Navigating land tenure for bankable LNG-to-Power projects in Vietnam

1. Typical LNG-to-Power project components

An LNG-to-power project typically includes the following features (which may span across multiple projects and project companies): 

1.1 Power generation: Gas-fired power plant (combined cycle gas turbine (CCGT)/open cycle gas turbine (OCGT) as approved).

1.2 LNG receiving, storage, and processing:

1. LNG import/receiving terminal: liquid jetty/berth(s), pier(s), access channel, sea dike/breakwater, navigation aids, customs/quarantine/port services area, ancillary and safety systems.
2. LNG storage tanks (full containment or equivalent).
3. Regasification plant/station (vaporizers, BOG handling, odorization/meters as applicable).
4. High-pressure gas pipelines from the regasification facility to the power plant (including safety corridors).

In practice, the LNG terminal may be owned and operated by a third party rather than the LNG-to-power project developer, for example, PV Gas owns and operates the Thi Vai LNG terminal.  Projects assigned to, or seeking access to, such a terminal do not own the facility; instead, they enter into a terminal use agreement (TUA) with the terminal operator (e.g., PV Gas).  The TUA is a key project document, governing capacity rights, service levels, tariffs, scheduling, interface obligations, and allocation of risks and liabilities.

1.3 Power evacuation: substation (e.g., 500 kV or as approved) and associated transmission lines, towers, and protection corridors.

1.4 Auxiliary infrastructure:

1. Water intake canal and pumping station.
2. Cooling water discharge canal/pipelines and outfall structure.
3. Wastewater treatment plant and discharge pipeline.
4. Freshwater supply system and clean water pipelines.
5. Internal roads, firefighting systems, control rooms, maintenance and service workshops, security perimeter, and other technical facilities.

2. Land and Water Surface Areas Required

Aligned with the components above, the project typically requires:

2.1 Land areas

1. Power plant site.
2. LNG storage tanks and regasification facility site.
3. Substation yard; tower foundation pads for transmission lines; service roads.
4. Onshore pipeline and utility corridors (gas pipelines, cooling water supply/discharge pipelines, freshwater lines, pumping stations).
5. Auxiliary facilities (e.g., wastewater treatment plant, firefighting facilities, workshops, administration buildings).
6. LNG import/receiving terminal site (land-based).

2.2 Water surface/sea areas

1. LNG import/receiving terminal water area (berth/jetty, maneuvering/anchorage areas, navigational channel, turning basin).
2. LNG subsea/nearshore pipeline corridors (if applicable).
3. Sea breakwater/dike footprint and associated protected water surface.
4. Water intake/discharge structures and marine outfall corridor.

3. Legal classification of land for LNG-to-Power projects 

3.1 Land for Energy Works

1. Onshore areas listed in Section 2.1 above may fall within “land for energy works” (đất công trình năng lượng).
2. By law, "land for energy works" broadly covers:
   1. Land for power plants and their auxiliary facilities.
   2. Substations and power transmission lines, including safety/protection corridors.
   3. Business, service, repair, and maintenance facilities within power plants premises.
   4. Oil and gas facilities: offshore platforms, processing facilities, refineries, gas processing plants, and biofuel plants.
   5. Storage facilities (e.g., crude oil storage, tanks), gasoline/oil/gas pumping stations, pipeline systems and their safety corridors.
   6. Business, service, repair, and maintenance facilities within oil and gas facility premises.
   7. Other facilities serving energy works.
3. This land type falls under “non-agricultural land” (đất phi nông nghiệp) and, for land-use planning/zoning, is treated as “land used for public purposes” (đất sử dụng vào mục đích công cộng).
4. Also, this classification is particularly relevant where the project developer does not obtain land directly from the State but instead:
   1. leases land within an industrial zone/park from the park’s infrastructure developer; or
   2. acquires land-use rights over land plot(s) within an industrial zone/park (a notable development under the Land Law 2024, which for the first time permits foreign-invested enterprises to acquire land-use rights directly). 

   In these cases, the developer must verify and confirm that the approved land-use function of the leased or acquired plot lawfully permits energy works, especially power plants and their auxiliary facilities.  For example, in 2023 the Government Inspectorate reported non-compliance in a province, where sites for LNG power plants were mistakenly approved within an “industrial service area,” rather than an “industrial area,” which is not designated for industrial production.

3.2 LNG Import/Receiving Terminal – Land and Water Areas

1. Depending on scale and design, an LNG receiving terminal may be structured as a "berth" (bến cảng) comprising one or more piers/wharves (cầu cảng) or a single pier/wharf.¹For example, Ca Na LNG phase 1 includes a dedicated LNG berth (bến cảng).²
2. Typical elements include:
   1. Onshore facilities (yards, warehouses, administration, access roads, safety systems) on land.
   2. Water surface areas (berths, turning basins, fairways, anchorages) within port limits.
   3. Marine/coastal structures (breakwaters, jetties/trestles, dolphins, mooring systems) occupying sea areas and, where applicable, coastal protection corridors.

4. Land use forms and financial regime 

4.1 General principles

Applicable land-use forms and financial obligations (land rental/land use fee, exemptions) depend on:

1. Area classification: onshore land vs. water surface/sea area.
2. Intended purpose: whether land for energy works is used for commercial purposes.
3. Project status: public investment vs. private or PPP; and whether a work is public infrastructure with non-business use.

4.2 Land for energy works (Onshore)

1. Form of use (lease vs. allocation).Where “land used for public purposes” is obtained directly from the State by the developer (through a Vietnamese project company), the form of land use typically depends on the function of the asset:
   1. Commercial use (e.g., private IPP selling electricity under a PPA): generally land lease, with rental payable annually or one-off upfront;
   2. Non-commercial public use (e.g., service roads, shared substation yard, shared water intake/discharge canals): land allocation without land use fee may apply if, expressly stated in investment decisions/approvals.
2. Linear assets and protection corridors. Land for transmission lines, gas pipelines, and their safety/protection corridors may remain under the management of existing land users. In such cases, the project company is typically granted easement/restricted use rights rather than a full lease/allocation from the State, backed by compensation for land-use restrictions and any affected assets. This approach should be anchored in statutory and contractual instruments and reflected in cadastral documentation.
3. Lease payment structure and bankability considerations. As analyzed in the note "Land Lease vs. Land Allocation – What Matters for Bankability?":
   1. Upfront lease payment fixes the rent for the entire lease term, improving certainty but increasing the upfront financial burden. In practice, it often supports broader rights over the land-use right itself and can enhance the security package.
   2. Annual lease payment eases initial cash outlay but may be subject to future adjustments and typically focuses rights more on assets attached to the land rather than on the land-use right.

   Sponsors should factor these trade-offs into structuring and be able to clearly explain to lenders the legal basis and rationale for the chosen rental payment method.  This is essential to support bankability and align expectations on risk allocation, timelines, and conditions precedent.

4. Lender scrutiny and sponsor engagement. From a bankability perspective:
   1. lenders will closely scrutinize:
      1. the choice between lease and allocation, and the rent payment structure;
      2. the clear legal basis for corridor rights (statutory and contractual);
      3. evidence of completed or well-advanced compensation and clearance for transmission lines and corridors;
      4. The long-term enforceability of access and maintenance rights, including remedies for interference.
   2. Sponsors should be prepared to articulate:
      1. why lease or allocation is legally available and optimal for each component;
      2. the reasons for selecting annual versus upfront lease rental (e.g., tariff structure, cash flow, certainty needs);
      3. the implications for rights that can be mortgaged or assigned and for the project’s security package, conditions precedent, and risk allocation.
5. Alternative floating solutions. Some LNG-to-power projects in Vietnam have also considered floating storage and regasification units (FSRUs), which raise distinct compliance issues under maritime law (e.g., port authority approvals, berthing/anchorage, maritime safety, and environmental protection). The FSRU interface must be closely coordinated with onshore land and construction regimes. Early, integrated permitting is recommended to align maritime and onshore approvals and schedules.

4.3 LNG import/receiving terminal areas

1. Onshore port land: Typically leased for commercial terminal operations. Allocation without land use fee is only possible where assets are expressly classified and used as non-business public infrastructure in the relevant approvals.
2. Water surface and sea areas: Typically subject to sea/water area lease with rental payable. From 1 August 2024, under Decree 103/2024/ND-CP, “water surface rental” aligns within the “land rental” for payment and management purposes, replacing prior decrees.
3. Operational and safety compliance:

   Use of onshore port land and water surface/sea areas must comply with applicable technical and safety requirements, including Circular 40/2022/TT-BCT and relevant maritime regulations.  In particular:

   1. Adequate water depth must be ensured under all tidal conditions for LNG carriers.
   2. Berth structures must be engineered to withstand vessel movement, vibration, and impact scenarios, including emergencies and extreme weather.
   3. Maritime safety/exclusion zones must be established during LNG transfer operations, with clear notification to surrounding marine and land traffic.
   4. Dedicated LNG loading/unloading arms with emergency release systems must be permanently installed and protected against collision damage.

5. Practical structuring for LNG-to-Power projects

To streamline approvals and ensure compliance, developers should:

5.1 Map components to land/legal regimes:

1. Power plant plot: land for energy works – land lease (commercial use).
2. LNG tanks and regasification: land for energy works – land lease.
3. Gas pipeline (onshore): possibly mixture of leased land from the State and easements/restricted land use with compensation.
4. Substation and transmission line:
   1. Substation yard: leased land (for commercial IPP).
   2. Transmission line towers: mainly leased plots; transmission lines and corridor: possibly easement/restricted land use with compensation.
5. Port onshore area: land lease for commercial terminal operations associated with the LNG facility; align with seaport (berths) master plan.
6. Port water area and breakwater: water surface/sea area lease; obtain maritime permits and establish safety zones.

5.2 Confirm “commercial” vs “non-commercial” purpose:

1. Most IPP LNG-to-power projects are considered commercial, leading to land lease rather than allocation without fee.
2. Components to be transferred to the State or operated as public non-business infrastructure may qualify for allocation without land use fee; this requires explicit classification in investment decisions and approvals.

5.3 Align with planning: Ensure consistency with PDP VIII, provincial land-use plans, port master plans, marine spatial plans, and pipeline/transmission corridor plans.

5.4 Anticipate involvement of multiple authorities:

1. Land: Provincial People’s Committee/Department of Agriculture and Environment.
2. Water surface/sea area lease: Ministry/Department of Agriculture and Environment (depending on sea area scale), and maritime authorities.
3. Port: Vietnam Maritime and Waterway Administration and port authority.
4. Electricity: Ministry of Industry and Trade/electricity regulatory authority of Vietnam for transmission interconnection.
5. Construction: relevant construction authority for construction permits and appraisal for specialized energy works.

Authored by David Harrison and Hai Ha.