Cambodia’s Royal Group is seeking LNG suppliers for its proposed 900 MW LNG-fired power plant in the country’s southwestern Koh Kong province, which will be the country’s first gas-based power project, Thomas Pianka, Division CEO for Energy, told S&P Global Commodity Insights in an interview.
The project could see Cambodia import its first seaborne LNG cargo and introduce the fuel into the country’s electricity mix on a utility scale, following similar initiatives in other Southeast Asian countries such as Vietnam and Philippines.
In 2020, Cambodia imported small-scale LNG through ISO tanks from China’s national oil company CNOOC, but these volumes did not need a full-fledged LNG import facility including regular sized LNG carriers.
Royal Group, which has a portfolio of hydroelectric power projects in Cambodia, initially planned the 700 MW thermal power project as a coal-based project financed by Chinese equity partners and banks until Beijing halted overseas coal plant investments.
In 2021, Chinese President Xi Jinping said the country will no longer build coal-fired power plants overseas in a pivotal address at the United Nations General Assembly ahead of the COP26 climate summit in Glasgow.
Royal Group Investments Group Co Ltd, the project company handling the power plant, was caught off guard by the announcement as it was working towards financial close. After trying to secure financing on its own, it worked with the Royal Government of Cambodia to then reconfigure the power project as a 900 MW LNG-based power project as the business did not have any domestic gas resources.
“I felt like someone shot me in the shoulder, and just missed my heart,” Pianka said. “As far I was concerned, it [the financing] was a done deal.”
“The decision to repurpose the project as an LNG-based power plant truly makes it an energy transition project,” he said.
The company is looking to Chinese financial institutions for financing the project and is working with Chinese EPC contractors for construction. Only Chinese infrastructure companies can currently meet the tight construction schedule, he said. “However, we are also looking at regional banks for project finance,” Pianka added.
The LNG-fired power plant is expected to be located at Thmor Sor Commune in the Botum Sakor District. It will comprise two units of 450 MW each. The first unit is expected to start commercial operation in April 2027 and the second in December 2027.
LNG-to-power
The project will require a total investment of around $1.342 billion and comprise an LNG jetty that can accommodate 185,000 cu m LNG ships, an LNG storage tank of 200,000 cu m and LNG regasification station of 160,000 cu m/hour, which equals to around 1.1 million mt/year.
The construction started on Oct. 16. The operation period is 30 years from the start of commercial operations, when it will be able to generate over 6,000 GWh of electricity every year.
“The project has a firm 30-year power purchase agreement or PPA with the state power company EDC (Electricite du Cambodge) and the ability to pass through fuel costs to EDC,” Pianka said.
However, the company is keen on developing an LNG procurement plan that will offer the best price and may opt for signing a long-term offtake agreement. “We are presently evaluating all options in the market,” he said.
The gas-fired power plant has a tight construction timeline because it has firm downstream buyers, and the project is also a part of Cambodia’s official power development plan that expects to meet strong power demand to boost the economy.
Pianka said the gas plant is expected to be driven by the country’s seasonality in power supply, mainly the availability of hydroelectric power that tends to drop in the dry season from November to March.
“There is a need to take the seasonality of domestic power generation into consideration. But the demand for electricity [in Cambodia] does not really fluctuate that much and is growing strongly year on year.”
Cambodia power
Royal Group’s 900 MW power project is expected to be the country’s first gas-fired power plant and will be key to support growth in renewables which currently comprises the majority of Cambodia's electricity mix.
Cambodia’s largest source of power generation is from hydro that accounts for around 58% of the total, followed by around 32.3% from coal, around 6.8% from solar and the remaining from oil, according to the International Energy Agency.
Cambodia’s electrification rate is the second lowest among Southeast Asian countries, and it has plans to increase its power generation capacity by building hydropower and coal-fired plants by 2025, which can contribute to improve self-sufficiency of power supply, the IEA said.
