Orientations for sustainable development of Vietnamese gas industry

Orientations for sustainable development of Vietnamese gas industry - 

In the context when the domestic gas supply is rapidly declined, the new fields have high development costs and the negotiation process of gas prices often lasts, while the demand for gas is increasing etc. It is requires Vietnam Oil and Gas Group to have synchronous solutions to ensure a long-term stable gas supply for the economy and contribute to meeting the goal on energy security of the country.

Implementing the direction of the Government and the Ministry of Industry and Trade (MoIT), Vietnam Oil and Gas Group (PVN) presides over establishing the overall project on developing gas industry in Vietnam to 2025 with orientation to 2035 with a principle to use economical, efficient and rational domestic resources, promote investment in deep processing natural gas, diversify products to enhance the value of the gas and prepare infrastructure for LNG import.

The main orientations are as follow:

Firstly: To develop a fully-constituted gas industry with synchronizing all phases from exploitation – collection – transportation – processing - reserve – distribution of the gas and import-export of gas products in the whole country; ensure to collect 100% of gas output from fields/lots exploited by PVN and petroleum contractors in Vietnam.

Secondly: To strive exploiting gas output of 10-11 billion m3/year in 2016-2020 period, 13-19 billion m3/year in 2021 – 2025 period and 17-21 billion m3/year in 2026 – 2035 period.

Thirdly: To study, search the markets and speed up developing the infrastructural system (ports, warehouses…) to be ready to receive imported LNG with amount of 1 - 4 billion m3/year in 2021 – 2025 period, and 6-10 billion m3/year in 2026 – 2035 period.

Fourthly: To continue developing the electricity market as a key market for gas consumption (including imported LNG) with the proportion of about 70-80% of the total gas output. Developing petrochemical products from gas, increasing investment in processing natural gas to enhance its added value, creating the materials and fuels for developing domestic industrial production towards exporting, reducing the trade deficit rate. Continue to maintain and expand the gas distribution system for the industrial, transport and urban living with the goals to protect the environment and improve the use value of gas. To synchronously develop the low pressured gas and compressed natural gas (CNG) distribution systems as a premise to develop the gas distribution system for transportation. To strive developing gas market with the scales of 11-15 billion m3/year in 2016-2020 period, 13 - 27 billion m3/year in 2021 – 2025 period and 23 - 31 billion m3/year in 2026 – 2035 period.

Fifthly: Carrying out the requirement of the Government to expand the capacity of existing LPG depots in combination with building new LPG depots to meet the domestic consumption demand with a scale of about 3.5 to 4 million tons/year in 2025 and about 4.5-5 million tons/year in 2035, for ensuring a minimum supply reserve requirement in over 15 days. To strive to meet 70% of LPG market share in the whole country.

The overall solutions for developing gas industry in Vietnam include:

Firstly: To strictly control the plans for gas/oil production, meet the technical requirements of the gas exploitation and collection system for maximizing the efficiency of investment in new gas projects ... One of the solutions is to intensify investment in search, exploration and appraisal to increase verified reserves for ensuring a long-term and stable gas supply. To continue improving the field internal pipeline systems/collection networks for gathering gas in the sea.

Secondly: To prompt putting urgent gas projects as mentioned below into operation on time schedule for ensuring investment efficiency:

1 / Nam Con Son 2 and Sao Vang - Dai Nguyet pipeline projects (it is selecting EPC contractors for construction and expected to be completed in 2020).

2 / LNG Thi Vai project EPC contract signed on June 24, 2016, expected to be completed by 2022).

3 / Block B gas projects chain (expected to be completed by 2022).

4 / Blue Whale Project (expected to be completed by 2023).

5 / LNG Son My project (expected to be completed by 2023).

Thirdly: To develop a roadmap and policy for reasonable gas prices: gas sources being exploited domestically with the cheap prices are more and more declining, while a leading proportion of gas amount supplied in the period of 2019-2035 with higher prices making the electricity and nitrogen fertilizer costs increase. Therefore, it is necessary to have a policy on gas prices suitable for each customer as electricity, fertilizer and gas deep processing.

Fourthly: To regularly update, establish the forecast data for gas supply- demand and market with a certain reliability. To accelerate the progresses for negotiating and signing the gas purchase agreements, and to build synchronous mechanisms and policies for the whole chain of the gas industrial infrastructural projects.

Fifthly: To improve the use value of natural gas by promoting investment in deep processing of natural gas due to investment in deep processing natural gas will create a large added value and many products beneficial to the economy and suitable for exploiting gas fields in Vietnam. So it is proposed to provide: 0.5 - 1 billion m3 of gas from Blue Whale for petrochemical production in the Central region and 0.4 - 0.5 billion m3 of gas from the Southeast region for Long Son Petrochemical Complex for producing NH3, derivatives, ethane...

Sixthly: To attract investment in gas sector. PVN will focus on the basic investment, infrastructural projects with a national strategic significance, scientific and technological research and encourage the foreign investors/other domestic economic components to invest in upstream, midstream projects (gas processing plants, pipeline systems, LNG, LPG storages...) and the new downstream activities such as urban gas distribution (city-gas), CNG ... to diversify/socialize investment capital.

Seventhly: Regarding to the scientific – technological activities, PVN will strengthen research and development of software modeling, simulation, optimization, risk management analysis, investment efficiency management, market analysis, forecast ... encourage investors to test the application of new technologies, promising applications in Vietnam. PVN also will research the fuels to replace natural gas, especially produce in large/medium-sized biogas to supplement the depleted natural gas reserves.

Eighthly: To continue to strengthen training courses for improving the qualifications of the existing staff and employees, provide additional training for the deficient and weak stages. To develop the human resources strategy and planning, regularly review and assess the status of human resources as required by job titles in combination with intensive training in the country over sea.

With the set targets, PVN was and is continuing to actively build the plans and programs for detailed implementation with specific solutions to maintain and develop steadily the gas industry, as well as ensure to successfully carry out the strategic objectives assigned to by the Party and the State to PVN.

Source: Translated from Vietnamese version of Dr. Le Manh Hung, PVN General Director

Leave your comment on this story