Gas consumption will continue to rise amid growing energy demand, increasing from eight million tonnes of oil equivalent (mtoe) in 2020 to 20 mtoe in 2035. As part of this transition, the share of coal will decrease by seven mtoe by 2050.

Joshua Ngu, vice chairman, of Asia-Pacific at Wood Mackenzie, believes the energy sector will remain the primary consumer of gas, with fuel expected to account for up to 14 per cent of total power generation by 2030.

"Gas-fired power generation is becoming increasingly necessary to prevent potential electricity shortages in the near term," said Ngu. "As coal generation levels off in the midterm and renewable energy continues to face challenges with intermittency and grid constraints, gas and liquefied natural gas (LNG) will become crucial for ensuring the country’s energy security and supporting sustainable economic growth."

While gas demand is forecast to increase, Vietnam faces challenges in domestic production. The country’s current gas fields, primarily located in Southeast Vietnam, are maturing, leading to a 25 per cent decline in domestic gas supply over the past five years.

However, recent developments, such as the Final Investment Decision (FID) for Block B in the Malay Basin, are expected to boost production by 0.4 billion cubic feet per day, which is equivalent to around 11.3 million cu.m, by 2030. Furthermore, the development of pipeline gas from Indonesia’s Tuna PSC in the Natuna Sea could be expected to flow into Vietnam by the 2030s.

Wood Mackenzie's research has strongly suggested that Vietnam is fully exposed to the spot LNG market but has yet to sign any long-term LNG contracts.

"The lack of contracted LNG supply, coupled with dwindling domestic resources, increases Vietnam’s exposure to potential price volatility and raises the risk of future blackouts or gas rationing," said Raghav Mathur, principal research analyst, Gas and LNG at Wood Mackenzie.

"The misalignments in LNG-fired electricity prices, power purchase agreements, and construction delays in LNG-to-power projects have been substantial obstacles for LNG contracting in Vietnam."

Wood Mackenzie addressed the fact that developing new gas infrastructure would ease concerns about gas shortages. The country’s main pipeline network is concentrated in the southern region, home to the economic hub of Ho Chi Minh City.

Two LNG regasification facilities have been built in southern Vietnam, with the Thi Vai LNG terminal already operational and the Hai Linh terminal expected to come online this month. Several more regasification terminals are in the feasibility stage and will be operational by the early 2030s.

"The Vietnamese government’s approval of Power Development Plan VIII underscores the importance of LNG-to-power projects, targeting an additional 22.4 GW of LNG-fired capacity by 2030," said Yulin Li, Research Associate, Gas and LNG at Wood Mackenzie.

However, for Vietnam to fully realise the potential of gas and LNG, there is a need for a dedicated energy system to focus on energy policy and regulation. "A robust policy framework is essential to attract investment in midstream and downstream gas infrastructure development," Li emphasised.

According to Wood Mackenzie’s analysis, Vietnam should explore partnerships with solution providers capable of meeting the country’s requirements. Many credible providers are currently active in Vietnam, including PETRONAS.

As one of the world's largest integrated LNG producers, PETRONAS produces over 36 million tonnes of LNG annually across facilities in Bintulu, Australia, Egypt, and soon Canada. This extensive network positions PETRONAS well to supply LNG to Vietnam.