informed us that PV GAS is a pioneer in importing LNG for replacing oil and coal in our power system.

Mr. Quang committed that PV GAS will exert all the strength to play a focal role in importing LNG for all the customers in Vietnam in order to effectively implement the role of management instrument and regulation of gas and LNG in the state.

Mr. Quang said that developing Thi Vai, Binh Thuan, or the Northern region into the nationwide LNG centers, and currently LNG Thi Vai project of PV GAS is active deploying to LNG supply for Nhon Trach power thermal plants and other customers in the Southeast region.

PV GAS is striving to import LNG from 2022. The appearance of the Thi Vai LNG terminal and Nhon Trach 3 and 4 power plants will contribute to ensuring the demand for gas and electricity for the focusing economic region in the Southeast.

In which, PV GAS' LNG project in Thi Vai is being actively deployed, aiming to supply imported liquefied natural gas to supply Nhon Trach power plants and other plants. other consumers in the Southeast region. In addition to bringing benefits to all parties involved, more importantly, the appearance of LNG Thi Vai Terminal and Nhon Trach 3 and 4 Power Plants will contribute to ensuring the demand for gas as well as electricity for the country. the industrial sector is increasingly urgent in the key economic region of the Southeast.

Recognizing the main force and responsibility assigned by Party,Government, and PVN in implementing the Strategy and Planning for the Gas industry in Vietnam, PV GAS become a pioneer in Vietnam's LNG market in wide and deep, synchronous, and sustainable deploying the suitable policies with rising to regional and international level to meet the requirement for developing green and clean energy sources to serve the socio-economic development of the country and contribute to ensuring energy and food securities of the country and international commitment on carbon neutrality.


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