Japanese Prime Minister Yoshihide Suga's recent three-day visit to Vietnam saw Japanese companies signing two memoranda of understanding (MoU) on October 19 to develop gas-fired power projects in the Southeast Asian country.
Under one MoU, Tokyo Gas Co., Marubeni Corp. and PetroVietnam Power Corp. will start work on a 1.5GW facility in Quang Ninh Province along the country's northeastern coast, which is estimated to cost US$1.9 billion.
A separate MoU was signed under which Marubeni will invest US$1.3 billion in the O Mon 2 power plant in Can Tho, a city in southern Vietnam’s Mekong Delta region. The 750MW gas-fired plant will be developed together with a Vietnamese partner, next to the existing O Mon 1 Thermal Power Plant, which has a capacity of 660MW.
Tokyo Gas, Japan’s biggest gas distributor, said last year it will increase investments in overseas infrastructure projects in liquified natural gas (LNG) and renewable energy, as part of efforts to grow its overseas earnings. Its medium-term target is generate 20% of earnings from abroad, from only 5.8% as recently as in 2018.
The company has developed close ties with Vietnam. In 2017 it acquired a 24.9% stake in Vietnamese gas firm PetroVietnam Low Pressure Gas Distribution Joint Stock Co., a unit of PetroVietnam Gas Joint Stock Corp. Under a strategic alliance, Tokyo Gas has helped expand sales to industrial gas users.
In its medium-term management plan released in March, Tokyo Gas said it will shift from viewing LNG as a raw material of gas and electricity delivered to its clients to viewing it also as “product”.
As part of a transformation of the LNG value chain, it will create and provide the various types of value from trading, production and power generation. By increasing the flexibility and competitiveness of its procurement portfolio, Tokyo Gas will work to expand LNG operations through trading, supported by terminal operations that are integrated with overseas LNG demand.
The company said that as LNG demand continues to increase worldwide, it will optimize LNG supply and demand by utilizing the group's assets and deepening co-operation with other companies in order to expand both transaction volumes and profits.
During his visit to Vietnam, Suga met with Vietnamese Prime Minister Nguyen Xuan Phuc and agreed to increase co-operation on both economic and security matters. The Japanese leader, who assumed his post just this September, also highlighted his country's role in Vietnam's infrastructure sector.
Japanese companies, for example, are heavily involved in the construction of parts of the Ho Chi Minh City Metro, whose Line 1 is expected to start operations towards the end of 2021. Sumitomo Corporation and Shimizu-Maeda are the main contractors on the 19.7-kilometre line, with the trains supplied by Hitachi.
