The global LNG price has experienced significant fluctuations due to various factors, including the pandemic and the war conflict. Especially when Vietnam has a policy of importing and using LNG as the main fuel in gas power production, the rise of demand for gas has led to many issues of concern.
1. Current price of LNG on the gas market
An increase in gas demand and the improvement of liquefaction technology promote fueled gas market growth and the entry of new countries. The LNG price can be affected by many factors like weather, supply and demand, and crude oil prices. The biggest LNG importers are Asian countries, for example, Japan, China, and Korea. China accounts for half of the gas industrial growth rate. However, it is predicted to fall slightly when pipelines from Russia start to supply LNG to China in the upcoming years.
LNG prices of some countries as of October 2021
According to Statista, the standard LNG price was up to 29.74 USD/MMBtu in October 2022. It was increased more than prices in January 2021 (at 8.21 USD/MMBTU) because of the supply problems. Besides, this statistic also demonstrates that the LNG landing cost has a price difference among countries. In this case, the Korean LNG landing cost was estimated at 35.43 USD/MMBTU in October 2021, compared to the United States (Lake Charles) landing cost was just about 5.43 USD/MMBTU.
The great price fluctuation is not only because of the primary factors such as weather, supply and demand and oil price, but also because the gas demand rising rapidly after the pandemic, and ongoing geopolitical conflicts, such as the one between Russia and Ukraine, which continue to influence LNG prices on a global scale.
Read more: What is liquefied natural gas (LNG)? Is LNG clean energy?
2. The issues Vietnam has to face when the LNG price fluctuates
The LNG price growth dramatically in recent years has caused many problems for nations that use LNG, including Vietnam. Therefore, Vietnam has to face socio-economic challenges. In the period of promoting LNG import to serve domestic demand, and as the main fuel for natural gas power development projects, the volatility in LNG prices raises concerns about the implementation of LNG projects in Vietnam.
The increase in LNG price puts pressure on implementing the power plant projects. It becomes harder when Vietnam depends completely on imported LNG. Electricity price is influenced by the LNG price. In other words, the rise of LNG makes it hard for gas power projects to enter the gas market and directly affects the progress and the qualification of gas power development projects.
It not only impacts on the development project based on raw LNG materials in Vietnam but also affects the other countries that depend on imported LNG. Nevertheless, many forecasts illustrate that the LNG price will be stable in the next few years. For this reason, our countries promote the preparation of infrastructure to import LNG at the end of 2023 and are going to execute each phase of the gas power LNG plan in the near future.
