Hanoi (VNS/VNA) - Foreigninvestors are diving into developing liquefied natural gas (LNG) and gas-firedpower projects in Vietnam, in part due to country’s growing demand forelectricity.

The KoreaGas Corporation (KOGAS) became the latest player after it entered into aMemorandum of Understanding (MoU) with the Energy Capital Vietnam (ECV) thatprovides a framework for the development of a privately funded liquefiednatural gas (LNG) regasification terminal, storage, gas supply system and 3,200MW gas-fired power project near Mui Ke Ga in the south central province ofBinh Thuan.

DavidLewis, CEO of ECV, said KOGAS' strong presence in the LNG business, along withECV's position as one of the first LNG movers in Vietnam, allows bothcompanies to leverage each other's strengths to bring low-cost LNG to Vietnamand help address critical energy security needs.

Interestamong foreign investors in Vietnam’s natural gas and LNG sectors continues tobe high, with the likes of Tokyo Gas and Marubeni Corporation interested inforging ties with domestic entities for potential opportunities in LNG, whilethe US Trade and Development Agency pledged its support to help improve Vietnam’s energy security status by providingsmart, clean technology and developing the LNG power industry. 

LNGconsumption in Vietnam is expected to grow at a robust average annual rate of10 percent over next decade, driven by Government efforts to graduallydiversify away from coal in favour of cleaner alternatives, and theintroduction of several LNG import projects to supplement decliningdomestic production.

TheGovernment has primarily centred on renewable sources such as solar and wind,although their intermittent  nature continues to raise questions aboutreliability, while hydropower, currently a prominent part of the national powermix, is increasingly being scrutinised for its harmful effects on theenvironment.

Thisopens up room for gas-fired power generation to assume a larger role in thenational power mix, as a cleaner, less- environmentally hazardous alternativeto coal and hydropower with a more reliable baseload power source comparedwith most renewables.

Thecountry’s current power plan – the Power Development Plan VII, revised in2016 – provides for the construction of 8GW of new gas-fired capacityacross Kien Giang, Dong Nai, Quang Nam and Binh Thuan provinces between 2021and 2027. The projects are likely to be retained in the forthcomingenergy plan.

Accordingto analysts from Fitch Solutions, Vietnam’s current crop of gas-to-powerprojects have a good chance of coming online as planned due to acombination of supportive factors including availability of funding,rising foreign capital inflows into the domestic power, natural gas and LNGsectors and increasingly supportive Government rhetoric for reducingemissions and promoting greater gas use.-VNS/VNA