The energy crisis in Vietnam threatens foreign investment, and the arrival of the country’s first LNG shipment does not seem to end the problem.
A survey of business activities conducted by the European Chamber of Commerce in Hanoi last June revealed that 50% believed that the energy crisis had affected investment companies’ plans. As some of them began searching for alternatives to the Asian country, while another percentage decided to temporarily suspend its expansion, she said ReutersToday, Monday, July 17, 2023.
In order to remedy the energy crisis in Vietnam, and limit climate change at the same time, the country – which has a fragile economy – has developed a plan to import gas and rely on this cleaner fuel among other fossil fuels in the energy transition stage, according to a report seen by the specialized energy platform.
The first shipment of liquefied natural gas to Vietnam
Vietnam happily received its first shipment of liquefied natural gas, in July, at a time when many problems remain facing the continuation of transitional fuel flows to renewable energy, according to the country’s vision.
The causes of the energy crisis in Vietnam varied, which centered on the difficulties in obtaining liquefied gas. These include the termination of purchase contracts due to high prices, and the postponement of the construction of the reception station due to lack of funding, in addition to the lack of supplies.
These problems hinder Vietnam’s ambitions to make imported gas the main fuel in the country, according to some sources in the industrial sector.
The energy crisis in Vietnam is manifested by frequent power outages; This raised the concern of foreign investors, and their questions about whether the Asian country is a reliable alternative to diversify investments in locations far from China.
Vietnam closed the tender for the purchase of the first shipment of liquefied gas on May 11, and it was supposed to start delivering quantities ranging from 50,000 to 70,000 tons, during the period from June 1 to July 31, by the delivery system on board, according to reports. Viewed by the specialized energy platform.
The shipment is an initial operational test of the $1.4 billion station in Dong Nai, before the commercial operation phase begins.
PetroVietnam Power expects the station’s capacity to supply between 680,000 and 850,000 tons per year of liquefied gas, starting from the current year (2023) until 2027.
Climate change
Difficulties in addressing the energy crisis in Vietnam, due to its inability to implement the LNG import plan, create another problem related to addressing climate change.
The Electrification Plan, which serves as a road map for electricity to 2030, was drawn up by Vietnam in May 2023.
The investment cost of that plan amounts to $135 billion, and includes, among other investments, the establishment of 13 power stations operating on imported liquefied gas.
Vietnam’s electricity plan is similar to that of its Asian neighbors Thailand, Singapore and the Philippines, which have recently launched energy mix roadmaps.
The electric power expected to be generated in Vietnam, depending on imported liquefied gas, is about 22.4 GW until 2030, which is sufficient to meet the needs of 20 million homes and ensure 15% of the national supply.
However, some analysts rule out that Vietnam will reach this expected capacity or even half of it, such as Kaushal Ramesh, an analyst for “Rystad Energy” in Oslo, who believes that these expectations are unrealistic, and that the capacity will not exceed 5 gigawatts.
With the difficulty of achieving these quantities of electricity generated by relying on imported liquefied gas, other criticisms of the plan emerge, namely that the government’s efforts to launch gas stations are concentrated in the south of the country, although the energy crisis in Vietnam is worse, and power outages are exacerbated in the northern regions.
According to the Japanese company “Tokyo Gas”, a developer involved in the construction of liquefied gas stations; The plan to build projects in the north will not begin before the second half of 2027.
third hurdle
There is a third obstacle standing in the way of generating electricity from imported liquefied gas in Vietnam, which is the dispute between PetroVietnam, which is responsible for generating electricity, and the network operator, EVN.
Onshore wind farm – Image via Wired
The cost of imported liquefied gas is 50% higher than domestic, and PetroVietnam wants to sell about 90% of the electricity generated for the network at these prices and with long-term contracts that extend to 20 years, while the network operator wants to get smaller quantities, according to Reuters.
Developers of liquefied gas station projects are looking to obtain government guarantees for their contracts with the national network in Vietnam, warning that their failure to obtain these guarantees means that the financing agencies will refrain from granting them financing for the construction of the stations.
The problem of the dispute extends over the pricing of electricity that companies obtain from the grid operator to renewable electricity from wind farms. So its contribution to addressing the energy crisis in Vietnam is declining, standing at 4.6 gigawatts from onshore farms for years.
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2023-07-17 10:54:14
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