In the past decade, Vietnam’s commercial energy has been growing at an average rate of 12% per year. The growth is driven by the increasing demand for household electricity, the development of motorized transport and the rapid growth of industry (EIA, 2012).

Electricity Consumption in Vietnam

Figure: Electricity Consumption in TWh (source: EIA)

3.1. Gas Demand

A big challenge for Vietnam is to balance the energy demand in order to sustain the current growth rates. To this end, Vietnam has launched a series of efforts to the increase the energy supply. The focus is in gas since easy coal reserves in the country will soon depleted. In addition to increasing the local gas production, PetroVietnam signed a deal in March 2012 (Reuters, 2012) with Tokyo Gas Company to build Vietnam's first LNG terminal in the central province of Binh Thuan to be able to import LNG. More LNG terminals are planned in the near future in order to keep up with the local demand. The gas will probably come from Australia or Qatar.

Vietnam-gas-production

The previous facts are strong indicators of the need for gas in the Vietnamese market. More solid indicators are the gas consumption and production (table 1). Vietnam's power plants alone will need 16.3 Bcm of gas by 2015, which represents a 75% jump relative to the current annual total of 9 Bcm per year.

Table 3: Natural Gas Overview

Year Production Consumption  Info Source
2010 290 Bcf   290 Bcf (8 billion m³) Energy Information Administration (EIA)
2011  9 billion m³  9 billion m³  VietNamNet (Thanh, 2011)
2015 estimate 16 billion m³    PNR Online (2012)

 The major gas consumers are located in the South Vietnam. Thus, the production form Block 21 can be easily transported to the end user. Possible buyers with which supply agreements can be formed are:

1. Gas power stations owned by PetroVietnam, through its subsidiary PV-Power. PV-Power plans to invest more in power generation with projected newly-built facilities of 34000 MW by the end of 2020 (PV-Power, 2012). Forming a supply agreement with PV-Power should be easier than with other consumers due to its connection with PetroVietnam.

2. Gas power stations owned by Electricity of Vietnam (EVN). EVN is the state owned enterprise that holds the monopoly on electricity distribution in Vietnam. It owns gas turbine power plants in South Vietnam with capacity of over 3000 MW located. In 2011, EVN faced a gas shortage of nearly 1 billion m³ and had to use oil instead (Thanh, 2011).

3. Industrial Areas in South province of Vietnam (Vung Tau, Dong Nai, Ca Mau). Facilities industrial areas use gas for producing heat and generating power.

4. Factories owned by PetroVietnam which supply Compressed Natural Gas and other gas products.

3.2. Gas Export posibilites, FLG

The option of an LNG facility and the option of exporting liquefied natural gas from the proposed development is ruled out at since the current estimated reserves are not that large to compensate the CAPEX of an LGN plant (Frank Jahn, 1998), but most importantly because the projected demand from the Vietnamese market in high enough to support the project.