As China tightens the noose over Vietnam’s ability to drill for oil and gas in its own UN-mandated 200-nautical mile Exclusive Economic Zone (EEZ), the country is turning to solar energy and other renewables to make up for lost ground.
Over the weekend, Singapore-based Sunseap Group broke ground on Vietnam’s largest solar farm, a 168-MW project in Ninh Thuan province. The $150 million project will become operational in June 2019 and supply more than 200 kWh of electricity to the national power grid annually, Sunseap said in a statement.
However, more solar projects are planned. Around 30 foreign and domestic companies have been approved to build solar power plants in the province. This has the potential of adding 9,999 MW of solar energy to the national grid.
Vietnam plans to triple the renewables needed for power generation by 2030, a report in the Singapore-Channel News Asia said on Saturday, citing government sources. Moreover, the country, whose GDP growth is second only to China in the Asia-Pacific region, is forecast to see its electricity demand increase more than 10 percent annually amid this economic growth.
Vietnam backed against the wall
The quandary for Vietnam is that this increased electricity demand comes as the country’s natural gas reserves needed for power generation are being depleted. In an effort to offset this decline, the country needs to either import liquefied natural gas (LNG), pivot back to coal or explore for more of its own gas resources.
LNG for its part is the most expensive of the three choices, while Vietnam still doesn’t have its first LNG receiving terminal. Prices for LNG also fluctuate, particularly spot prices during during peak season in the winter months. Also, with a ramp up in gas and LNG demand coming from China per Beijing’s mandate that gas make up at least 10 percent of its energy mix by 2020, upward pressure will weigh on LNG prices in Asia going forward.
Spot prices for LNG in Asia breached the $10/MMBtu price point this past winter amid unexpected increases in Chinese gas demand.
Coal for its part has been one of the fuels of choice in Asia for power generation but it’s also the dirtiest burning hydrocarbon and countries in the region are trying to reduce their coal and carbon foot prints. This leads to Vietnam’s plans to explore for and produce more of its own gas off its coast.
However, twice in the past year Beijing has pressured Vietnam to stop gas projects within Vietnam’s own territorial waters, which Beijing also claims as part of its so-called nine-dash line that comprises more than 90 percent of the South China Sea.
Two months ago Hanoi caved into pressure from Beijing, and ordered Spanish energy firm Repsol to stop drilling for oil and gas at the Red Emperor block in waters off Vietnam’s southeast cost. The Spanish company and PetroVietnam were joint partners in the venture.
The project was in its final stages, while the pull-out could cost Repsol some $200 million in lost investment, a figure that that the Madrid-based company says it wants Vietnam to reimburse.
Also, last July Vietnam also ordered Repsol to stop oil drilling operations at an adjacent location, Block 136/3, in response to what media at the time called “threats from China.”
Taking it to the streets
All of these developments up the ante for Vietnam, a country that has complex economic and political ties with its giant neighbor to the north. However, most Vietnamese have a decided anti-China stance that is complicating matters even more for the government.
This weekend, as ground was being broken on the country’s largest solar project, protesters in the country’s capital, Hanoi, and economic hub, Ho Chi Minh City (Saigon), took to the streets in large numbers to protest a recent government move that would allow foreign firms to lease land for up to 99 years in three special administrative and economic units. The concern for most Vietnamese is that the new deal will be dominated by China.
Demonstrators in Hanoi carried anti-China banners, including one that said “No leasing land to China even for one day,” while protestors in Ho Chi Minh City were dispersed by police. Some were later put in vehicles and driven away, according to a several media reports.
Police arrested 102 protesters in Vietnam’s central province of Binh Thuan on Sunday, the country’s online newspaper VnExpress reported, citing local police. The report added that dozens of policemen were injured in the incident.
Yesterday, the Chinese government warned its citizens living in and traveling to Vietnam to pay attention to security while traveling within the country.