GE strengthens Vietnamese presence with US$5.5 billion of new investments

US' industrial giant GE (NYSE: GE) has just announced five agreements valued at more than $5.5 billion to support the development of the Vietnamese energy and aviation sectors during a signing ceremony that is part of Prime Minister Nguyen Xuan Phuc’s visit to the US.

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PetroVietnam's CEO Nguyen Vu Truong Son and GE Power's president and CEO Steve Bolze sign the MOU to co-develop 1,500MW new gas-fired power plants in Central Vietnam
Deepening cooperation with Vietnam

The landmark Memorandum of Understanding (MoU) has been signed to co-develop 1,500MW new gas power plants and other agreements valued at over US$3.58 billion for the new CFM International aircraft engine production and maintenance support. Together, the agreements constitute the largest combined set of transactions for GE in Vietnam to date.

Specifically, GE and Vietnam National Oil & Gas Group (PetroVietnam) signed an MoU to cooperate on the development of two 750MW combined cycle gas turbine power plants—Mien Trung I & II—using the Blue Whale gas field, which is the biggest gas project in Vietnam’s history, with an estimated 150 billion cubic meters of reserves (equivalent to 5.4 trillion cubic feet).

Mien Trung I Plant is expected to begin operation in 2023 and Mien Trung II in 2024.

GE, with its global power development expertise, will work with PetroVietnam to identify the latest technology solutions to provide higher efficiency, lower fuel consumption, and lower emissions rates.

GE has been active in Vietnam for 24 years and provides more than 30 per cent of the country’s installed base power generation capacity. The MoU with PetroVietnam, a flagship domestic economic group, once again strengthens GE’s footprint in Vietnam’s energy infrastructure development.

Meanwhile, CFM International signed two new agreements with VietJet Air, including a 12-year maintenance support contract for the airline’s 215 LEAP-1B engines ordered in 2016. Under the terms of the agreement, valued at $3 billion at list price, CFM guarantees maintenance costs for all of VietJet Air’s LEAP-1B engines that will power its fleet of 100 Boeing 737 MAX airplanes on a dollar-per-engine flight hour basis.

In addition, the airline expanded its CFM-powered A321 fleet with an order for 20 CFM56-5B engines to power 10 new aircrafts. This agreement, which also includes a long-term maintenance agreement, is valued at $580 million at list price. 

Speaking about the deals, Gaël Méheust, CFM president and CEO, said, “We appreciate the high level of confidence these agreements show in CFM and in our ability to support VietJet over the long term. It has been an honour to be a part of the very dynamic and exciting team for the last six years. It is a privilege to know that this very special relationship will continue for many more years to come.”

“Through a strong local presence, we have built long-term partnerships with our customers in Vietnam to meet the country’s unique needs,” said Wouter Van Wersch, president and CEO of GE ASEAN. “Our most recent deals, which will support our US and global manufacturing operations, further reinforce the important economic, trade, and investment partnership between Vietnam and the US.”

Shaping a sustainable energy future

GE, global wind and solar company Mainstream Renewable Power, and local Vietnamese partner Phu Cuong Group has formalised a $2-billion joint development agreement to develop, build, and operate the 800-megawatt Phu Cuong wind farm in the Mekong Delta province of Soc Trang. 

The agreement marks the next phase of the collaboration project with Phu Cuong Group announced in November 2016. The project is in support of the 1-gigawatt initiative that GE and the Vietnamese Ministry of Industry and Trade signed in May 2016.

The wind farm is expected to be the largest in Vietnam and will be completed in two phases, with the first approximately 200MW phase expected to reach financial closure in 2018. GE Renewable Energy has been earmarked as the equipment provider for both phases.

According to Mainstream’s chief operating officer Andy Kinsella, starting the construction of the first phase is a significant step forward in supporting Vietnam to deliver 1GW of renewable energy by 2020.

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A corner of the Bac Lieu wind farm developed by Cong Ly Construction-Trade-Tourism Co., Ltd. with turbines supplied by GE
“Today’s agreement is central to Mainstream’s strategic focus of bringing large-scale, low-cost renewable energy to high-growth markets across Asia, Africa as well as South and Central America. We look forward to working closely with our partners in bringing this project to fruition,” said Kinsella. This agreement marks Mainstream’s first large-scale investment in Asia and Vietnam, following the establishment of gigawatt-scale portfolios in South America and Africa.

“Producing electricity from wind energy is a new market in Vietnam. As one of the pioneers, Phu Cuong Group wants to work with strong partners with a capacity to ensure the quality of the project. GE and Mainstream are the best partners in this area. We are confident that this collaboration will bring success to the project, contributing to the development of green power to the people of Vietnam,” said deputy general manager of Phu Cuong Group Pham Quoc Anh.

Vietnam has set the goal of producing more than 10 per cent of its power from renewable energy by 2030. GE Renewable Energy has deep roots in Vietnam. The company’s manufacturing plant in the seaport city of Haiphong, which employs 500 workers, can produce multiple products, including the 1.X and 2.X wind turbine generator models and electrical control system components as well as fabrication components. 

“Taking the next step in the project further strengthens the collaboration between our three companies and reinforces our shared commitment to using innovative technology solutions to support Vietnam’s renewable energy goals. We look forward to developing more wind power projects in accordance with the 1GW initiative signed with the Ministry of Industry and Trade last year,” said Wersch.

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