July 5, 2020
AliExpress WW
Could COVID-19 Cause A Boom In Coal Power?

Could COVID-19 Cause A Boom In Coal Power?

AliExpress WW

Via Ristad Energy,

AliExpress WW
  • COVID-19 influenced not only the revenues of the energy industry, but also the development of its infrastructure.

  • The delay in new gas facilities means that many countries, such as Vietnam, will have to rely on coal production to make up for the deficit.

  • A Vietnam case study shows that these infrastructure delays will also lead to an increase in LNG imports.

The global recession in the energy industry from Covid-19 has not only damaged direct revenue, but also also affects national infrastructure planning and energy policies.

Rystad Energy analysis shows that gas resources around the world will experience development delays, and the construction of planned regasification facilities is also at risk. Coal can be beneficial as a result.

The example of Vietnam is a good example of how a country with its rich gas resources cannot meet the expectations of domestic production, instead, an increase in imports of liquefied natural gas (LNG) is required. Planned regasification plants also run the risk of delays due to recession, making coal use the only financially viable option to meet the growing demand for electricity.

Vietnam’s strong GDP growth – about 6-7 percent per year – requires a growing amount of energy resources. Vietnam expects that, thanks to the desire to satisfy the country’s steady growth, its generating capacity will reach 125–130 GW by 2030 compared to the current 54 GW. In 2019, 33 percent of the country’s energy system was provided with gas, while the rest worked on renewable energy and coal.

Even if non-gas sources achieve their respective goals, there will still be a substantial demand for gas, as it is expected that gas-generating capacity will increase from 7.2 GW at present to 15 GW by 2025 and 19 GW by 2030.

Before the pandemic, Covid-19 Rystad Energy predicted that domestic gas production in Vietnam would reach 10 billion cubic meters (billion cubic meters) by 2025. About 60 percent of all gas produced is expected to come from new developments. Our updated forecast shows a completely different picture: the pandemic crisis and low oil prices have postponed more than 200 billion cubic meters. M undeveloped natural gas reserves in Vietnam.

Regardless of the current conditions, the country is already facing a reduction in domestic gas production. Nam Con Son Gas accounted for approximately 30 percent of the country’s total gas production in 2019, and since 2010 the average decline compared to the same period last year was 8 percent. Similarly, gas production in other gas projects reached 11-40 percent. YoY decline between 2011 and 2019

Of the 180 billion cubic meters of gas resources discovered over the past 10 years, only the San Wang and Dai Nguyet fields have approved field development plans, since the FID process proved to be long and difficult. In the past decade, only 11 percent of projects have been able to secure funding and the right to start drilling and developing new resources.

“Despite the fact that in 2021 the costs of new fields in Vietnam are expected to triple, and the volume of investments will exceed $ 1.8 billion. USA, The current double crisis of low oil prices and Covid-19 has affected the ability of key stakeholders to spend capital, creating a huge obstacle to the monetization of existing available resources.“Says Rystad Energy senior analyst Dembika Chakraborty.

As a result, Vietnam will produce only 7 billion cubic meters of gas in 2025, rather than the expected 10 billion cubic meters, creating a gap of 9 billion cubic meters between domestic production and the expected domestic demand of 16 billion cubic meters. Vietnam’s goal of producing 80 percent of its electricity through gas over the next 15 years now seems even less likely.

To avoid a return to heavy coal imports, Vietnam is likely to start increasing LNG imports by 2022. Despite this, importing a sufficient amount of LNG will be difficult.

There are currently four LNG terminals in the project’s pipeline – Thi Vai LNG, Son My LNG, Tien Giang LNG and Southwest LNG projects – which together will have a total capacity of 10 million tons per year by 2025. However, the terminals, which will be built mainly in the south of Vietnam, will import only 1 million tons per year by 2023 with the launch of the first phase of the terminal in Thi Wai. This will only slightly fill the supply and demand gap.

Given this, any delays in other planned regasification projects jeopardize Vietnam’s goal, a potential outcome that seems realistic in today’s volatile market conditions.

Thus, in order to ensure a stable and affordable energy supply, Vietnam is likely to have to increase coal imports, which will make it almost impossible for the country to achieve its goal and reduce greenhouse gas emissions by 20-30 percent by 2030.


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