Photo: baodautu.vn

A notable development emerged on August 29 when Petroleum Technical Services Corporation (PTSC, a subsidiary of state-run Vietnam Oil and Gas Group or PetroVietnam) secured an offshore surveying licence, covering nearly 200,000 hectare off the southern province of Ba Ria-Vung Tau.

Rather than fortifying Vietnam's domestic energy supply and honouring its COP26 pledges, the focus intriguingly shifts to exporting green energy to Singapore using a sub-sea cable.

In February 2023, PTSC partnered with Sembcorp Utilities Pte Ltd. (SCU), a Singapore-based subsidiary of Sembcorp Industries. This alliance envisions a Renewable Energy Export Project, a brainchild of Singapore's Energy Market Authority, targeting an offshore wind farm with a capacity of roughly 2,300MW.

This licensing move neatly coincided with the Singaporean Prime Minister's visit to Vietnam last month. The partnership reflects the ongoing 50^th-anniversary celebration of diplomatic ties and the 10-year strategic partnership milestone between Vietnam and Singapore. Around this time, Singapore's Ministry of Trade and Industry endorsed the export project with a Letter of Intent.

With the procurement of this survey licence, PTSC stands as the first and sole investor in Vietnam to be green lit by the Ministry of Natural Resources and Environment to execute marine resource observation, investigation, and evaluation activities for offshore wind power development.

Under the accord, the two entities will exclusively invest in producing approximately 2.3GW of power from offshore renewables in Vietnam. This electricity will then be exported to Singapore via underwater high-voltage cables to cater to Singapore's clean electricity demand from 2030.

Previously, Enterprize Energy, a foreign-invested firm, in 2020 had acquired a licence for the Thang Long Offshore Wind Project, but with its expiration, tangible progress has waned.

“With our establishment of the business in Asia, Enterprize Energy approached the Vietnamese government to seek consent to evaluate the Thang Long offshore wind development zone, an area of approximately 2,000 square kilometres and were able to proceed with site survey work from July 2019 for the 3,400MW projects,” the company stated in its official website.

As for other offshore wind projects listed in Power Development Plan VIII (totalling 6,000MW by 2030), their strategic roll-out remains indistinct.

The Ministry of Industry and Trade's (MoIT) report to the government emphasised that local authorities would play a pivotal role, weighing factors like production costs, grid capacity, transmission charges, and regional socioeconomic benefits.

Vietnam grapples with power investment hurdles

In an August assembly convened by the MoIT, the Minister of Industry and Trade Nguyen Hong Dien highlighted ongoing liquefied natural gas (LNG) projects. While expressing optimism about their eventual fruition, especially by the 2024-2025 period, he emphasised rigorous adherence to timelines.

“Any project derailment would invite stringent measures,” Dien said.

Curiously, the session sidestepped the pressing issues plaguing LNG ventures - like setting power purchase prices or ironing out discrepancies in yearly electricity agreements. PDP8 earmarks 22,000MW of LNG power, but its development timeline remains unclear, with a few exceptions like the Nhon Trach 3 and 4 projects. A major contention arises around electricity pricing.

While the MOIT remains chiefly responsible for electricity pricing - including creating retail power price frameworks and various pricing structures - it is also guiding the creation of generation, wholesale, transmission, and auxiliary service pricing structures, as well as system operation and market operation fees. It holds the overarching accountability before the government in all power-related activities, including electricity pricing.

However, the Ministry of Finance (MoF) has expressed reservations about bearing the responsibility of scrutinising, overseeing, and reporting on electricity price hikes below 10 per cent.

Should the price surge exceed this threshold or fall outside the set framework impacting the macroeconomic scenario, the MoIT will review the pricing strategy, subsequently consulting the MoF and other relevant agencies.

Ground realities suggest that administrative hesitance looms large around transparent power tariffs - central for sealing power purchase deals, kickstarting power plant construction, and foreseeing capital mobilisation challenges.

For LNG projects still in the investor-hunting phase, Dien emphasises swift procedural adherence, ensuring potential investors bring the requisite financial muscle and expertise. By October 2023, localities are expected to finalise their investor shortlist.