LNG power project investors struggle to find buyers in Vietnam

Despite billions of U.S. dollars poured into liquefied natural gas (LNG) power projects in Vietnam, many now face the risk of underuse, raising concerns about capital recovery and future investor interest.

Speaking at the 2025 Annual Oil and Energy Forum held in Hanoi on Monday by the Vietnam Petroleum Association and the Vietnam National Industry - Energy Group (Petrovietnam), Nguyen Quoc Thap, chairman of the association, voiced concerns over low mobilization rates from LNG power projects.

The newly-completed Nhon Trach 3 and 4 LNG-fired power plants in Dong Nai Province, which borders Ho Chi Minh City, are ready for operation, but have not yet been fully integrated into the national grid.

He explained that state-run Vietnam Electricity (EVN), the sole power purchaser, prioritizes cheaper sources when dispatching electricity.

In particular, this year, with abundant water flows, lower-cost hydropower was mobilized more heavily, further sidelining higher-cost LNG-generated power.

Statistics from EVN indicated that LNG-based electricity accounted for just 6.6 percent of total power mobilization in the first seven months of 2025, down from 8.2 percent during the same period last year.

Meanwhile, hydropower mobilization rose to 23.5 percent from 22.8 percent.

Although the government recently issued Decree 100, providing mechanisms such as transferring gas prices into electricity pricing and guaranteeing minimum electricity offtake at 65 percent for 10 years, these measures are seen as insufficient to address investor concerns.

Nguyen Duy Giang, deputy general director of PV Power, the investor of the Nhon Trach 3 and 4 power projects with a combined capacity of up to 1,624 MW, said that the plants were set to start commercial power generation in the fourth quarter of this year.

He affirmed that a key challenge lies in the mechanism for transferring gas input costs directly into electricity prices.

Giang emphasized that the current offtake rate is below the break-even point.

He also cited the complexity of the investor selection process and lack of direct power purchase mechanisms as additional barriers.

According to Vietnam's Power Development Plan VIII, the nation has up to 18 LNG power projects.

However, Giang noted that apart from the Nhon Trach 3 and 4 plants, most projects are still in early investment phases and are unlikely to become operational before the 2028-30 period.

According to Thap, resolving the issue of electricity offtake requires a proper understanding of the LNG power market, which is not targeted at general clients but at industrial users and large-scale consumers who demand long-term supply commitments.

Several industrial consumers want to know where their energy comes from and whether it can be guaranteed in the long term, Thap said.

A direct power purchase mechanism is essential, enabling generators to engage in direct negotiations with consumers, he said.

This should be implemented for both LNG power projects and renewable energy plants to secure long-term offtake agreements and enhance investor appeal.

Nguyen Duc Hien, deputy head of the Party Central Committee's Economic Commission, echoed the sentiment, stressing that Vietnam's energy transition, estimated to cost US$135 billion, cannot rely on state resources alone.

He called for comprehensive reform of the power market, including separating wholesale and retail segments and enhancing market competition, to attract investors.

Thap stated that policies for developing gas-fired power remain insufficiently attractive to investors, as there is no government-backed guarantee system to secure loans for state projects, nor a mechanism to guarantee foreign exchange conversion.

Besides, planning is incomplete and lacks coordination, especially detailed planning covering storage terminals, LNG facilities, power plants, transmission and distribution grids, and industrial clusters.

The Power Development Plan VIII and the National Power Development Plan only sketch out basic locations for LNG projects, but investors want integrated development zones and project clusters to operate effectively, Thap added.

Tieu Bac - Ngoc An / Tuoi Tre News

(2025/07/30-17:27)

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