US companies sign US$3 billion deal for LNG-to-power project in Vietnam

Three American companies namely Bechtel Corporation, General Electric and McDermott have signed an agreement to provide equipment and services worth more than US$3 billion for a liquefied natural gas (LNG)-to-power project in Vietnam’s Mekong Delta.

Map of Delta Offshore Energy's Bac Lieu project

Under the Master Teaming Agreement signed on October 28 at the 2020 Indo-Pacific Business Forum (IPBF) in Hanoi, the signing is aimed to utilize the best-in-class American technology and engineering from the US for the 3,200-megawatt Bac Lieu LNG-to-power project developed by US-headquartered Delta Offshore Energy.

Costing US$4 billion, this is the biggest foreign direct investment project in the Mekong Delta so far, scheduled to become fully operational by the end of 2027. 

The investor plans to complete the preparations for the investment by the end of 2020. At the end of 2023, it will build a station to storage, recycle, and bring gas ashore as well as operate the first-phase gas turbine capacity of 750MW.

The complex project will comprise of a 3,200-megawatt combined-cycle power plant which will cover 40 hectares of land, a floating station to receive and store 150,000-174,000 cubic meters of LNG, a gas recycling station, and a 35km high pressure gas pipeline.

The power plant is designed to generate over 20 terawatt hours (TWh) of electricity (20 billion kWh) annually and will have regasification capacity of up to six million ton per annum (6 MTPA).

The total project concession will be up to US$50 billion over 25 years and is expected to import up to 3 MTPA of LNG. It is expected to help balance US-Vietnam trade which is now in the Southeast Asian country's favor.

Led by Delta Offshore Energy, with cooperation from Bechtel, General Electric and McDermott, the project has appointed industry-leading American firms as advisors including JP Morgan as project finance Mandated Lead Arranger, Hogan Lovells as international counsel, Black & Veatch as technical advisor, Marsh as insurance and risk advisor.

The project, which is the first private sector owned and operated LNG-to-power project approved in the national master power development plan as a totally foreign-invested project, is expected to help address the growing clean, reliable and competitive energy needs of Vietnam and its rapidly growing economy.

Bac Lieu project is of national importance with public support by Vietnam’s top leaders to ensure energy security for the socio-economic development of Bac Lieu province, a top shrimp exporting province, as well as the rest of the Mekong Delta of Southern Vietnam, the nation’s bread basket which currently faces a power shortage of up to 20% according to Vietnam’s Ministry of Industry and Trade.

The project is a flagship model for the US-Vietnam bilateral relations on trade, investment and energy security and represents a new dawn for private sector-initiated investments in energy infrastructure in Vietnam, according to the US Embassy in Hanoi.