Flexibility crucial for Vietnam’s LNG goals

Vietnam is considering adjustments to electricity offtake rules for liquefied natural gas (LNG) projects under. Partner David Harrison and Counsel Hai Ha from Hogan Lovells explain why the proposed changes are intended to strengthen project bankability and support LNG development.

- David Harrison and Counsel Hai Ha

There are now efforts to balance investment incentives with concerns over system costs

Vietnam is considering strengthening offtake assurances for LNG-to-power projects through proposed amendments to Decree No.56/2025/ND-CP, given lukewarm interest from sponsors and financiers with respect to the current framework.

Policy discussions led by the Ministry of Industry and Trade (MoIT) indicate that the “long-term minimum contract quantity” (Qc) may be increased from 65 to 75 per cent, alongside a potential extension of the applicable term from up to 10 years to as much as 15 years.

These proposed changes are intended to enhance the bankability of LNG projects identified under the amended Power Development Plan VIII (PDP8), while balancing the risks of over-contracting and higher system costs for Vietnam Electricity (EVN).

Under the PDP8, Vietnam targets 22,524MW of imported LNG-fired power capacity by 2030 and 34,724MW by 2035, with a long-term orientation towards co-firing or conversion to hydrogen by 2050. The plan identifies 21 LNG thermal power projects, including 15 scheduled for operation between 2025 and 2030 and six others between 2031 and 2035.

Policymakers view LNG as a flexible and dispatchable energy source critical to supporting renewable energy integration and ensuring system reliability. LNG power is also expected to help stabilise the electricity system as Vietnam accelerates renewable deployment under its energy transition strategy.

However, LNG-fired generation remains significantly more expensive than many alternatives, and is exposed to global commodity price volatility and geopolitical risks because LNG is an imported fuel source for Vietnam.