The big winner outside the Middle East battlefield: Russia secures major contracts for Vietnam's nuclear power and liquefied natural gas

Ask AI · How is Russia breaking through the sanctions deadlock through cooperation with Vietnam?

A month ago, the Russian economy was still trapped in a vise of low oil prices and Western sanctions. The fighting in the Persian Gulf completely reversed the situation, and Russia unexpectedly became the biggest winner in the energy market.

According to Vietnam News Agency (VNA), during a formal visit to Russia on March 23 led by Vietnam’s Prime Minister Pham Minh Chinh, the two countries signed an intergovernmental agreement to cooperate in building the country’s first nuclear power plant in Vietnam. Russia’s state nuclear energy corporation Rosatom, which is involved in implementing the project, disclosed that the agreement plans to build two VVER-1200 nuclear reactor units with a total installed capacity of 2,400 megawatts at the Ninh Thuan 1 nuclear power plant, using the Leningrad Nuclear Power Plant Phase II project as the reference plant. The target is to have it completed by the end of 2030.

Vietnam’s exploration of nuclear power dates back to 2009. Under the original plan, the Ninh Thuan nuclear power project would include two nuclear power plants, each equipped with two million-kilowatt-class nuclear reactor units, and they would be built jointly with Russia and Japan, respectively. Affected by the 2011 Fukushima nuclear accident and constrained by fiscal budget limits, the project was halted in mid-2016.

In recent years, with power demand growing and in the context of decarbonization, nuclear power plans across Southeast Asia have been revived one after another. During Russian Prime Minister Mikhail Mishustin’s visit to Vietnam in 2025, the two countries signed a memorandum on cooperation in nuclear energy development. Last December, Japan announced it would withdraw from the plan for Ninh Thuan 2 nuclear power plant, mainly because the target timeline for commercial operation in 2035 was too tight. After Japan pulled out, investors from France, South Korea, and the United States showed interest in the project.

On the 23rd, Pham Minh Chinh also went to Novatek to promote the construction of a large liquefied natural gas project in Vietnam. Pham Minh Chinh said Novatek’s business is highly aligned with Vietnam’s development strategy—maintaining an economic growth rate of around 10% and achieving net-zero emissions by 2050. He welcomed Novatek’s participation in developing liquefied natural gas receiving terminal infrastructure projects and liquefied natural gas power plant projects in places such as Hai Phong—Quang Ninh, the southern area of Kien Giang province, Yi Son in Thanh Hoa province, and Van Phong in Khanh Hoa province, and said he also welcomed efforts to ensure stable LNG supply to the Vietnamese market.

Novatek Chairman Leonid Mikhelson said Vietnam is one of the fastest-growing countries in the world and places high importance on energy development. Novatek hopes, on the basis of the comprehensive strategic partnership with Russia and on longstanding traditional cooperation, to continue to receive support from the Vietnamese side to expand the company’s investment in Vietnam. The company is very interested in Vietnam’s LNG sector. According to Russian media reports, Novatek has signed a preliminary agreement to supply LNG to Vietnamese customers and is preparing to start supplying the first batch of cargoes soon. “This move will open up a new direction for Russia’s natural gas exports, especially in the current context of intense international sanctions pressure.”

Vietnam has been importing LNG since 2023, and early supply sources included Indonesia, Malaysia, Qatar, and Russia.

Vietnam is one of the Southeast Asian countries most severely affected in the global energy crisis triggered by the conflict in the Middle East.

As a major fuel supplier to Vietnam, Thailand has temporarily banned the export of certain fuels, including aviation fuel. In Vietnam, concerns about skyrocketing prices and fuel shortages have been spreading, and motorbike drivers have been lining up outside major gas stations in Hanoi until late at night. Since Vietnam relies on imports for more than three-quarters of its aviation fuel, and as supply chains are disrupted, Vietnam’s Civil Aviation Authority has issued a warning that aviation fuel shortages may occur as early as April.

A research report by Mitsubishi UFJ Financial Group (MUFG) analyzes that Vietnam’s special vulnerability, compared with other parts of Asia, lies in its severe dependence on Middle East crude oil imports. Vietnam’s imports of crude oil from the Middle East account for 85%, and almost all come from a single country—Kuwait. If the Strait of Hormuz is closed, it will lead to a significant reduction in crude oil feedstock supply for Vietnam’s domestic refineries, ultimately putting pressure on Vietnam’s refineries at home. Meanwhile, although Vietnam does not directly depend on Middle East imports of refined products, nearly all of its refined products come from Asian refineries such as those in South Korea, Singapore, and Malaysia. If these regional refinery countries start to cut refinery operating rates, Vietnam will undoubtedly be affected. In addition, nearly 80% of Vietnam’s propane imports and more than 50% of its hydrocarbon gas liquids imports such as ethylene and polypropylene also come from the Middle East.

MUFG believes that once the Strait of Hormuz is closed for a long period, Vietnam will face higher electricity costs, because Asian countries will compete to buy coal and drive up coal prices. Overall, the firm estimates that for every $10 per barrel increase in the oil price, Vietnam’s GDP growth rate will fall by about 0.2 percentage points and inflation will rise by about 0.3–0.4 percentage points. If oil prices continue to rise to above $120 per barrel and are accompanied by severe energy shortages, Vietnam’s GDP growth rate could fall by more than 1%, especially after factoring in indirect effects such as disruptions to manufacturing and supply chains, and the growth rate may drop below 7%.

A statement issued by the Vietnamese government last Sunday said the focus of this visit is to deepen relations with Russia and expand cooperation in trade, investment, and energy.

“Seeking an agreement with Russia this week, Hanoi has exposed how urgently Vietnam wants to stop the outflow of energy that could threaten its double-digit economic growth targets.” An editorial in the South China Morning Post said that fuel supply disruptions caused by the Iranian war could even weaken the legitimacy of Hanoi’s new leadership. Since late February, when the United States and Israel attacked Iran, the prices of Vietnam’s gasoline and diesel (RON 95) have jumped by 50% and 70%, respectively. Given serious uncertainty in Middle East supply of goods and shipping routes, Vietnam is taking “preemptive action” to ensure fuel and electricity supplies.

Against the backdrop of a sharp rise in oil prices, on March 12 the U.S. government further loosened sanctions on some Russian oil. Before that, on March 5, the U.S. Treasury issued a special 30-day waiver order targeted at India, allowing India to buy Russian oil that had been stuck at sea. The new license orders expanded the scope to global buyers.

Based on Reuters’ calculations using a tax benchmark oil price of $75 per barrel, Russia’s April oil and natural gas export revenue will increase by 70% compared with March, reaching 900 billion rubles, the highest single-month record since October 2025.