Vietnam’s gas power industry is poised for significant growth as the country seeks to diversify its energy mix and reduce its reliance on coal. With increasing energy demand driven by rapid economic development and industrialisation, natural gas is seen as a cleaner and more flexible alternative to traditional fossil fuels.
Despite its potential, however, the gas power industry faces several challenges, including high costs and complex infrastructure requirements. The development of gas-fired power plants and LNG facilities involves significant capital investment and technological expertise. Additionally, regulatory uncertainties and delays in approving key projects have hindered the timely implementation of planned expansions. The lack of a clear pricing mechanism for gas and electricity tariffs can also complicate project financing and investment decisions.
Looking forward, the future of Vietnam’s gas power industry will depend on successful collaboration between the government, domestic companies, and international investors. Strategic investments in infrastructure, such as pipelines and storage facilities, along with the implementation of clear regulatory policies, will be essential for the industry’s development. If these challenges are effectively addressed, Vietnam’s gas power sector has the potential to play a key role in meeting the country’s growing energy needs while supporting its transition to a more sustainable and diversified energy system.
Gas power in Vietnam in numbers
In July 2024, gas turbine power plants in Vietnam generated approximately 14.65 billion kWh of electricity, accounting for 8.2 percent of the country’s total power output, according to data from Vietnam Electricity.
This reflects the increasing role of gas-fired power in meeting the nation’s energy demands, particularly as the government seeks to diversify the energy mix and reduce dependence on coal. The use of gas turbines, known for their efficiency and flexibility, is expected to continue growing, supported by investments in new gas fields and LNG infrastructure. This expansion will be crucial for ensuring a stable and reliable energy supply as Vietnam’s electricity consumption continues to rise.
Gas power policies in Vietnam
Vietnam’s gas power policies are designed to support the development of natural gas as a key component of the country’s energy mix. These policies are driven by the need to diversify energy sources, reduce dependence on coal, and lower greenhouse gas emissions. The key elements of Vietnam’s gas power policies include:
National Power Development Plan (PDP VIII)
The National Power Development Plan, known as PDP VIII, outlines the strategic role of natural gas in Vietnam’s energy future. It aims to increase the share of gas-fired power to 20 percent of the total installed capacity by 2030. This includes the development of new gas-fired power plants and the expansion of LNG import terminals to secure stable gas supplies.
Support for LNG Infrastructure
Vietnam is focusing on the development of liquefied natural gas (LNG) infrastructure to enhance energy security. Policies encourage investment in LNG terminals, storage facilities, and related infrastructure. The government has approved several large-scale LNG projects, and the private sector, including foreign investors, is encouraged to participate in these developments.
Incentives for Gas Power Projects
The government provides various incentives to attract investment in gas power projects, including tax breaks, land use rights, and favourable lending conditions. These incentives aim to make gas power projects more financially viable and attractive to both domestic and foreign investors.
Regulatory Framework and Pricing Mechanism
Vietnam is working to establish a more transparent regulatory framework and pricing mechanism for natural gas and electricity generated from gas. This includes efforts to standardise Power Purchase Agreements (PPAs) for gas-fired projects and to develop a competitive gas market that can provide more predictable pricing for investors.
These policies reflect Vietnam’s commitment to leveraging its natural gas resources and expanding its LNG import capabilities to support sustainable and reliable energy development. Effective implementation of these policies will be crucial for the growth of the gas power industry and for meeting the country’s future energy needs.
Domestic gas power companies in Vietnam
There are several key domestic gas power companies operating in Vietnam.
PetroVietnam Power Corporation (PV Power)
PetroVietnam Power Corporation, commonly known as PV Power, is the leading gas power company in Vietnam and a subsidiary of the state-owned Vietnam Oil and Gas Group (PetroVietnam). It operates several major gas-fired power plants, including Nhon Trach 1 and 2, and Ca Mau 1 and 2, contributing significantly to the country’s electricity supply. PV Power is also involved in the development of new gas power projects and LNG infrastructure to support the expansion of the sector.
Vietnam Electricity (EVN)
Vietnam Electricity, or EVN, is the state-owned power utility responsible for the generation, transmission, and distribution of electricity across the country. While primarily focused on hydro and coal power, EVN also operates gas-fired power plants and is involved in the development of new gas and LNG projects to diversify its energy portfolio and support the national energy strategy.
PetroVietnam Gas Joint Stock Corporation (PV Gas)
PetroVietnam Gas, a subsidiary of PetroVietnam, plays a crucial role in the gas power sector by supplying natural gas to power plants. It is responsible for the processing, transportation, and distribution of gas, ensuring a stable supply for gas-fired power generation. PV Gas is also actively involved in developing LNG infrastructure, including import terminals and storage facilities, to support the growing demand for gas in power production.
Bitexco Power Corporation
Bitexco Power, a private energy company, has expanded its operations to include gas power projects alongside its traditional focus on hydroelectric power. It is involved in the development of gas-fired power plants and aims to contribute to Vietnam’s increasing demand for cleaner and more efficient energy sources.
These companies are key players in Vietnam’s gas power industry, driving the development of gas-fired power projects and supporting the country’s energy transition.
Foreign gas power companies in Vietnam
There are several key domestic gas power companies operating in Vietnam.
ExxonMobil (USA)
ExxonMobil, a major American energy corporation, is actively involved in Vietnam’s gas power industry. The company is collaborating with PetroVietnam and other local entities on the development of the Blue Whale (Ca Voi Xanh) gas field, one of Vietnam’s largest offshore gas projects. This project is expected to supply natural gas to several planned gas-fired power plants in central Vietnam, significantly boosting the country’s gas power capacity.
Shell (Netherlands)
Shell, a global energy company based in the Netherlands, is exploring opportunities in Vietnam’s gas sector, particularly in the development of LNG infrastructure and gas supply chains. Shell has been in discussions with local partners to invest in LNG import terminals and related facilities, supporting the growing demand for gas in power generation.
Mitsubishi Corporation (Japan)
Mitsubishi Corporation, a Japanese multinational, has a strong presence in Vietnam’s energy sector. The company is involved in the construction and operation of gas-fired power plants, including the Vung Ang 2 thermal power project. Mitsubishi is also exploring further investments in LNG projects and gas infrastructure, aligning with Vietnam’s energy diversification strategy.
AES Corporation (USA)
AES Corporation, an American energy company, has been active in Vietnam’s gas and power sectors, particularly with its Son My LNG import terminal project. This terminal will support several planned gas-fired power plants in the region, enhancing Vietnam’s energy security and contributing to the expansion of the gas power sector.
Gazprom (Russia)
Gazprom, a major Russian energy company, has partnered with PetroVietnam to explore and develop natural gas fields in Vietnam. Gazprom is involved in joint projects for both onshore and offshore gas exploration and aims to support the country’s growing demand for natural gas in power generation.
These foreign companies play a crucial role in advancing Vietnam’s gas power industry by providing technological expertise, investment, and partnerships to support the development of gas infrastructure and power projects.
Gas power projects currently underway in Vietnam
Several significant gas power projects are currently underway in Vietnam, aimed at expanding the country’s gas-fired power generation capacity and supporting its energy diversification strategy:
Blue Whale (Ca Voi Xanh) Gas Field Project
Developed in partnership with ExxonMobil and PetroVietnam, the Blue Whale gas field is one of Vietnam’s largest offshore natural gas projects. Located off the coast of central Vietnam, this project is expected to supply natural gas to several planned gas-fired power plants in the Quang Nam and Quang Ngai provinces, with a combined capacity of over 3,000 MW. The project is anticipated to contribute significantly to the country’s energy security.
Nhon Trach 3 and 4 Gas Power Plants
These two gas-fired power plants, being developed by PV Power, are located in Dong Nai province. Each plant will have a capacity of around 750 MW, using imported LNG as fuel. The Nhon Trach 3 and 4 plants are expected to be operational by 2025 and will play a crucial role in meeting the growing electricity demand in the southern region of Vietnam.
Son My LNG-to-Power Complex
The Son My complex in Binh Thuan province is a large-scale project involving multiple stakeholders, including AES Corporation, PetroVietnam, and local partners. It consists of an LNG import terminal and several gas-fired power plants, with a total planned capacity of over 4,500 MW. This project aims to enhance the country’s LNG infrastructure and supply stable energy to the national grid.
Long Son LNG Power Plant
The Long Son power plant, located in Ba Ria-Vung Tau province, is being developed by General Electric (GE) in collaboration with PetroVietnam and local partners. It is designed to have a capacity of around 1,200 MW and will use imported LNG. The project is expected to commence operations in the late 2020s, contributing to the diversification of Vietnam’s energy sources.
Bac Lieu LNG-to-Power Project
This project, developed by Delta Offshore Energy and other partners, is located in Bac Lieu province. It includes an LNG import terminal and a gas-fired power plant with a planned capacity of 3,200 MW. The project aims to support the southern region’s energy needs and reduce reliance on coal-fired power.
What’s next?
Looking ahead, Vietnam’s gas power sector is likely to see increased collaboration with international energy companies and financial institutions to support technological advancements and funding for new projects. The country’s commitment to reducing greenhouse gas emissions and transitioning to a more sustainable energy mix could further boost the role of gas power, especially as it serves as a bridge between traditional fossil fuels and the eventual integration of more renewable energy sources like wind and solar.
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