SK Innovation Eyes Vietnam's Growing AI Power Demand with LNG and SMR Initiatives

SK Innovation is set to pursue energy business ventures in Vietnam, focusing on Liquefied Natural Gas (LNG) and Small Modular Reactors (SMRs) to address the escalating electricity demand fueled by AI data centers and burgeoning high-tech industries. The company aims to leverage its established LNG supply networks from the United States and Australia for short-term fuel provision while exploring long-term partnerships in next-generation SMR technology.

SK Innovation CEO Choo Hyung-wook recently visited Vietnam, engaging in discussions with officials from the Ministry of Industry and Trade, the state-owned energy firm PetroVietnam (PVN), and its power subsidiary PV Power. These talks centered on potential collaborations in the energy and advanced technology sectors. The strategic move is predicated on the projection that Vietnam's power needs will surge due to the rapid growth of industries requiring substantial electricity, such as AI data centers and semiconductor manufacturing.

SK Innovation believes that a stable power supply infrastructure is crucial for attracting AI data centers and advanced manufacturing facilities. The pace of power infrastructure development is seen as a key factor that could influence Vietnam's competitiveness in attracting foreign investment in high-tech sectors. "The rapid advancement of AI is expected to significantly increase power demand," stated Choo. "For the time being, LNG can be a realistic solution to secure energy security."

In the short term, SK Innovation proposes expanding LNG-powered generation in Vietnam. Despite Vietnam's economic growth and expanding manufacturing base driving up power consumption, the volatility of international LNG prices and supply poses a challenge for increasing gas power generation. SK Innovation plans to mitigate this by utilizing its gas field assets and long-term LNG contracts in the US and Australia to supply fuel for Vietnamese power projects, diversifying supply sources to manage market fluctuations.

Looking ahead, SK Innovation intends to collaborate with PVN on next-generation SMR technology. The company is partnering with US nuclear firm TerraPower to commercialize its fourth-generation reactor technology, 'Sodium.' This advanced SMR design integrates energy storage systems, allowing for adjustable power output based on demand fluctuations. Choo expressed anticipation for a long-term partnership in the nuclear sector with PVN once the technology and economic feasibility of next-generation SMRs are verified. PVN itself is diversifying its business portfolio beyond oil and gas to include LNG power generation, renewable energy, and nuclear power.