GAS FOR ENERGY TRANSITION

PLATTS - 20 Nov 2024 - Natural gas will play a key role as a transitional energy source in Southeast Asia, given the high costs and regulatory complexities in adopting renewables, PetroVietnam Exploration Production Corporation (PVEP) said Nov. 19 at OSEA in Singapore.

"In terms of cost, offshore wind, for example, now is significantly higher than traditional gas-powered electricity," said its CEO Tran Hong Nam.

"The way forward, for the time being dealing with transition, natural gas plays a very important role. A gradual transition is needed while maintaining energy security and affordability."

He added that many countries are already making "big shifts" from oil to gas which aids in emissions reduction, and natural gas use could be made cleaner using methane abatement technologies.

This comes as Southeast Asia remains highly dependent on imported fossil fuels, with such energy sources – especially coal – making up nearly 80% of the region's rising energy demand since 2010, the International Energy Agency (IEA) said in a report last month.

For now, coal and oil make up half of the region's energy demand, while natural gas forms about 20%, the IEA added in the report.

This has made the region more vulnerable to price spikes, especially during the recent global energy crisis, and the agency noted that fossil fuel subsidies in Southeast Asia had soared to a record $105 billion in 2022, nearly 60% above the previous peak.

Vietnam had suffered an energy shortage amid financing woes and sticky retail prices in 2022, and its major refineries have maintained high run rates since then as the country pursues fuel self-sufficiency though refinery upgrades.

NOC's role

Security and affordability will continue to be areas of focus in Southeast Asia, as the region's energy demand is expected to grow further, said Tran.

IEA noted that Southeast Asia made up 11% of global energy demand growth since 2010, and is projected to contribute over a quarter of growth until 2035.

"As a national oil company... we have the responsibility to meet the energy requirements that the economy requires," Tran added.

For instance, Vietnam's Block B project – which PVEP has a stake in – is expected to achieve first gas in the third quarter of 2027, with the project expected to produce 490 MMcf/d of gas.

In 2023, Vietnam imported its first commissioning LNG cargo for the 1-MMtpa Thi Vai regasification terminal in Southeast Vietnam. Since April 2024, utilization of this terminal has ramped up with LNG being supplied to existing gas-fired power plants and industrial end-users.

Last year, Vietnam also approved its long-awaited Power Development Plan 8, or PDP8. PDP8 featured strong gas-fired capacity growth, with gas capacity to grow to 38 GW by 2030 from 7 GW.

According to S&P Global Commodity Insights data, Vietnam imported 0.07 million mt of LNG in 2023 and has imported 0.25 million mt of LNG so far in 2024.

In 2025, Vietnam's power sector could see gas availability risks due to the government-imposed LNG price ceiling, alongside a lack of power purchase agreements for the country's upcoming LNG-fired power plants, according to Commodity Insights' Vietnam short-term power report.

Vietnam could expect to see another 1 GW of smaller hydro and biomass projects starting in 2025, which could alleviate supply risks but will be insufficient to cover the projected power demand increase.

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