Russia’s Novatek eyes LNG exports to Vietnam

Novatek, Russia's second-largest natural gas producer, is considering shipping liquefied natural gas (LNG) to Vietnam for existing and future power plants, says CEO Leonid Mikhelson.

Mikhelson told reporters that he did “not know when” a project that the company planned to implement in Vietnam in partnership with Siemens and TotalEnergies will start, Russian news agency Interfax reported October 28 from Baku, Azerbaijan.

“There is another [project] there,” he said. “And in principle, a power plant is being built, launched in 2024. And there is an existing one in the same region. I just spoke with the [trade] minister, it uses about 1 billion cubic meters of gas, while Petrovietnam’s own production is falling, so we could actually add [gas] there. The whole question is the cost,” Mikhelson said.

Novatek, second to Gazprom in Russia’s gas industry, is also considering building a regasification terminal in Vietnam, Interfax reported.

Regasification is a process of converting LNG at - 162 °C temperature back to natural gas at atmospheric temperature.

Last December, Novatek signed a cooperation agreement with state-run Petrovietnam on developing potential LNG and power projects in Vietnam, which is seeking to achieve carbon neutrality by 2050.

In December 2017, Novatek signed a memorandum of understanding with French major TotalEnergies and German engineering giant Siemens. The three sides said that under the deal, they would pursue opportunities to collaborate on LNG sales and develop infrastructure for newly built gas-fired generation plants in Vietnam, an energy-thirsty market.

No LNG-to-power plants are operational in Vietnam at present. The country is trying to discourage coal-fired power generation, which supplies about half the electricity output now.

Petrovietnam Power Corp.’s Nhon Trach 3 & 4 power plants with a combined capacity of 1.6 gigawatts, Vietnam’s first project LNG-to-power projects, are under construction in Dong Nai province near Ho Chi Minh City.

In September, American energy corporation AES received in-principle approval from the Ministry of Industry and Trade for its VND50,432 billion ($2.11 billion) Son My 2 LNG-to-power plant in the south-central province of Binh Thuan. The built-operate-transfer (BOT) project’s development timeline is from 2023 to 2028. It features three 750-MW turbines.

It will be fueled by imported LNG supplied from Son My LNG terminal. AES and Vietnam's PV Gas in May received an investment registration certificate for the $1.4 bln terminal project.

Also in September, Japan's Tokyo Gas and Kyuden Group inked a memorandum of understanding with Truong Thanh Vietnam JSC on jointly developing an LNG-to-power project with a phase-one capacity of 1,500 megawatts in the northern province of Thai Binh.

In the same month, Petrovietnam subsidiary PV Power agreed on a 30% capital contribution to a consortium that will build a $2 billion LNG-to-power complex in Quang Ninh province, also in the north. Three other companies in the consortium are Vietnamese firm Colavi and two Japanese firms - Tokyo Gas Co., and Marubeni Corp. The capital contribution of these firms is unknown.