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Understanding LNG in Vietnam's Energy Market

Liquefied Natural Gas (LNG) has long been a sensation in the global energy market. In recent years, it has consistently been highlighted as a new direction for Vietnam's gas industry. 

The historic arrival of the first LNG vessel at Thi Vai LNG Terminal was marked as a game-changer, adding vibrancy to the Vietnam’s monotonous energy market.

However, bringing this energy source into the country poses numerous challenges, requiring the state and businesses to be proactive in implementing effective solutions in the face of fiercely international competitive market.

Potential and Opportunities

Vietnam’s Party and State are keenly focused on economic development in line with the commitments they made at COP26, to achieving net-zero emissions by 2050. With its more environmentally friendly feature, LNG has been identified as an optimal solution at this moment, and is expected to help reduce pressure on domestic sources, as well as mitigate energy security risks.

Vietnam's Power Development Plan VIII has determined gas-fired power from LNG will account for over 14.9% of the total national electricity generation capacity by 2030. This will make Vietnam a potential LNG importer, exerting a strong influence on the global market.

Furthermore, with its strategic location at the heart of Southeast Asia with many large terminals capable of receiving LNG carriers, Vietnam can become a hub in the region, attracting international investors and businesses. PV GAS' first and largest LNG terminal in Vietnam as of present, namely Thi Vai LNG Terminal, is to be inaugurated and operational soon, expected to become a significant link in PV GAS’ LNG chain.

Vietnam’s first and largest LNG terminal is going to be put into operation

Moreover, there will be diverse applications of LNG in many sectors such as electricity, transportation, industries, and households, making it an attractive energy source in Vietnam as well as internationally.

Challenges Need Addressing 

Alongside the potential and opportunities, there are practical difficulties, challenges, and a need for more time to achieve the State's goals in applying LNG.

First and foremost, the issue of infrastructure investment costs must be mentioned. Constructing LNG transportation, storage, and distribution infrastructure demands significant capital and modern technology and requires strict safety protocols.

Currently, in Vietnam, only PV GAS' Thi Vai LNG Terminal has been confirmed to meet all domestic and international standards and requirements for safe operation. Although LNG has been available in Vietnam, there are still many obstacles to bringing this new energy source to the market. Among these is the formation of policy mechanisms, which plays a decisive role. 

 

Cai Mep Oil Terminal is capable of receiving LNG carriers of up to 100,000 tons.

 

The state's legal frameworks regarding LNG and the taxes for this energy are still in the drafting process or have not yet met the specified objectives. The trend-based investment registration demands careful attention from state energy research and management agencies.

Moreover, prices of imported LNG have been fluctuating over the past decade, necessitating appropriate pricing mechanisms for Vietnam’s LNG market in electricity production.

In its pioneering role, PV GAS has been and continues to actively participate with relevant Ministries and Departments in establishing policy mechanisms. It is hoped that these will soon be perfected, promoting the development of LNG in Vietnam for the sake of national energy security and transformation.
 

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