Million dollar project

GE’s latest 9HA.02 turbine is accelerating the shift to LNG

After a wave of investment in solar and wind power over the past two years, Vietnam is now witnessing strong interest in the field of electricity generated with the use of liquefied natural gas (LNG).

A report by the Institute for Energy Economics and Financial Analysis (IEEFA) published in January stated that Vietnam has quickly become one of the most promising LNG import markets in Asia, and many domestic and international investors have expressed their desire to pursue projects in the country. They are encouraged by changes in government management that no longer sees coal-fired thermal power as the centre of the power system, as well as the rapid growth of renewable energy in the nation’s power structure.

As such, investors have actively portrayed LNG as a cleaner source to replace coal and argue that gas-fired power units will be one of the main power sources required to feed public demand and supplement unstable renewable sources.

The IEEFA report also stated, “Vietnam’s electricity industry has never seen a wave of investors expressing so much interest as they do now, that – with the accompanying diplomatic pressure – remains unprecedented in the country’s history.”

Interest in LNG power may also be related to Resolution No.55/NQ-BCT on the orientation of Vietnam’s National Power Development Plan (PDP8), which emphasises the rapid development of LNG thermal power plants. However, at the same time, experts advise that priority must be given to developing LNG import and distribution infrastructures.

According to the nation’s target until 2030, Vietnam must import 8 billion cubic metres of LNG per year, while the current rate is zero. The focus on LNG power generation is also attributed to its advantages, such as ensuring a stable power supply and minimising the impacts on the environment.

“The third draft of the PDP8 for the period 2021-2030, with a vision to 2045, is proposing to quadruple the current capacity of gas-fired thermal power by 2030 to 28GW, equivalent to 21 per cent of the total system capacity. Most of these plants are then expected to use imported LNG,” the IEEFA report states.

According to experts, LNG power generation is flexible and can be adjusted as needed. Besides this, the carbon emissions of LNG account for roughly half of coal power, which helps to reduce the energy sector’s impact on the environment. At the same time, LNG power is capable of reaching higher power output when needed, without interruptions and dependencies on nature such as wind or solar power.

Given the fact that global CO ₂ emissions are still increasing, the power sector takes on a mandate and a multidimensional approach to take important steps to rapidly reduce greenhouse gas emissions and solving the problem of climate change on a large scale.

“Despite the massive deployment of renewables such as wind and solar power, the energy sector has not improved significantly to meet the goals set out in the Paris Agreement on carbon neutralisation. The International Energy Agency (IEA) said that to achieve improvements in power efficiency, instead of spending time building new renewable power sources, it is possible to convert from coal to gas to reduce emissions faster,” said Vic Abate, General Electric’s (GE) senior vice president and chief technology officer and former CEO of both GE’s Gas Power and Renewables businesses.

According to the current draft of the PDP8, there are about 24 LNG projects proposed with a total potential of 23GW by 2025 and 84GW by 2035, with a demand for imported LNG of about 60 million tonnes per year.

Challenging negotiations

According to experts, about half of the proposed gas power projects are complexes for LNG import ports, storage tanks, recycling systems, and gas pipelines and power plants, with the remainder being pure power plants running on LNG.

However, no LNG power project has started its construction yet because contracts related to their operation have not been completed, most notably because of the missing power purchase agreements (PPA).

Even though the Bac Lieu LNG project was licensed in early 2020, the project owners are still negotiating a PPA without seeing the finish line anywhere close.

Talking about the progress of LNG project implementation, experts from the energy sector, as well as several project brokers and financial advisors, also said that the biggest challenge will be to negotiate the PPA.

“PPA negotiations must comply with the regulations of the Ministry of Industry and Trade, whereby the approved project documents must be available before the negotiation. Based on investment costs, cash flow in and out, profits, and discount rates, the purchase price of electricity that investors want to sell will be set. Except for those cases that do not exceed 7 US cent per kWh, for which Electricity of Vietnam will sign a PPA immediately, other prices will take computation and consideration,” said energy consultant Nguyen Binh.

Other investors also said that since the government reaffirmed that there are no guarantees, the decision to invest in an independent power plant requires investors to make great efforts.

“Spending a few billion US dollars on projects without a foreign currency conversion guarantee will make it difficult for investors to keep cash flows in hand when unexpected situations occur,” said Binh.

Track 4A power plant in Malaysia running on GE’s latest generation of HA turbines

Scale is king

According to Petrovietnam, the 24 planned LNG power projects recorded in the draft PDP8 will lead to a situation where the coastline of Vietnam will be covered by the configuration of “one power plant plus one LNG import and gas refinery warehouse”.

Meanwhile, other countries around the world are developing power plant clusters using large receiving ports to optimise the cost of gas infrastructure between the port and the power plants.

This means that these power centres choose a place with favourable conditions for convenient infrastructure with low cost, located near a suitable load centre and built according to environmental criteria. For instance, port warehouses must have a capacity of at least 6 million tonnes of LNG per year to be considered cost-efficient.

In parallel with the recommendations on the size of LNG terminals, experts also said that using new and innovative technologies will bring higher efficiency to an LNG power plant.

In the technology race, GE’s two world records for operating power plants with the highest efficiency have sparked the interest of LNG project operators in Vietnam as they offer significant cost savings compared to other technologies in the industry.

“The newest generation of turbines offers the lowest cost of capital and fuel conversion with a long engine life, thus reducing the total cost of ownership. As such, a generation H turbine combined with cycle plant for 1,000MW occupies an area of ​​about 0.05 square kilometres, far less than the 20sq.km needed for onshore wind or solar power plants of the same scale,” said Christophe DuFault, general manager (Project Execution) of GE Gas Power Asia, adding that GE’s HA turbines are currently the largest and most efficient gas turbines in the world and have received more than 120 orders from more than 48 customers in 20 countries and regions.

With its strong development potential, the IEA expects the Asia-Pacific to be a region with many “breakthroughs in the development of LNG power plants in the next decade”.

GE has more than 80 years of experience in the supply and construction of combined cycle power plants, and it has been 29 years since the first H turbine generation. GE’s H-generation turbines currently supply 21.5GW at 24 locations worldwide and are monitored daily at its centre in Kuala Lumpur.

In addition to delivering outstanding energy efficiency and cost savings, GE’s newest H-generation turbines also cut emissions – a key factor in securing the future of the energy industry in Asia-Pacific.

However, experts also say that although LNG can be a superior solution to other fossil fuels in terms of efficiency and emissions, both these advantages depend heavily on related technology.

“Our new power plant operating in Malaysia demonstrates that low-carbon or non-carbon gas power technologies, such as our HA technology, can help accelerate CO ₂ reductions in power production. At GE, the combination of gas and renewable electricity will be part of the solution for the present and the future,” said DuFault.

LNG is now expected to lead the way in Vietnam’s energy structure, meeting a large portion of its capacity by 2030.

Thoughts return to stronger rail options. Source: freepik.com

Although the Ever Given container ship was rescued one week after being stranded in the Suez Canal in Egypt, the trading world remains rocked as hundreds of billions of US dollars has evaporated in the wake of the global trade system significantly relying on this narrow canal.

The incident has also posed questions on developing other transportation channels, in which trans-continental rail routes may be top of the list.

“One of the most effective channels is to develop a rail route running through Asia and Europe. This would be very good for exporters in Vietnam,” said Tran Thanh Hai, deputy director of the Ministry of Industry and Trade’s Agency of Foreign Trade.

It is now recommended that exporters should consider and take advantage of the current rail route connecting Vietnam through China to Kazakhstan, Russia, Belarus, Poland, and Germany. From Germany, the goods can be transported to other European markets.

Currently if goods are transported via this rail route, it would take a month from Vietnam to Germany, with a cost of $8,000-9,000 per container, which is higher than the $6,000-8,000 for sea transportation which can take up to 50 days.

However, the existing difficulty is the difference in railway widths and also standards of the trains themselves. The width of Vietnam’s railways is one metre, while that of other nations is around 1.4m. Moreover, trains in Vietnam cannot accommodate a huge volume of goods at the same time – each train can carry a maximum of 90 tonnes of goods for 15 compartments. If exporters want their goods transported by trains from Vietnam to overseas markets, they will have to change trains many times, meaning higher costs.

These factors currently make it difficult for Vietnam to boost the transportation of goods by train to other international markets.

Kazakhstani Ambassador to Vietnam Yerlan Baizhanov previously told VIR that Kazakhstan, China, and Vietnam had established a council to discuss a project to develop a rail route for goods transportation from Vietnam through China to Kazakhstan and other member countries of the Vietnam-Eurasian Economic Union (EAEU), including Russia, Belarus, Armenia and Kyrgyzstan, and vice versa.

“The council has organised a number of meetings. One of the key issues now is to fix the cost for transporting goods,” Baizhanov said. “I believe that there will be a shared solution. If this rail route is not developed, it will be difficult to raise the bilateral trade between Kazakhstan and Vietnam, which currently sits at only $500 million per year.”

The railway will help reduce the time for transporting goods from Kazakhstan to Vietnam to only 14 days from about one or two months now, he added. “The Kazakhstani side will continue working with Vietnam’s authorised agencies about this project,” said Baizhanov.

Currently, goods are transported between both nations by sea, which often takes a few months for a ship.

Under the railway project, whose total length and investment capital remain unrevealed, container goods will be transported from Vietnam’s northern Dong Dang and Lao Cai railway stations to China’s Lianyungang port – whose 49 per cent of stake is now held by Kazakhstan Temir Zholy (KTZ), the national railway company of Kazakhstan. After that, the goods will be transported by railway to Kazakhstan, which borders China, and to other EAEU countries.

Leaders of the railway industry of Vietnam, Kazakhstan, and China have decided on the project’s logistics manager, namely KTZExpress of Kazakhstan and Vietnam’s Transportation and Trade JSC, a member unit of state-owned Vietnam Railways Corporation. They have also considered the demand for organising container-based trains for the new routes. KTZ and Vietnam Railways Corporation also inked an MoU on cooperation in railway development several years ago.

Currently, under its strategy, Kazakhstan is boosting transport infrastructure modernisation and attaching great importance to developing transport-logistics routes connecting Kazakhstan with Southeast Asian nations including Vietnam. The railway will also enable Kazakhstan to boost imports of electronics, and garments and textiles products from Vietnam, which it needs the most.

In the same vein, in 2018, members of the Organization for Cooperation of Railways (OSJD) discussed a plan to develop a railway transport system running from Vietnam to Russia through other Asian and European countries. The plan is part of an agreement signed that year at the OSJD’s conference of general directors in the central city of Danang. Directors pledged to promote logistics development through rail, expand research cooperation, and supply locomotives and machinery. However, no further information of the plan has been published so far.

The Vietnamese search engine aims to reach 20% of the browser market share on desktops and 15% of the search engine market share on mobile devices by 2021.

Coc Coc, the Hanoi-headquartered browser and search engine, will develop new features to meet the demand of its targeted users in suburban and rural areas, in the context of the increasing mobile phones penetration in Vietnam and the expansion of digital technology in all areas of life, Ms. Dao Thu Phuong, Deputy CEO of Coc Coc told the media gathering on December 22 in Hanoi.

Ms. Dao Thu Phuong and Mr. Nguyen Vu Anh, two Deputies CEO of Coc Coc in Vietnam.

Rural Vietnam is a prime market for growth, projected to be twice as fast as metropolitan areas. This is where over half of the country’s population resides – an untapped market with rising internet penetration.

According to the latest report “Vietnam’s Search for Tomorrow” released in October by Google, 77% of rural people now have internet access, and 91% use the internet daily. The internet has become a bridge to resources, products, and services that these users are accessing for the first time.

The report showed that the rural users choose Search as the key tool when making purchase decisions, with 45% of rural consumers using it to find information on products vs. traditional media (24%) and social media (27%). In fact, 77% of Vietnam rural users clicked on a search ad because of a relevant headline.

Rural users are considered as the major driving force to materialize the goal of Made-in-Vietnam search engine in the coming time.

Coc Coc targets the Vietnamese users in suburban and rural areas. Photos: Nhat Minh

Plans for 2021

With the achievement of 13 million mobile users on both iOS and Android, Coc Coc has risen to the top four most popular mobile browsers in Vietnam and ranked 1st among the free apps on the App Store in November.

According to the report by Statcounter, a web traffic analysis website, the market share of Coc Coc doubled that of the same period in 2019 and gained a larger piece from the search engine’s share giant Google (a drop from 94.4% to 89.9%) in August. From a zero-market share in 2013, the Vietnamese browser and search engine company Coc Coc ranked second after 7 years.

Coc Coc aims to reach 20% of the browser market share on desktops and 15% of the search engine market share on mobile devices by 2021.

This year, the engine has reached 25 million users including 4 million mobile ones. It missed its goal of 30 million mobile users for the whole year 2020, from 24 million in 2019, mainly due to the impacts of Covid-19.

Coc Cok is estimated to gain an estimated VND235 billion (US$10.1 million) in revenue, an increase of more than 13% compared to 2019, recording a pre-tax profit of VND30 billion ($1.3 million). “This year marks the highest revenue and profit of the company since 2017,” Deputy CEO of Coc Coc Nguyen Vu Anh said.

By 2021, Coc Coc plans to launch the project Coc Coc Audience Network, as a platform connecting publishers and advertisers based on numerous users and outstanding technology. It is expected to be one of the browser’s core activities for the coming years.

PetroVietnam’s first-quarter online meeting connected different locations

On April 7, 2021 PetroVietnam hosted a periodical online meeting with leaders of its member units to review production and business activities in March and the first quarter, as well as discuss operation plans in April and in the upcoming quarters.

The meeting was presided over by PetroVietnam CEO Le Manh Hung, with the presence of chairman of the Members’ Council Hoang Quoc Vuong, other executives of the group and leaders of related member units.

Seventeen out of its 22 units have been operating profitably, among them 12 out of 17 units posted fair growth compared to similar period in 2020.

The leaders heard that in the first quarter of this year, PetroVietnam outperformed all consolidated financial targets, with the group contributing more than VND19 trillion($826 million) to the state coffers, reaching 118 per cent of the quarter’s set projection and up 3 per cent on-year.

17 out of its 22 units have been operating profitably, and 12 of these 17 units posted fair growth compared to the same period in 2020. To post such positive results, the units have taken drastic cost-saving measures, helping to curtail as much as VND2.835 trillion ($123.26 million) in operating costs.

In the whole first quarter, PetroVietnam has closely followed its set plans and targets in production and business activities. Other facets such as ensuring oil and gas security, participating in the building of related policies and mechanisms and the revision of the new Law on Petroleum, or cultivating business culture at the workplace have reached the set plans. All member units belonging to PetroVietnam have managed stable production and business with absolute safety.

PetroVietnam chairman Hoang Quoc Vuong delivering remarks at the online meeting

Delivering remarks at the online meeting, PetroVitnam chairman Hoang Quoc Vuong praised the Board of Management and member units for their effective performance.

“As multiple hardships still exist in the forthcoming months, businesses must keep close tabs on the actual situation to deliver appropriate management decisions to optimise production and business efficiency. Efforts must gear towards continued restructuring to save costs, raise operational efficiency, take advantages in core areas, and strive to maintain and increase exploitation capacity to ensure future sustainable development,” said Vuong.

PetroVietnam labourers are working at oil and gas projects across the country

PetroVietnam CEO Hung commented on the achievements posted in the first quarter, detailing the challenges that might affect PetroVietnam’s operations in the next months, and urged businesses to continue optimising governance efficiency and keeping close eyes on opportunities and risks in the domestic and international market.

“PetroVietnam and member units need to further scale up market share, fostering investment portfolio management and investment alliance, particularly strengthening internal cooperation for further sustainable development,” Hung noted.

The global political and economic situation in the first quarter made recovery unclear in 2021 with uncertainties from geopolitical issues, trade tensions, and other unforeseen events. These factors are expected to negatively affect the world’s crude oil market in the upcoming period.