US firms eager to tap into Vietnam’s LNG thirst
Vietnam is set to import some 5 million tons of LNG by 2025 and the volume will likely reach 10 million tons by 2030 and 15 million tons by 2035.
A number of US energy companies have expressed interest in providing liquefied natural gas (LNG) for Vietnam, which is in dire need of energy to sustain its rapidly-growing economy.Vietnam is an important emerging market for LNG and Sempra LNG believes that LNG from the US and North America can help transform the economy, create new jobs, create new industries, heat homes and businesses, and fuel power plants, J.C. Thomas, Director of External Affairs, Sempra LNG, told Hanoitimes in a private interview during a study tour to its LNG facility in Hackberry, Louisiana.
J.C. Thomas, Director of External Affairs, Sempra LNG. Photo: Minh Tuan
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“We see Vietnam and its surrounding neighbors as markets with huge potential,” Thomas stressed.
Thomas tipped that the company is building a project in the Pacific basin on the West Coast of Mexico, from which it will send LNG throughout Asia and the world with competitive prices.
Explaining the advantages of having a West Coast facility, Thomas said the company won’t have to rely on the Panama Canal for shipping LNG, thus saving up to 12 days of transit time, and can have direct linkages to places like Vietnam to supply LNG.
Sempra LNG is one of the few companies that are building an LNG terminal on the West Coast of the US and Mexico. The project will have access to natural gas from the US through pipeline networks.
The LNG facility under construction is built up on an existing LNG import terminal, so it doesn’t have to build tanks and loading berths. Another advantage is that it has access to natural gas, supply pipeline for a first stage, and for a second stage the company will build a pipeline that connects into the Permian basin in the US that is the lowest cost resource of natural gas in the world, Thomas added.
Sempra is pursuing five strategic LNG opportunities at three locations in North America, with a goal of delivering 45 million tons per annum of clean natural gas to the largest world markets, and the ability to dispatch LNG into both the Atlantic and Pacific basins.
Cameron LNG is one of Sempra LNG’s five LNG export terminals in the US and its first LNG production commenced in May 2019, while commercial operations started in on August 19. Its phase 1 consists of three liquefaction trains with a combined capacity of 12 million tons per year.
“We believe our construction cost is competitive and helps us move forward and approach our markets on time,” Thomas boasted.
When asked about the long distance between the US and Vietnam, Renee Pirrong, head of research and analytics at Houston-based Tellurian Inc. – an integrated natural gas and LNG company founded in 2016 - affirmed that it’s feasible for Vietnam to import LNG from the US.
The selling price will also depend on which project and what type of commercial agreements that the buyers in Vietnam have with that project, she said.
Renee Pirrong (L), head of research and analytics, and Joi Leczar, senior vice president, Public Affairs & Communications, Tellurian Inc. Photo: Minh Tuan
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Tellurian can produce LNG at US$3/BTU on the water, assuming that shipping cost hovers around US$1.5/BTU, so the cost in Vietnam will be around US$4.5/BTU on the water. But to be entitled to that low cost, the buyers will have to be an equity partner with US$500 million.
“Tellurian is invested in selling LNG to the Asian market, including Vietnam,” said Joi Leczar, senior vice president, Public Affairs & Communications, Tellurian Inc.
Leczar tipped that a Vietnamese company had approached Tellurian to discuss a possible purchase of LNG from the US provider, but she declined to reveal the name of that company.
Trump's tariff threat
To sustain annual economic growth rate of 6-7%, Vietnam has to import energy to meet a double-digit demand growth of electricity and has turned into a net energy importer despite its huge hydrocarbon reserves.
Houston-based Liquefied Natural Gas Limited (LNG Limited) and Hanoi-based Delta Offshore Energy (DeltaOE) said September 16 they had signed a deal to develop a LNG-to-power project in southern Vietnam which will use LNG from a Louisiana-based project. The complex project in Vietnam includes an LNG import terminal and a 3,200-megawatt combined-cycle power plant
The announcement came in at no surprise as the Vietnamese government has plans to import large scale LNG from the US after President Donald Trump sounded alarm on the widening trade deficit with Vietnam and threatened to impose tariffs on imports from the Southeast Asian country.
A coastal commune in the central coastal province of Binh Thuan is expected to soon house a $5 billion LNG project that would include an import terminal and gas-fired power plant and eventually import billions of dollars of US fuel into the country, Bloomberg report on September 24.
LNG thirst
An LNG carrier
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At the LNG Producer-consumer Conference last week in Tokyo, Vietnam’s Minister of Industry and Trade Tran Tuan Anh stated that developing LNG in an indispensable trend in the country to ensure energy security.
Vietnam is set to import some 5 million tons of LNG by 2025 and the volume will likely reach 10 million tons by 2030 and 15 million tons by 2035, Anh said.
To prepare for this trend, Vietnam is developing a legal framework for LNG and giving priority to LNG projects, the minister added.
State-run PetroVietnam Gas Corporation (PV GAS) and its partners plan to start construction of the Thi Vai LNG terminal, one of the country’s first LNG terminals in southern Vietnam, later this month. The terminal will have a capacity of 1 million metric ton (mt)/year in its first phase in 2022, which will be raised to 3 million mt/year by 2023 in the second phase of development.
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