Gas may bully coal in Vietnam’s $7.8 billion power project
21 March 2019
Vietnam’s latest plans for $7.8 billion in gas-fired power projects may see the nation become one of the world’s newest liquefied natural gas importers and cut its coal use.
The Ninh Thuan provincial government on Wednesday said it met with Thailand’s Gulf Energy Development Pcl over plans to build four gas-fired plants, with total capacity of about 6,000 megawatts, as well as LNG import facilities, it said on its website Wednesday. Gulf Energy declined to comment.
“This LNG project will help replace some of the existing coal-fire power,” Hoang Quoc Vuong, Vietnam’s deputy minister of industry and trade, said by telephone. “We will definitely need to import LNG for these new plants.”
The Ca Na LNG project would bolster Vietnam’s entry into the ranks of LNG buyers, adding further demand to the fastest growing fossil fuel market, and give the cleaner-burning fuel an inroad into a nation that’s expected to drive regional coal use. A separate 3,200 megawatt project has also been proposed for Bac Lieu province, and analysts at Sanford C. Bernstein & Co. said in a report earlier this month that Vietnam is expected to join the LNG importing club in 2027 as its domestic gas reserves deplete.
To be sure, as electricity demand continues to grow at a fast pace and capacity is constrained, coal plants will run at high utilization rates to serve base load demand, according to Yun Ben Yap, a research analyst at Wood Mackenzie Ltd. That means new gas-fired power won’t displace existing or planned coal plants in Vietnam, he said.
Vietnam has been seen as one of the world’s few bright spots for coal-fired power despite a broader global shift from the fuel. Coal will dominate its power sector over the next decade, making up 50.5 percent of generation by 2028, compared with 22.5 percent for gas, according to a Fitch Solutions report in February. Vietnam’s electricity demand increases by about 10 percent annually, according to the ministry of industry and trade.
“Increasing environmental consciousness and pollution concerns have led to a general pushback against coal,” Fitch Solutions analysts said in the report. “While Vietnam has committed to carbon emission reductions, there are limited practical alternatives for the government to meet the surge in power demand at present.”
Gulf Energy Chief Executive Officer Sarath Ratanavadi in December reiterated the company’s plans to invest about 150 billion baht ($4.7 billion) the next few years to build new power plants across Southeast Asia. He said at the time the company was in talks with partners for a hydro project in Laos, a gas-fired plant in Myanmar and renewable projects in Vietnam.