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Vietnam's natural gas sector to triple in size in fifteen years

November 10, 2010

Hanoi, Nov 11, 2010 – Vietnam’s natural gas sector is set to triple in size over the next fifteen years, according to a World Bank report released today, “Vietnam Gas Sector Development Framework.”

The report presents a vision of the infrastructure and institutions needed to overcome the challenges and realize these objectives. According to the report, the gas sector is facing multiple challenges, including greater demand for gas; and a potential gas shortage, which may become worse if a few key decisions for change are not made soon.

“Development of the natural gas sector is a key component of Vietnam’s overall economic policy and is prominent within the National Strategy for Energy Development.” says Alain Barbu, Acting World Bank Country Director for Vietnam. “Vietnam wants to move toward more competitive markets with more liberalized pricing, and this should be done gradually, so that a stable pricing framework, with linkages to competitive fuel markets, can support the build-out of gas production and infrastructure.”

The report recommends that from now until 2025, Vietnam should apply various measures to address the uncertainty in the pricing methodology, the weakness in converting resources into reserve and to attract more investment in the sector. Specifically, Vietnam needs to create a competitive gas pricing methodology, as well as eventually a wholesale competitive gas market. It also suggests the Ministry of Industry and Trade set up an advisory unit on gas policy development, adjusting PetroVietnam’s role and establish a modern regulatory structure.

Vietnam’s gas sector, according to the report, has tremendous potential which can be realized by 2025 with concerted and coordinated efforts by public agencies and their private partners. Gas now meets over 15% of the country’s primary energy demand and 88% of the gas is currently consumed in the power sector. Gas-fired generation accounts for 40% of total electricity supply.

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