Vietnam’s economic growth is closely correlated with energy consumption. It is anticipated that for every 1% increase in GDP, there will be a corresponding 1.4% rise in electricity consumption. As such, the development of the power sector must stay one step ahead, laying the foundation for rapid and sustainable growth in the upcoming period.
OPPORTUNITIES TO PARTICIPATE IN THE LNG VALUE CHAIN
According to the Master Plan for Vietnam’s Power Development for the period 2021-2030, with a vision towards 2050 (Master Plan VIII Adjustment), forecasts indicate that Vietnam’s commercial electricity demand could soar to between 1,237.7 and 1,375.1 billion kWh by 2050. Industries and construction are expected to account for approximately 50-60% of total electricity demand.
Therefore, in Vietnam’s future energy mix, alongside renewable energy sources such as solar and wind power, LNG is identified as one of the key energy sources to ensure energy for development and achieve the net-zero emissions target by 2050. Accordingly, Master Plan VIII (Adjusted) aims to vigorously develop LNG-fired power plants. By 2030, Vietnam plans to develop a system of ports, infrastructure for electricity supply, and LNG-fired power plants with a maximum LNG power source capacity of 22,400 MW.
Research by various organizations worldwide shows that LNG reduces COâ‚‚ emissions by 30-40% compared to coal, serving as a “bridge” in the transition to renewable energy. Especially in the context of developed countries gradually phasing out fossil fuels, the demand for LNG – considered a cleaner energy source – will continue to increase.
“More and more countries are applying LNG in various aspects of life, such as Japan’s plan to switch to hybrid electric and LNG vehicles by 2035, the trend of researching small-scale LNG generators, and using LNG for unmanned aerial vehicles (drones) to improve efficiency,” said Mr. Do Tien Thinh, Deputy Director of the National Innovation Center (NIC) under the Ministry of Finance, at a recent workshop on innovation in the LNG industry.
Therefore, according to Mr. Thinh, this will open up opportunities for Vietnam not only to consume LNG but also to participate in the global LNG value chain, from technical services and logistics to technology development.
BOTTLENECKS THAT NEED TO BE ADDRESSED
Mr. Song Soohwan, Commercial Director of LNG, SK Innovation E&S, also highly appreciated the opportunity for Vietnam to play an important role in the LNG value chain, especially in the supply chain related to the operation system and coastal vessels.
“LNG is associated with the global trend towards green, stable, and environmentally friendly energy sources. Therefore, along with the energy transition trend, Vietnam has the opportunity to participate in the LNG value chain thanks to its stable economic growth and increasingly important role in the international arena. Moreover, Vietnam is also highly appreciated for its production capacity in the gas industry, and mastering LNG technology will be an important stepping stone for Vietnam to master hydrogen technology in the future,” said Mr. Song Soohwan.
However, according to the Deputy Director of NIC, the development of the LNG energy sector and the LNG value chain in Vietnam are facing many challenges. For example, converting coal-fired power plants to gas-fired power plants to achieve the net-zero emissions target by 2050 is very challenging and costly. In addition, Vietnam is also facing a shortage of high-quality human resources related to LNG as universities mainly train this industry as a chemical industry instead of an applied energy industry, which is necessary for the future.
“Therefore, to meet the human resource needs for new power plants according to Master Plan VIII Adjustment, there needs to be a harmonious combination of schools, businesses, and research institutes,” suggested Mr. Thinh.
From the perspective of a company with many years of experience in the solar energy and LNG industries, SK proposed that Vietnam should consider a model of moderately-sized LNG stations located in industrial parks. According to SK, with Vietnam’s long coastline and current transport infrastructure, dispersed gas stations in industrial parks will be more suitable, helping to optimize investment costs and flexibility in supply, similar to the experience in Taiwan.
However, at present, some localities such as Thanh Hoa and Nghe An are considering the option of using floating LNG storage and regasification units (FSRU). “The floating option, although expensive and with concerns about storm resilience in Central Vietnam, has the advantage of fast construction time and is being proposed by consulting firms and corporations as a solution to planning bottlenecks,” Mr. Thinh explained. Therefore, Vietnam is in the process of studying to choose the most suitable option.
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