Korea-backed Hai Lang LNG power project at risk of delay

South Korean investors are fretting over possible delays in their liquefied natural gas to power project, Hai Lang phase 1, in Quang Tri province as it is not included in Vietnam’s draft power development plan VIII.

Together with Vietnam’s T&T Group, Korea Gas Corporation (KOGAS), South Power (KOSPO) and Hanwha Energy (HEC) are participating in the project phase 1, which is expected to start commercial exploitation in the period 2026-2027 in Southeast Quang Tri Economic Zone, central Vietnam.

The project progress (2026-2027) was mentioned in the country’s approved power development plan VII (PDP VII), but the draft PDP VIII states that phase 1 would be put into commercial operation in 2036-2040 and phase 2 in 2041-2045.

“Therefore, investors as well as provincial authorities are facing quite a serious problem. We hope that the Vietnamese government would pay attention and create conditions for the project to be implemented as originally planned,” the Korea Chamber of Commerce in Vietnam said in its presentation made at the recent Vietnam Business Forum (VBF).

Kocham quoted the South Korean investors as saying they understand that the Hai Lang project is located quite far from the area with electricity demand in the North or the South, so the Ministry of Industry and Trade is concerned about the cost of electricity transmission.

“However, the Hai Lang phase 1 project (1,500 MW) has points that are very suitable for Vietnam’s development interests such as not requiring expansion of the existing 500 kV line, having the optimal location to put the LNG production model in, investor’s capacity and high level of enterprise’s contribution to the country’s balanced development.”

Specifically, according to the pre-feasibility project implemented by the Institute of Energy, the Hai Lang phase 1 project can operate normally without expanding the existing power transmission network. In general, the loss during power transmission on the 500 kV grid is not significant, about 0.1 percent from Quang Tri province to the North. This is a reasonable loss that can be fully compensated by the introduction of the LNG system with economic and competitive advantages due to favorable geographical conditions.

In terms of seaport equipment and operating costs of LNG carriers necessary for the implementation of LNG project development, the investors noted that the land area for the Hai Lang project is economical and stable because this area ensures the deep water level necessary for the porting of LNG carriers, which is quite rare in Vietnam.

In southern or northern Vietnam, the water depth of most coastal areas is low, so large-scale dredging or establishment of floating LNG terminals (FSRU), construction of long undersea pipelines for LNG carriers to access is required.

The investors also highlighted their ability to execute the project in a timely and economically efficient manner. “KOGAS can provide LNG in the most economical way to Vietnam thanks to its LNG purchasing power equivalent to 9 percent of the total global LNG trade (35 million tons per year). KOSPO has the largest number of LNG power plants in Korea, so KOSPO has excellent LNG power generation capacity, related operating technology capability, and excellent key equipment negotiation capacity.”

They added that the project would contribute to the balanced development of provinces in central Vietnam and revitalizing new industrial complexes in the country like Southeast Quang Tri Economic Zone in Quang Tri province and Chan May Lang Co area in Hue town.

"Although using fossil fuel sources, LNG power generation is the optimal solution to help achieve the goal of net-zero emissions with a stable baseload in the process of replacing coal-fired power sources."

The investors noted that if PDP VIII stipulates that the plan is to be rolled back beyond 2030, the project development may become practically impossible. “For example, it will be difficult to coordinate with finance, construction, and equipment companies that are intending to participate in the Hai Lang project.”

With investment capital of nearly VND54 trillion (over $2.3 billion), the Hai Lang project, set to use more than 120 hectares of land, embarked on its technical component in mid January 2022.

According to the plan, the project includes Hai Lang LNG Terminal phase 1, which will receive LNG ships from 170,000 to 226,000 cubic meters with an annual reception capacity of 1.5 million tonnes of LNG per year, and Hai Lang Power Center phase 1, which will have a generation capacity of 1,500 MW.

Do Quang Hien, Chairman and General Director of T&T Group, said that the project applies new-generation gas turbine technology that is being used in many developed countries like the U.S., France, Japan and South Korea, with high power generation efficiency.

After operation, Hai Lang Power Center will supply the national electricity system with about 8.25 billion kWh/year and can make up for the shortage of capacity at times as renewable energy like solar power and wind power in the central region accounts for a large proportion but fluctuates due to the weather.

A source told local press that the Hai Lang project investors have not yet proceeded negotiations on a power purchasing agreement (PPA) with the electricity purchase company under Vietnam Electricity (EVN). Such negotiations in Vietnam are notoriously time-consuming.