Norway's state-controlled energy giant Equinor has cancelled plans to invest in Vietnam's offshore wind sector, a company spokesperson told Reuters, in a setback for the Southeast Asian country's green power ambitions.
Vietnam has attracted international interest in its renewables plans because of its strong winds in shallow waters near coastal, densely populated areas, according to the World Bank Group, but delays in regulatory reforms have recently pushed some would-be investors to reconsider their plans.
"We have decided to discontinue our business development in Vietnam and to close our office in Hanoi," Magnus Frantzen Eidsvold, an Equinor spokesperson, said in an interview.
It is the first time Equinor has closed an international office focused on offshore wind development.
The company has previously exited more than a dozen countries where it had oil and gas activities over the last few years to focus on renewables and low-carbon systems.
Equinor's exit deals a further blow to Vietnam after Danish offshore wind company Orsted, another major player in the industry, said last year it would pause its plans to invest in large offshore wind farms in the country.
Vietnam has no current offshore wind projects but wants to install wind farms for 6 gigawatt (GW) by 2030, equal to 4% of its planned capacity, as part of plans to reduce coal and reach net zero carbon emissions by the middle of the century.
Its plans, however, have been repeatedly delayed, as recent political turbulence in the country has paralysed reforms and projects.
The industry is also considered sensitive by Vietnamese authorities because projects would be developed in the contested South China Sea, a crucial shipping waterway that Beijing claims almost in its entirety.
The industry ministry in the Communist-ruled country is pushing to assign to state-owned companies the first pilot project on offshore wind, a move that foreign investors said would slow down the development of the industry because domestic firms do have not enough capabilities.
The Vietnamese industry ministry did not immediately reply to a request for comment.
Two Vietnam-based offshore industry executives, who dfeclined to be named because they were not authorised to speak to media, said in the best scenario Vietnam could install only about 1 GW of capacity by the end of the decade because of regulatory hurdles.
They said talks are underway to convince the government to allow a foreign partner to co-develop the pilot project.
Equinor had decided to quit Vietnam after a regular review of its portfolio of renewable assets, Eidsvold said.
"The offshore wind sector has been facing significant headwinds lately and we need to be disciplined in our approach," he added.
Equinor opened a representative office in May 2022 in Hanoi, Vietnam's capital, describing the nation of 100 million as having a "high potential to become an interesting growth market for offshore wind," according to Equinor's website.
"The country has among the best wind resources in Asia," the website said.
(Reuters - Reporting by Francesco Guarascio in Hanoi and Nerijus Adomaitis; additional reporting by Khanh Vu; editing by Gwladys Fouche and Louise Heavens)