The Texas-based company is weighing stakes in two power plants and the gas import infrastructure to feed them, as well as in the oil refining sector, according to a post Thursday on a central government website, citing a phone call between Prime Minister Nguyen Xuan Phuc and Irtiza Sayyed, Singapore-based president of ExxonMobil LNG Market Development Inc.
The prime minister said shipments of American natural gas would “help create harmonious trade balance between Vietnam and US” Exxon’s investment would also contribute to relations between the countries, especially as 2020 marks the 25th anniversary of reestablishing diplomatic ties. Exxon declined to comment.
The US has sided with Vietnam in its growing tensions with China over territorial disputes in the South China Sea, where Beijing’s claims overlap with several neighboring nations. Exxon holds a major stake in Vietnam’s largest offshore energy project, and the government in Hanoi last year tried to tamp down speculation the US giant planned to divest amid pressure from Beijing.
If confirmed, it would mark a step further for Exxon into power generation, following other global majors such as Royal Dutch Shell Plc and Total SA, which have been diversifying away from upstream production in the face of volatile prices and an uncertain demand future. Exxon so far hasn’t announced plans to build power plants itself, although it has been involved in ventures aimed at developing generation capacity.
Vietnam’s rapid economic growth means that its peak power demand will increase more than 2.5-fold to 2030 from 2018, according to BloombergNEF.
Investing in power plants could help lock in customers for Exxon’s growing LNG supply, which will continue to expand with the startup of projects from the US to Mozambique. According to the post, Exxon is interested in the 4,000 MW Haiphong project and the 3,000 MW Long An venture, including the terminals to import LNG, which the company would supply from the U.S. and other countries.
Exxon has a 64 percent stake in Ca Voi Xanh, or Blue Whale, a joint-venture with state-owned Vietnam Oil & Gas Group that lies about 80 kilometers (50 miles) off the coast of Danang.