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Vietnam to start construction of Thi Vai LNG terminal in October

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Vietnam to start construction of Thi Vai LNG terminal in October

Singapore — State-run PetroVietnam Gas and its partners plan to start construction of one of the country's first LNG terminals at Thi Vai in southern Vietnam in late October, an official with parent company PetroVietnam said Thursday.

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The Thi Vai LNG terminal is one of at least two new LNG import facilities under development that would make Vietnam the newest LNG importing country in Southeast Asia.

The addition of new downstream demand centers is critical for the growth of the nascent LNG industry, as prices of LNG are coming under pressure from supply-driven market fundamentals, mainly new projects in the US in coming years.

Gas distribution company PetroVietnam or PV Gas is in process of reviewing the remaining design issues of the LNG terminal with consultants and contractors before construction can begin, the official said.

The Thi Vai terminal is expected to be operational in the third quarter of 2022, the official said on the sidelines of the Vietnam LNG-to-Power Summit 2019 in Hanoi Thursday.

It will have a capacity of 1 million 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.

National oil company PetroVietnam, through its gas arm PV Gas, supplies natural gas to meet 30% of Vietnam's electricity demand and 70% of its fertilizer needs.

Vietnam held 24.7 trillion cubic feet of proved natural gas reserves at the end of 2016, up from 6.8 Tcf in 2011, of which half was located in the northern deepwater areas of the Song Hong basin, according to the US Energy Information Administration.

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It currently does not import any natural gas despite growing gas demand for power generation in southern Vietnam and it produced 375 billion cubic feet of dry natural gas in 2016, which was fully consumed domestically, the EIA said citing official data.

PV Gas awarded an engineering, procurement and construction contract to build the Thi Vai terminal to South Korea's Samsung C&T Corp and PetroVietnam Technical Services Corp on June 24.

On the same date, it signed an agreement to supply LNG from Thi Vai to PetroVietnam Power's proposed Nhon Trach 3 and Nhon Trach 4 power plants in southern Dong Nai province with a capacity of 600 MW each.

In 2014, PV Gas signed two LNG sale and purchase agreements with Russia's Gazprom Marketing & Trading and Anglo Dutch Shell for deliveries into Thi Vai LNG terminal. This was followed by two preliminary LNG supply agreements with Virginia-based AES Group and Alaska Gasline Development Corp in November 2017.

The US EIA says a second terminal, Son My LNG, is being planned with multiple phases, the first of which will have a capacity of 86 Bcf/year.

Earlier this week, Australia's LNG Ltd signed a 20-year SPA to supply 2 million mt/year of LNG from its proposed Magnolia LNG export terminal in Louisiana to a gas-to-power project in Vietnam. Under the deal, LNG will be sold to Delta Offshore Energy to fuel a 3,200 MW combined-cycle power plant proposed in Bac Lieu province.

-- Eric Yep, eric.yep@spglobal.com

-- Newsdesk-Vietnam, newsdesk@spglobal.com

-- Edited by Wendy Wells, wendy.wells@spglobal.com