HANOI (Bloomberg): Vingroup JSC has asked the Vietnamese government to allow it to replace a large liquefied natural gas power project with renewable energy, citing surging fuel prices linked to the Middle East conflict.
The rapid increase in LNG prices - due to war-driven supply disruptions in key exporter Qatar and intensifying competition among Asian buyers for limited supplies - has underscored significant risks for import-dependent projects like Vingroup’s proposed Haiphong LNG-to-power facility, it said in a letter seen by Bloomberg News.
The company proposed shifting to a mix of solar and wind power paired with battery storage, according to the document, which was first reported by Reuters. The letter was addressed to the country’s trade minister and the head of the Electricity Authority.
"In addition to cost factors, dependence on imported fuel also poses considerable challenges to energy security, supply autonomy, and Vietnam’s ability to control electricity generation costs,” Vingroup said in the letter.
A representative of VinEnergo, the startup energy unit of Vingroup, declined to comment on the matter. The Vietnamese government did not immediately respond to requests for comment.
The proposed pivot comes as energy-importing nations grapple with surging prices due to the US-Israeli war against Tehran. Iran’s retaliatory strikes have knocked Qatar’s export plant offline and effectively halted shipping through the Strait of Hormuz, affecting 20% of global LNG supplies. Price-sensitive buyers, such as Vietnam, have been forced to scale back purchases as the fuel becomes increasingly expensive.
Vingroup’s move also signals that the war is forcing many companies and countries to rethink their strategy of leaning into gas to transition toward cleaner energy. Vietnam had been actively expanding its LNG infrastructure to bolster energy security as it replaces coal-fired power. It is now fast-tracking its plan to develop green power.
While a shift to renewables would reduce exposure to volatile fuel prices, Vingroup noted that upfront investment could be roughly five times higher than for an LNG plant. The company therefore asked the government to consider a pricing mechanism that would allow investors to recover costs, according to the letter.
The Haiphong project is planned to have a capacity of 4.8 gigawatts, with the first phase targeted for operation by 2030. Vingroup has already secured turbines for the initial tranche from GE Vernova Inc.
--With assistance from Sing Yee Ong, Nguyen Dieu Tu Uyen, Nguyen Xuan Quynh and Nguyen Kieu Giang.
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