Higher electricity production and import expected this year
HCMC – Electricity output and import this year are estimated at 284.5 billion kilowatt hours (kWh), up
Electricity of Vietnam said that imported LNG gas is 1.5 times higher than domestic gas, making EVN's electricity production price higher than the output (retail) price. This fact affects the purchasing and generating costs of EVN.
A report in July by the Vietnam Oil and Gas Group (PVN) showed that the domestic gas supply capacity in the Southeast region is expected to be 3.06 billion m3 in 2024, then reduced to 2.61 billion m3. a year, it only meets 33% of the current gas demand of power plants, so it is necessary to use imported LNG for power production additionally.
Gas source for power generation has dropped sharply.
The Electricity of Vietnam (EVN) has listed the obstacles in electricity production and trading. When coming here, many gas turbine plants in Vietnam will have to use additional fuel from imported LNG in the future. The report has just been sent to the Ministry of Industry and Trade.
Notably, in this document, EVN is concerned that Vietnam has to import liquefied natural gas at high prices, thereby putting pressure on electricity prices when production costs (generating power, purchasing electricity) are higher than the retail price of the group's output, in the context that EVN itself is facing difficulties in financial balance.
Electricity of Vietnam (EVN) reported to the Ministry of Industry and Trade that the ability to supply gas in the Southeast region of the Vietnam Oil and Gas Group (PVN) and the PetroVietnam Gas Corporation (PV Gas) for power generation has decreased strongly from 2020 onwards as gas fields enter a period of production decline.
Specifically, in 2020, the supply capacity is only about 6 billion m3; by 2023, the supply capacity is only 4.3 billion m3. In the Southwest region, the gas supply capacity is stable at 1.3-1.4 billion m3/year.
PV Gas has also informed EVN about the supply of reprocessed LNG to power plants in the Southeast region, according to which the capacity of natural gas supply in the Southeast region in 2024 is expected to be 3.06. billion m3, in 2025, at 2.61 billion m3.
This level only meets about 33% of the fuel demand of power plants and proposes to use LNG as an additional and alternative fuel.
To ensure fuel for power generation, PetroVietnam Power Corporation (PVPower) proposed that EVN consider approving the plan to add imported LNG for power generation and, at the same time, negotiate an annex to the purchase and sale contract to use this fuel source.
According to EVN, at present, PV Gas has also completed the construction and installation of equipment for phase 1 of the Thi Vai LNG warehouse with a capacity of about 1 million tons/year with 01 LNG tank with a capacity of 180,000 m3, the equivalent amount of additional gas is 1.4 billion m3/year (equivalent to 5.7 million m3/day).
At the same time, the Thi Vai LNG terminal also received the first LNG vessel to test the system on July 10, 2023, ready to supply additional gas to the Phu My and Nhon Trach power plants (as Sputnik reported. before).
EVN assessed that, in the face of the fact that the domestic natural gas supply has yet to be additionally exploited and is increasingly declining, the addition of imported LNG fuel for existing power plants is using raw materials. First, gas is to be considered.
For the Phu My 2.2 and Phu My 3 BOT Thermal Power Plant project, we will only be able to use imported LNG fuel after handing over to the Vietnamese side in 2024 (Phu My 3) and 2025 (Phu My 2.2).
This is because the amount of domestic natural gas committed in the past time to Phu My 3 and Phu My 2.2 in the related contracts also ended due to the expiration of the BOT contract implementation time and the gas seller allotted to existing consumers through long-term contracts.
When operating Nhon Trach 3 and 4 plants, they must also use imported LNG for power generation.
High LNG prices affect electricity generation and purchase prices.
However, the addition of imported LNG for power generation is also facing some difficulties, according to EVN.
The first is the issue of price. According to the Vietnam Electricity Group, the current price of LNG to Vietnam, according to the studies of consultants, is 10 - 12 USD/million BTU, plus the costs of storage - recycling - transportation, the price of gas LNG after being reprocessed to the fence of Phu My power plants will be at 12-14 USD/million BTU, 1.5 times higher than the current domestic gas price.
High LNG prices lead to an increase in power generation costs of power plants, increasing electricity purchase costs of EVN in the context that EVN's financial balance is still facing difficulties.
The next problem, according to EVN, is if only EVN's power plants or only thermal power plants in Phu My of EVN and Power Generation Corporation 3 use additional LNG, the remaining power plants use LNG. In the case of domestic gas, the market competitiveness of gas turbine thermal power plants when using LNG fuel will be greatly affected. In the case of too high LNG prices, it will lead to the inability to operate in the electricity market.
According to EVN, the additional purchase of LNG is associated with the commitment of the off-take volumes, depending on the procurement mechanism and the allocation ratio of long-term/short-term contracts with corresponding off-take commitments.
EVN noted, with the drastic fluctuations in fuel prices and the influence of the international market in recent times, the approval of commitments and constraints on fuel consumption needs to be carefully considered by the requirements of EVN by the operation capacity of the power plant at each operation stage to reduce risks in contract performance.
Besides, EVN also suggested that if PV Gas is the operator of the existing gas pipelines, it is necessary to recalculate the gas transportation charges for the previously put-into-operation and recovered pipelines. All investment costs and expenses when adding LNG gas sources and reporting to the Ministry of Industry and Trade for approval following the Law on Prices.
Vietnam may consider importing LNG from Russia.
The approved Power Plan VIII shows that Vietnam is estimated to import about 23,900 MW of LNG, equivalent to 16.4% of the total electricity supply in 2030. This also means that the import demand for LNG will increase higher than Resolution No. 55 of the Politburo.
In addition to the gas-fired power projects operating with domestic gas that can switch to using imported LNG as above, there are currently 9 LNG power projects with investors with a total capacity of about 18,000 MW and 4 projects with a total capacity of about 18,000 MW. An uninvested LNG project with a total capacity of 6,000 MW is in the investment preparation stage to put it into operation before 2030.
Based on the national energy security strategy and ensuring sufficient electricity supply, the Ministry of Industry and Trade said that Vietnam can import LNG gas power for power plants with a capacity of 23,900MW in 2030.
According to many experts, in the short and medium term, Vietnam can import liquefied natural gas (LNG) from Russia, Australia, the US and Qatar because these countries have the largest amount of LNG exports and plan to increase the volume of LNG exports.
