Vietnam gas and LNG H2 2018 summary

Declining domestic gas production and rising power demand could see a bigger role for LNG, if integrated power project can progress. The LNG development plan for Vietnam seems to have taken two directions – the planned route underpinned by LNG projects outlined in the Gas Plan; and the “wildcards” path where private investors seek out viable integrated LNG-to-power projects with the support of local governments. We see traditional gas and power players supporting the traditional LNG such as Thi Vai and Son My. Wildcard projects, such as the Bac Lieu project, are gaining traction. In H2 2018, three projects, headlined by newer names in the LNG game, were announced. While the Thi Vai and Son My LNG terminals are likely to come online, not all proposed “wildcard” projects are going to move ahead as there is insufficient end-user LNG demand. In the end, only projects situated in areas of high electricity growth will see PPA with EVN, and secure the necessary financing to move forward.