Vietnam’s LNG gamble hits a roadblock as 22.5 GW power plan stalls

Vietnam’s ambitious plan to rapidly expand LNG-fired power generation is running into a series of hurdles, even as the country’s economy grows at its fastest pace in years, according to The Merchant’s News.

Vietnam is targeting 22.5 GW of LNG-fired power capacity across 15 projects by 2030, but progress on several projects has been slowed by delays in land clearance, power purchase agreements (PPAs), LNG supply contracts, construction agreements and financing.

The challenge comes at a critical time for Vietnam’s economy. GDP grew 9.95% year-on-year in the third quarter, its fastest growth in four years, while exports jumped 24.5%. To meet its full-year growth target, the economy would need to expand by roughly 12% in the fourth quarter, increasing pressure on the country’s power infrastructure.

According to The Merchant’s News, of the 18 LNG projects being monitored by the government, only Hiep Phuoc is currently considered on schedule.

Why Vietnam’s LNG projects are stuck

The problem is not simply a lack of investment interest. LNG-to-power projects require several pieces to fall into place before construction and financing can proceed.

Developers need land clearances and construction contracts. They also need long-term LNG supply agreements to establish the cost of fuel. At the same time, power producers need PPAs with buyers to guarantee that electricity generated by the plant can be sold.

Financing then becomes dependent on these agreements.

The report highlights a “chicken-and-egg” problem in which lenders are reluctant to finance projects without PPAs, while power buyers need clarity on electricity prices. Those prices, in turn, depend heavily on the cost of LNG, which developers may be unwilling to lock in at current market levels.

This makes the economics particularly difficult when Asian LNG prices are around $25/MMBtu.

Vietnam LNG power plan: At a glance

Delays could eventually work in Vietnam’s favour

Ironically, the delays may not necessarily be bad news for Vietnam over the longer term. If the country committed now to large volumes of LNG at today's prices, it could lock itself into expensive long-term contracts. A wave of new LNG supply expected after 2028 could instead create a more favourable market for buyers.

The Merchant’s News estimates that if Vietnam's planned 22.5 GW of gas-fired capacity operates at high utilisation, the plants could require roughly 200-300 LNG cargoes a year.
Waiting could therefore give Vietnam greater negotiating power when global LNG supply expands and competition among sellers increases.

But the immediate power requirement remains

That strategy carries a near-term risk. Vietnam's manufacturing and export sectors need reliable electricity now, not only after 2028.

Without the planned LNG plants, additional electricity demand will have to be met through a combination of coal, hydropower and power imports.

That leaves Vietnam facing a difficult trade-off: move ahead with expensive LNG contracts to secure generation capacity, or wait for potentially cheaper gas while risking a power shortfall that could constrain its rapid economic expansion.

The question is increasingly whether Vietnam can wait for cheaper LNG without the delay in new gas-fired capacity becoming a constraint on its 10% growth ambitions.