$4 bln LNG-to-power Mekong Delta project targets 2029 completion

Project investor Delta Offshore Energy (DOE) plans to complete work on the $4 billion LNG-to-power plant in the Mekong Delta province of Bac Lieu in 2029.

At a Wednesday meeting with Bac Lieu authorities, a DOE representative elaborated they aim to put the first 800-MW turbine into operation in June 2028.

The representative asked the province to support and fix hurdles that the mega project was facing, stressings problems related to power purchase agreement, currency exchange, government guarantee for capital arrangement and other issues.

Bac Lieu Chairman Pham Van Thieu responded that the province was willing to tackle problems within its jurisdiction and asked the firm to contact ministries, central agencies and the Prime Minister to fix issues beyond the province’s reach.

DOE, which has its head office in Hanoi and a branch office in the U.S., received its investment registration certificate in 2020. It set up a Vietnamese enterprise for project implementation in Q2/2021. The project secured environmental impact assessment approval in Q3/2021 and a feasibility study appraisal in Q4/2021.

The 3,200 MW project is slated for completion in December 2027, according to the investment registration certificate, but its progress has been sluggish.

The project, set to begin construction in the second quarter of 2022, is entangled in procedural bottlenecks.

Without a signed power purchase agreement (PPA), the investor cannot negotiate with financial institutions to make capital arrangements, the company says.

Previously, Bac Lieu authorities had acknowledged that foreign currency conversion, government guarantee for EVN payment obligations and issues of compensation in case the PPA is terminated were hurdles for the giant project.

In May, DOE said it aims to reach a PPA with state utility Vietnam Electricity (EVN) in the last quarter of this year so that the project can break ground in 2024.

In May, Prime Minister Pham Minh Chinh issued Decision No. 500/QD-TTg, approving the much-awaited national Power Development Plan for 2021-2030 with vision to 2050 (PDP VIII). PDP VIII prioritizes maximizing the use of domestic gas for power generation. In case domestic gas production decreases, natural gas or LNG will be imported.

PDP VIII limits the development of power sources using LNG if there is an alternative to reducing dependence on imported fuels. By 2050, plants using LNG will gradually switch to hydrogen, the plan envisages.

The list of LNG projects of importance and priority for development until 2035 are prescribed under Table 1 of Appendix II: Quang Ninh (1,500 MW); Thai Binh (1,500 MW); Nghi Son (1,500 MW); Quang Trach II (1,500 MW); Quynh Lap/Nghi Son (1,500 MW); Hai Lang Phase 1 (1,500 MW); Ca Na (1,500 MW); Long Son (1,500 MW); Hiep Phuoc Phase 1 (1,200 MW); Long An I (1,500 MW); Long An II (1,500 MW); and Bac Lieu (3,200 MW).

In related news, Vietnam's first cargo of liquefied natural gas (LNG) was pumped into the Thi Vai LNG Terminal last Monday, marking a milestone in the country’s clean energy transition. Global oil giant Shell provided the first shipment and LNG carrier Maran Gas Achilles pumped it into the terminal located in the southern province of Ba Ria-Vung Tau. This first batch - almost 70,000 tons - will serve the LNG terminal’s test run before commercial operations begin.