Page 4 - FSUOGM Week 31 2021

FSUOGM COMMENTARY FSUOGM

Novatek doubles down

on ESG concerns

Novatek has often said it offers some of the cleanest gas available of the market

RUSSIA RUSSIA’S biggest LNG exporter Novatek put Gyetvay confirmed that the company had just
further emphasis on environmental, social and signed a pre-FEED contract on the project, add-
WHAT: corporate governance (ESG) concerns in its lat- ing that the scheme could still produce some
Novatek's latest corporate est corporate call on July 29, while also announc- LNG in addition to chemicals. But ammonia is
call was mostly dedicated ing plans to expand oil production. expected to be the main focus.
to ESG issues. As analysts at BCS Global Markets (BCS GM) “We are analysing the markets and talking
noted, “ESG dominated the presentation, with with our Asian and European partners to under-
WHY: eight of the first 12 slides devoted to sustaina- stand their long-term perspectives,” Gyetvay
Novatek is eager to bility.” Among the highlights, Novatek noted explained. “To us, ammonia represents a new
improve its climate that up to 20-30% of gas usage at its Yamal LNG market and not just for fertiliser consumption,
credentials in front of project could be replaced with hydrogen. In the as it could be used in ship transport, electricity
investors. company’s future LNG projects, the ratio could generation and industrial consumption.”
reach 40-50%. He also stressed ammonia’s importance as a
WHAT NEXT: Novatek has been working since last year with useful carrier of hydrogen, given its lower vol-
The company still Baker Hughes and Siemens on the potential of its ume density.
expects to expand its gas gas turbines to run on hydrogen in order to lower Novatek has often said it offers some of the
production in the coming direct emissions from its production activities. cleanest gas available on the market. It estimates
decade, viewing the fuel Hydrogen can be produced from natural gas that its greenhouse gas (GHG) intensity ratio
as having a key role in without emissions if the CO2 that is released is dropped 1% to 295 kg of CO2 equivalent per
the energy transition. captured and stored. barrel of oil equivalent (boe) last year, versus an
“Preliminary analysis shows that at the cur- industry average of 359 kg of CO2, despite a 3.1%
rent production sites, 20% to 30% of natural gas climb in its hydrocarbon output.
used in turbines can be replaced with hydrogen, The company also delivered a 19% reduc-
and on future production sites, it is estimated tion in Scope 1 GHG emissions in 2020 thanks
that we can replace up to 40% to 50% with hydro- to increased utilisation of associated petroleum
gen,” Novatek CFO Mark Gyetvay said. gas and energy efficiency measures. Scope 1
Novatek is also reconfiguring its Obsk LNG and 2 emissions accounted for only 5% of the
project to produce the low-carbon chemi- company’s total direct and indirect emissions,
cals blue ammonia, hydrogen and methanol. Gyetvay said, meaning that Scope 3 emissions

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