Gas and LNG are key to Vietnam's development

According to Wood Mackenzie's energy market research and consultancy, gas demand in Vietnam is expected to increase by an average of 12% per year, and will even triple by the mid-2030s.

On the morning of September 5, at the workshop “Liquefied Natural Gas (LNG): Promoting Vietnam’s Sustainable Development”, Mr. Joshua Ngu, Vice President of Asia-Pacific of Wood Mackenzie, said that the reason for Vietnam’s increasing gas demand is because Vietnam is in the process of moving towards Netzero carbon emissions by 2050, as committed by the Government at COP26.

However, to achieve this commitment, Vietnam must have a strategy for gradual energy transition. Accordingly, Vietnam's economic growth is dependent on strategic investments such as flaring infrastructure, LNG contracts and important policy reforms.

According to Mr. Joshua Ngu, Vietnam's gas consumption will increase from 8 million tons of oil equivalent (Mtoe) in 2020 to 20 Mtoe in 2035. During this transition, the proportion of coal consumed will decrease by 7 Mtoe in 2050. Notably, the electricity sector will continue to lead in gas consumption, with this fuel forecast to contribute up to 14% of total electricity output in 2030.

In addition to the forecasted increase in gas demand, Vietnam also faces many challenges in domestic production. Existing gas fields, mainly located in the Southeast region, are entering the depletion stage, leading to a 25% decrease in domestic gas supply over the past five years.

With recent developments such as the investment decision (FID) of Block B in the Malay Basin, which is expected to add 0.4 billion cubic feet (11.3 million m3) of gas production per day by 2030, or the construction of a gas pipeline from the Tuna Production Sharing Contract Block (Indonesia) and the Natuna Sea, it is expected that gas will be transported to Vietnam from the 2030s onwards. Accordingly, Wood Mackenzie predicts that in the future, the Yet-To-Find (YTF) gas volume after 2030 will be distributed in both the North and South of Vietnam.

However, in addition to these advantages, Vietnam is also facing risks of price fluctuations in the gas market due to a shortage of guaranteed LNG supply. Wood Mackenzie's research shows that Vietnam is only fully exposed to the spot LNG market and has not signed any long-term LNG purchase contracts.

According to Mr. Raghav Mathur, the difference between the price of electricity produced from LNG, power purchase contracts, and LNG power projects that have not made much progress have become significant obstacles to signing LNG contracts in Vietnam.

To address this situation, Wood Mackenzie believes that developing new gas infrastructure will alleviate concerns about gas shortages. This is entirely possible because Vietnam's main pipeline network is currently concentrated in the southern region, where the economic center of Ho Chi Minh City is located.

In addition, two LNG terminals have been built in the South, with Thi Vai LNG terminal already operational and Hai Linh terminal expected to be operational in September 2024. Several other LNG terminal projects are in the feasibility study stage, expected to be operational in the early 2030s.

According to Wood Mackenzie’s analysis, Vietnam should develop more partnerships with solution providers that can meet the country’s requirements. Currently, there are many reputable suppliers operating in Vietnam, including Petronas, one of the world’s largest integrated LNG producers, with more than 36 million tonnes of LNG per year, with facilities in Bintulu, Australia, Egypt and soon Canada.

According to Tin Tuc Newspaper

Source: https://doanhnghiepvn.vn/kinh-te/khi-dot-va-lng-la-mau-chot-cho-su-phat-trien-cua-viet-nam/20240906093739281