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Novatek eyes hydrogen production

on Yamal, gets ESG rating boost

ENERGY NOVATEK is looking to produce and use hydro- making Novatek relatively more attractive to
TRANSITION gen at its Yamal LNG plant in the Russian Arctic, investors versus other oil and gas companies,”
Kommersant reported on December 11. BCS GM said.
Russia’s leading LNG exporter has been Novatek pledged new goals to reduce its
looking to convince increasingly climate-con- emissions over the next decade in August, in line
scious investors of its green credentials, recently with similar moves by oil and gas firms across the
announcing new projects and targets for reduc- world. This includes a 5% cut in GHG emissions
ing its emissions. Hydrogen is one way of decar- at its LNG production facilities such as Yamal
bonising power generation. It can be produced LNG.
from natural gas using techniques such as meth- US financial firm MSCI just upgraded
ane steam reforming, and CO2 emissions from Novatek’s ESG rating significantly from BBB
the process can be captured and stored. to A, making it the only Russian company to
While gas and other fossil fuels emit CO2 and achieve such a high rating. In contrast, Gazprom
other greenhouse gases (GHGs) when used as and Lukoil have BBB ratings, while Rosneft and
an energy fuel, hydrogen releases only water as Tatneft have BB and Surgutneftegaz only B.
a by-product. Novatek has even surpassed some leading inter-
According to Kommersant, Novatek intends national oil majors such as BP, which only has a Novatek pledged
to convert one of the eight SGT-800, 47-MW gas BBB rating.
turbines at Yamal LNG supplied by Germany’s “It is unclear what the trigger for the upgrade new goals
Siemens to run partially on hydrogen. Under was, but we know Novatek has been working dil-
this pilot project, the ratio between hydrogen igently to improve its ESG score, as have, for that to reduce its
and natural gas in the turbine can reach 60:40, matter, other Russian oil and gas companies such
the newspaper said citing sources. as Rosneft, Lukoil and Gazprom,” BCS GM said. emissions over
Novatek announced on December 10 that “As a gas company with peer-leading reporting the next decade
it had formed a strategic partnership with Sie- practices, Novatek was already likely to screen
mens to “jointly develop and implement high- well with PMs, which we understand are increas- in August.
tech solutions to produce LNG, electricity, ingly under pressure from their own clients to
hydrogen and other products,” with the goal of show they are investing with ESG scores in mind.
reducing CO2 emissions. Novatek earlier said Receiving this upgrade should only confirm its
it intended to begin storing CO2 at Yamal LNG attractiveness on these measures.”
by 2022. Novatek also announced on December 1 the
Analysts at BCS Global Markets (BCS GM) opening of Europe’s first carbon-neutral LNG
said the focus on hydrogen would help bolster refuelling station for vehicles in Rostok, Ger-
Novatek’s attractiveness among investors in many. The carbon footprint from the gas the
terms of its environmental, social and govern- station sells will be offset by various emission
ance (ESG) score. reduction projects, Novatek said, including wind
“Although Yamal LNG may eventually export farms. These projects will be certified in line with
hydrogen to Europe for profit, we think the larg- the international Verified Carbon Standard, the
est impact on the stock price would come by company said.™

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