Understanding Liquefied Natural Gas in Vietnam

Posted by Written by Mai Chi Tran Reading Time: 5 minutes

The Vietnamese government has put Liquefied Natural Gas (LNG) at the center of its Power Development Plan 8 (PDP8) as a means to wean the Southeast Asian nation off coal. Here’s a short overview of the current LNG supply in Vietnam.

Vietnam’s LNG market is very active and growing, especially LNG gas power plant projects and LNG warehouses. But despite growing demand for LNG, this industry still faces some challenges.

Laws and regulations are often inconsistently applied, pricing is volatile, and investor selection is in need of reform. LNG is, however, the cornerstone of Vietnam’s future power production.

According to the PDP8 the burgeoning Southeast Asian nation expects to derive 25 percent, or 37,000 MW of power, from LNG by 2030. This will require huge sector growth and investment.

As a result, there are a broad swathe of opportunities for foreign energy firms.

Vietnam’s LNG imports

Domestic LNG projects currently produce just 7 billion m3 per year of usable gas which is not enough to fulfill Vietnam’s current needs. As a result, Vietnam relies heavily on imports.

In 2018, Vietnam imported 55 percent of the total LNG used domestically, by 2020 that number had grown to 70 percent.

According to Vietnam’s gas industry development plan, Vietnam will need to import one to four billion cubic meters (m3) of LNG per year from 2021-2025 and that will then increase to six to 10 billion m3 per year by 2026.

Earlier this year PV GAS signed a contract to import the first shipment of LNG into Vietnam. This will come from Shell and be delivered to the LNG port at Thi Vai in southern Vietnam.


According to the latest PDP8, by 2030 LNG will account for a total installed capacity of about 29,700-38,800 MW, or 24-29 percent of total electricity production.

By 2045, the total installed LNG capacity is expected to be about 43,300-46,300 MW, producing 233.6-246 billion kWh and accounting for 20-24 percent of total electricity output.

Hitting these targets, however, will be challenging, and being able to utilize LNG to this extent will face some obstacles.


The price of imported LNG fuel is volatile. Traded on global markets it is susceptible to the ebbs and flows of global supply and demand. In 2022, for example, prices shot up when Russia invaded Ukraine. Similarly, strong competition in the gas production market in 2021, combined with the Covid-19 pandemic, saw supplies increase and demand drop at the same time, this led to a drop in LNG prices.

Laws and Regulations

Regulations on investment procedures are not applied consistently. There are multiple laws that apply to LNG projects, for example, the Investment Law, Bidding Law, Construction Law, Environment Law, and Planning Law and often these laws conflict with each other.

Investor Selection

Investor selection is important but there is currently no consistent bidding mechanism to select investors for LNG projects, according to Vietnam’s Power Generation Company, a subsidiary of state power provider EVN. Sometimes it is the government who chooses the investor, or sometimes it is assigned to a ministry, or sometimes it is assigned to the province in which the project will be implemented. This can cause confusion for the parties involved, and subsequently delays.

Furthermore, projects in the LNG sector often have many moving parts and require a high level of expertise and cooperation between multiple stakeholders. A lack of qualified investors can often delay a project’s implementation and hinder the project’s development.

LNG projects in Vietnam

Vietnam Gas Corporation (PV GAS)

State-owned PV GAS operates as a subsidiary of PetroVietnam, which is the national oil and gas company of Vietnam. Its primary responsibility is to explore, produce, process, transport, and distribute natural gas and similar products within Vietnam.

Currently, PV GAS is the only supplier of LNG to the Vietnamese market. It has invested US$500 million in ensuring Vietnam’s long-term gas supply.

PVGAS provides services like:

  • Gas extraction: Through its subsidiaries and affiliates, PV GAS has gas extraction projects around the country and is gradually joining international gas extraction and purchase projects. PV GAS works with a number of other parties in the process as well as in distribution.
  • Gas imports: In order to meet the increasing demand for gas and to supplement the gas supply PV GAS is implementing a number of LNG import projects.
  • Gas transportation and distribution: PV GAS has three gas transport and distribution systems to deliver gas to consumers.

Foreign firms working with PV GAS

Though PV GAS has a monopoly on Vietnam’s gas supply, there are still a number of ways foreign firms can become involved in the sector.

  • Joint ventures: PV GAS and AES Investment Company signed a joint-venture agreement to establish and operate Son My LNG Warehouse. AES has also been approved by the government to be the main investor in the Son My 2 Power Plant Project which will use LNG.
  • Importing partnerships: In order to import LNG for trial and commercial operation in Thi Vai, PV GAS issued a procurement document, which received interest from suppliers around the world. After a process of evaluation, selection, and negotiation, PV GAS signed a purchase confirmation with Shell to import Vietnam’s first LNG shipment.
  • Strategic alliance agreements: Tokyo Gas Asia, a subsidiary of the Tokyo Gas Company, acquired a 24.9 percent stake in PV Gas D, a subsidiary of PV GAS. They also signed a cooperation agreement whereby Tokyo Gas Asia will use its technology and expertise to develop demand for natural gas and introduce energy-efficient technologies to improve PV Gas D’s operational capacity.

Thi Vai LNG Storage Project

Managed by PV GAS, and being developed at Cai Mep Industrial Park in Ba Ria – Vung Tau, this is a major and key project of Vietnam’s oil and gas industry. It is a joint venture between Samsung C&T (South Korea) and PetroVietnam Technical Services Corporation (PTSC).

The project has a phase 1 capacity of 1 million tons of LNG. By the end of 2022, this phase was 97.08 complete. Phase 2 has a capacity of 3 million tons of LNG, and is expected to be completed this year.

Part of this project will also be port facilities for LNG tankers. It will be capable of receiving ships with a tonnage of up to 100,000 tons.

The Long Son LNG Power Center

When the first phase of this project is complete it will have a capacity of 1,200 to 1,500 MW. It is expected to start operating in 2025-2026. The total investment needed is estimated at US$1.75 billion. This project is located on a 110-hectare site, covering both land and sea, outside Long Son Petroleum Industrial Park, in Ba Ria-Vung Tau. This project is currently looking for investors.

LNG moving forward

LNG is set to play a key role in the development of Vietnam’s power sector. This will involve developing a number of power plant projects around the country as well as importing a huge volume of LNG. In this respect, energy suppliers may find a broad range of opportunities to choose from in Vietnam.

However, there are still some challenges related to pricing, the legal framework, and investor selection that enterprises should consider when looking to invest in Vietnam’s LNG market. These can, however, be effectively navigated with the right advice and support.

For more information on maximizing opportunities in Vietnam’s LNG market contact the business advisory experts at Dezan Shira and Associates.

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