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Delta Offshore Energy signs PPA for Bac Lieu LNG project

The 3.2GW power facility is expected to come into service in 2024

Delta Offshore Energy has signed a power purchase agreement (PPA) for the 3.2GW Bac Lieu LNG-to-power project. DOE made the announcement on January 21, following negotiations with the Vietnamese govermment which began in late December.

Under the 25-year PPA, Vietnam will purchase electricity from Bac Lieu, with a lifetime value of approximately US$50 billion.

Bac Lieu LNG2P is the first 100% privately funded major project in Vietnam, and an important the step in the country’s transition from coal to gas as a primary fuel for power generation. It forms part of the revised national power plan PDP7.

It involves a 3.2GW power generation facility with a liquefied natural gas receiving terminal, a regasification plant, a pipeline, and associated infrastructure onshore and offshore, which will be built in the Mekong Delta province of Bac Lieu.

According to DOE, Vietnam has emerged as the top foreign direct investment destination in the region, and is well-placed to benefit from the “China Plus-one” strategy being pursued by many global industries.

Vietnam’s rapid industrialization is straining its existing power grid, and serious shortages and outages are already an issue in some parts of the country, particularly in South Vietnam, which has the largest population and industrial cluster in the nation.

Expected to enter into service in 2024, the Bac Lieu LNG2P project will help provide much needed power security. The project has been progressing slowly, but reached a nunber of important milestones over the past 12 months. These include:

  • A request for proposals from LNG suppliers, asking for a price quote on delivery of 25 years worth of LNG. This reached a semi-final stage in which nine bidders (from an initial field of 29 suppliers) remain.
  • The choice for design and construction of the LNG floating storage unit (FSU), a key element of the power plant’s fuel supply, reached the final stage, with DOE beginning review of the two most interesting bids.
  •  International contractors McDermott completed the front-end engineering design (FEED) of the pipeline that will transport the gas from the regasification terminal to the power plant.
  •  Global engineering company Bechtel completed the all-important pre-FEED study necessary to establish the engineering basis of the plant, and international engineering firm Black & Veatch completed their concept study of the plant.

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