FACTBOX: Vietnam's new energy masterplan focuses on energy security, coal and gas production

Vietnam’s Deputy Prime Minister Tran Hong Ha recently approved the National Energy Masterplan over 2021-2030 with a vision to 2050 focused on energy security and stable energy supply. The masterplan is the latest national level energy strategy to be finalized following recent approvals of Power Development Plan VIII, or PDP 8, and the National Infrastructure Plan for Oil and Gas Reserves and Supply for 2021-2030, with a vision to 2050.

The masterplan, issued on July 26, covers the production and supply of natural gas, coal, petroleum and renewables and puts tremendous focus on ramping up domestic production for self-sufficiency. It lays out the plan to supply energy for average economic growth of 7%/year on average over 2021-2030 and 6.5%-7.5% over 2031-2050.

Some of the key targets in the plan include the commissioning of two major upstream gas projects by 2030, steps to meet Vietnam’s net zero target by 2050 and a huge interim reliance on coal production.

Coal and gas trade flows

• Vietnam’s masterplan targets domestic natural gas production of 5.5 billion-15 billion cu m/year by 2030, which will be raised to 10 billion-15 billion cu m/year by 2050. Vietnam’s gas output rose 8.3% year on year to 8.08 billion cu m in 2022, according to state-owned PetroVietnam.
• The wide target is due mainly to some uncertainty around two major upstream gas projects, the Block B and the Ca Voi Xanh. The masterplan focuses on the development of both flagship projects for energy security.
• Vietnam’s Block B, at a capacity of 6.4 billion cu m/year, is targeted for completion in 2027, while the Ca Voi Xanh with a capacity of 7 billion-9 billion cu m/year is aimed for 2030. If delivered on time, it will significantly cut reliance on LNG imports.
• The masterplan supports LNG import terminal construction and Vietnam will give more priority to sourcing LNG from regional markets such as Malaysia, Indonesia and Brunei.
• The Thi Vai terminal’s capacity will be tripled to 3 million mt/year after 2025. The first phase of 3.6 million mt/year of the Son My LNG terminal is expected to complete during 2026-2027.
• Vietnam’s LNG import capacity is projected to be 15.7 billion-18.2 billion cu m [11.4 million-13.2 million mt/year of LNG] in 2030, before dropping to 10.6 billion- 12.2 billion cu m/year [7.7 million-8.8 million mt/year] in 2050. This underpins LNG’s role as a transition fuel.
• The total gas market (including domestic gas and imported LNG) is projected at 30.7 billion-33.2 billion cu m/year in 2030, before dropping to 20 billion-22 billion cu m/year in 2050.
• Vietnam’s domestic coal production is expected to be 41 million-47 million mt/year by 2030, before falling to 39 million mt/year by 2045 and 33 million mt/year by 2050. This means an increase in the next few years as Vietnam produced 39.4 million mt of coal in 2022, according to Vietnam National Coal Mineral Industries Holding, or Vinacomin, the main state coal producer.
• The masterplan aims to tap the Red River coal basin by 2040 and produce on industrial scale. The basin in the Red River Delta stretches over 3,500 sq km across the four northern provinces of Thai Binh, Hung Yen, Nam Dinh and Phu Tho. Coal reserves are estimated at 210 billion mt, according to Vinacomin in 2015.
• The plan aims to import 73 million mt of coal in 2030, peaking at 85 million mt in 2035 and falling to 50 million mt by 2045. This signals a steep ramp up in coal imports as Vietnam is expected to import 13.2 million mt in 2023, according to state media citing the government. Vietnam also plans to export between 2 million and 3 million mt of coal over 2021-2030.
• The ramp up of imported coal is driven mainly by the thermal power plant pipeline and by 2050, Vietnam is not expected to import coal.

Infrastructure (renewables)

• The proportion of renewable energy in total primary energy consumption is planned at 15%-20% in 2030 and about 80%-85% in 2050.
• Vietnam’s greenhouse gas emissions will be about 399 million-449 million mt in 2030 and fall to 101 million mt in 2050. GHG emissions will be cut by 17%-26% by 2030 and by about 90% by 2050 compared to the normal development scenario. Peak emissions can be reached by 2030 conditional on Just Energy Transition Partnership funding.
• Vietnam will increase the share of renewables, which includes wind, solar, and hydro, in power generation, to 30.9%-39.2% by 2030 and to at least 47% by 2030 if JETP funding is sufficient. By 2050, the share of renewables will increase to 67.5%-71.5% in accordance with PDP 8.
• By 2030, the country plans to build two renewable energy hubs in the northern, central or southern regions, with the aim to export 5,000-10,000 MW of renewable energy by 2030.
• Vietnam plans to produce 100,000-200,000 mt/year of green hydrogen by 2030, which will be raised to 10 million-20 million mt/year by 2050.
• The masterplan aims for CCUS capacity in industries and power plants of about 1 million mt/year by 2040 and 3 million-6 million mt/year by 2050.

LNG prices

• Volatile LNG spot prices have raised concerns among Vietnamese market participants, who have suggested the need for a framework to regulate the country’s LNG imports.
• Vietnam's first LNG cargo arrived at PV Gas’ Thi Vai terminal on July 10 on board the LNG tanker Maran Gas Achilles and supplied by Shell from the Bontang LNG terminal in Indonesia. While the exact price was not known, Platts assessed JKM July average at $9.584/MMBtu, according to S&P Global Commodity Insights data.