Vietnam may see gas shortage for power generation in 2025: S&P Global

Vietnam is likely to face a shortage of domestic natural gas for power generation in 2025, while LNG supply for LNG-fired power is not yet a suitable solution, according to S&P Global.

In a Tuesday commentary, the analyst said per state utility Vietnam Electricity (EVN) reports, gas-fired power plants in Vietnam are mostly located in the southern region. They include facilities of 5,705 MW in the southeastern area, needing 20-22 million cubic meters of gas daily; and 1,500 MW in the southwestern area, demanding four-six million cubic meters of gas daily.

As gas fields are depleting, the gas supply is expected to drop to 5.3-6.8 million cubic meters per day in 2025, below the supply of 9.5 million cubic meters per day in 2024.

As a quick fix, EVN purchased LNG from the Thi Vai terminal operated by PV Gas, the gas arm of state-owned Petrovietnam. The LNG is supplied to gas-fired power plants, namely the 715 MW Phu My 3, 477-MW Phu My 2.1, and 477-MW Phu My 4.

All those facilities, located in the southern coastal province of Ba Ria-Vung Tau, originally used domestic gas as fuel and have switched to use LNG as fuel.

LNG challenges

However, S&P Global pointed out that PV Gas can supply LNG to those power factories because Nhon Trach 3 & Nhon Trach 4, first power plants in Vietnam to exclusively use LNG as fuel, are not yet operational.

When those two power plants, with a capacity of 750 MW each, become operational, they “will absorb all the LNG supply” from Thi Vai terminal, S&P Global noted.

Besides, S&P Global emphasized challenges related to generating LNG-fired power. Cai Mep LNG terminal, the second LNG terminal in Vietnam, has a capacity of three million tons a year and has secured deals to supply one million tons a year to Hiep Phuoc power plant in Ho Chi Minh City.

Hai Linh Co. Ltd, the investor of Hai Linh LNG terminal, is likely to supply the remaining two million tons a year to the mentioned Phu My power plants, S&P Global said. However, the gas is only needed for the dry season, which is normally in April-July, so Hai Linh “does not need to start commercial operations immediately,” it stressed.

Another key hurdle in the progress of the Nhon Trach 3 & 4 power plants and the Hai Linh LNG project is that the government has still not given EVN approval to sign power purchase agreements for LNG-based electricity generation, S&P Global highlighted.