US energy firm AES Corporation and Petrovietnam Gas JSC (PV Gas) on Wednesday signed a term sheet of the joint venture agreement for a liquefied natural gas (LNG) terminal with a US$1.4 billion investment in central Vietnam.

AES Corp. and PV Gas sign deal at IPBF at the presensence of Vietnam's Deputy Prime Minister Pham Binh Minh and US Ambassador to Vietnam Daniel J. Kritenbrink. Photo: AES Vietnam

With the agreement signed during the 3rd Indo-Pacific Business Forum (IPBF) held in Hanoi on October 28-29, the joint venture is expected to speed up Son My LNG Terminal’s financial completion which is scheduled in 2022 and commercial operations in 2025.

The Son My LNG terminal complements AES’ investment in gas infrastructure around the country, with its previously announced US$1.8 billion 2,200 megawatts (MW) combined cycle gas turbine (CCGT) power plant.

Together, the plant and terminal will play a major role in shaping Vietnam’s energy future by diversifying the energy mix with imported LNG as well as meeting the country’s increasing demand for sustainable and affordable electricity.

“This is an important milestone for the development of the Son My LNG terminal and our CCGT power plant. With these two projects, AES is fully committed to the country’s growth in cleaner energy sources and offering the most reliable and affordable electricity to support the continued economic growth of Vietnam,” said President of AES Vietnam David Stone.

As part of the signing ceremony, AES also received a Letter of Interest from the US’ Eximbank and International Development Finance Corporation (DFC) to support the Son My LNG Terminal and Son My 2 CCGT projects with a loan amount of US$3.2 billion.

Making comments in pre-recorded remarks to a business conference hosted both online and in person in Hanoi, US State Secretary Mike Pompeo said Vietnam has approved the project and that it would “open the door to billions of dollars per year in US LNG exports to Vietnam. That’s a real win-win situation.”

Virginia-based AES Corp. and its Vietnamese partners have been gradually ramping up efforts to develop a hub for importing LNG from the US over the past several years.