Localities refuse coal fired power in favour of natural gas power?

The capacity of natural gas supply for electricity generation only meets about 66 percent of demand.

Natural gas power

In recent years, many localities have expressed dismay over coal thermal power projects. In the report sent to the National Assembly at the 8^th session about issues in the field of Industry and Trade recently, the Ministry of Industry and Trade stated that power source projects, especially projects outside the Vietnam Electricity Group (EVN) were often behind schedule so it affected electricity supply. Notably, after three years, many projects have not been implemented due to local proposals and recommendations, such as: coal fired power projects in Bac Lieu, Quang Ninh and Ha Tinh. Meanwhile, many other localities proposed to supplement new natural gas power centers such as Bac Lieu, Ba Ria-Vung Tau and Ninh Thuan.

Refusing coal fired power and support for natural gas power was primarily from environmental concerns.

According to EVN, currently, there are eight power plants using natural gas, with a total capacity of 5,644 MW in the South East region. The Southwest region has Ca Mau 1 and 2 power plants (including four units) using natural gas fuel with a total capacity of 1,500 MW.

Since 2010, the average annual output of natural gas supplied to the power plants was 7.96 billion m3 (of that 6.49 billion m3 of natural gas was supplied to the power plants in the Southeast region and 1.47 billion m3 of natural gas in the Southwest region), failing to meet the maximum mobilization demand of the plants. The demand for natural gas to operate maximum power generating sets in the Southeast region was 23.9 million m3/day and the Southwest region was 6.4 million m3/day. Thus, if calculating the total gas demand for electricity generation, about 30.3 million m3/day was needed.

At the meeting between Petro Vietnam Gas Corporation (PV Gas) and EVN in November 2019, General Director of PV Gas Duong Manh Son said: If calculating the total natural gas demand for power plants in the Southeast region and Southwest region, it would need about 30.3 million m3/day. Meanwhile, from mid-2018, the gas fields of block 06.1 and 11.2 showed significant declines, especially in 2019. The total amount of natural gas supplied to both sources was only about 20 million m3/day. It means that the ability of natural gas supply for electricity generation only meets about 66 percent of demand.

The price is very high

According to the Oil, Gas and Coal Department (Ministry of Industry and Trade), the capacity of gas supply in the Southeast region would be maintained at the current output level until the end of 2022. From 2023, the output of gas supplied would be reduced sharply (block 06.1 stop exploitation in May 2023) and it would start to cause a lack of gas in the Southeast region. With a total capacity of 19,000 MW of natural gas power plants in the period to 2030, about 22 billion m3 of gas will be needed, of that it was nearly 50 percent would come from imported liquefied natural gas (LNG) source.

The lack of gas from block 06.1 and 11.2 would affect the fulfillment of contractual obligations with BOT power plants. If the current gas output exploited from block 06.1 and 11.2 was maintained, it would be a shortage of natural gas for BOT power plants from 2023. It was estimated that the total gas shortage for BOT power plants until the end of the contract in 2025 was over 3 billion m3.

In terms of price, although in the period of 2021 - 2022, Vietnam might be able to supplement production from new natural gas sources (Sao Vang - Dai Nguyet field), it would definitely face higher prices compared with the present. This would affect not only the production of power plants but also electricity prices.

The representative of the Electricity and Renewable Energy Authority (Ministry of Industry and Trade) assessed that the difficulty in developing electricity and gas currently was a limited domestic gas source, so it depended on the source of imported LNG from abroad and the price of LNG depended on the global market. In addition, Vietnam has no experience in building and operating LNG terminal projects and a series of LNG gas projects. Especially, the high electricity price made it difficult to participate in the electricity market.

Facing difficulties in developing natural gas power, EVN and PV Gas have developed quick gas supply plans for the Southeast region from LNG. However, in the immediate future, to ensure power supply in 2020 (prioritizing power supply in the dry season), EVN suggested PV Gas to maintain gas supply to the Southeast region at 18.38 million m3/day (the same as in 2019); speeding up negotiations with Malaysia Petronas National Oil and Gas Group, ensuring the supply of gas for Ca Mau power plants - the Southwest region as currently which was about 4.18 million m3/day.