Page 12 - AsiaElec Week 26 2021

AsiaElec HYDROGEN AsiaElec

Novatek might sell a stake in blue hydrogen

project Obsky GCP to Japan’s Mitsui

JAPAN RUSSIAN LNG producer Novatek might sell a of the momentum on the ‘green’ market that is
stake in its “blue hydrogen” Obsky GCP project picking up. By combining ammonia, hydrogen,
to Japan’s Mitsui, Kommersant reported on June and apparently methanol production, they can
24. show Western corporates they’re more compe-
Mitsui would remain the minority share- tent than their state-owned enterprises (SOEs)
holder and might also be a major buyer of ‘blue’ competitors in Russia, have a great relationship
ammonia produced by the project. Blue hydro- with the state, and want to build ‘green’ assets.
gen is hydrogen made by sheering off hydrogen The current cost of CO2 emission in Europe
from hydrocarbons and capturing the result- has soared this year and is currently at $60 per
ing CO2 waste gas. The project is at the port of tonne, so any premium is likely to be around
Sabetta on the Yamal peninsula and might be $100/t, which can be added to the current unu-
launched in 2026. sually high price of ammonia of $530/t.
The project envisages the construction of Accounting for carbon capture (to make
2.4mn tonnes of capacity of conventional steam ammonia ‘blue’), the project might cost $1,100-
methane reforming, and ammonia synthesis 1,400 per ton in terms of capex, or $2.4-3.1bn
with capacity of 2.2mn tonnes. That will also for the entire plant, according to VTB Capital
capture the CO2 emitted in the process of steam (VTBC) estimates.
reforming and power generation, which would “In our view, the plant is to be subject to the
allow the company to certify the ammonia as subsidies that are currently being discussed by
“blue” and get the corresponding premium the government. We expect the project to have
which is starting to arise on the international NPV of $1.2-1.5bn. Overall, we see the news as
markets. supportive for Novatek,” VTBC said.
What’s most important here is that the “The fundamental ESG advantage of gas
ammonia plant is intended to make use of CO2 names, coupled with company-specific drivers
from the methane released during the pro- and potential geopolitical shifts, will, we expect,
duction of “blue” hydrogen, a new angle to the provide the catalysts for a further appreciation
Arctic-2 LNG project Novatek is leading with in Russian gas stocks relative to oils. Overall, we
TotalEnergies (and in which a Japanese consor- believe that Novatek might have strong advan-
tium including Mitsui owns 10%). tages in terms of the cost of energy, water and
These projects aren’t necessarily sanctioned infrastructure, to compete with international
or else as closely scrutinised by OFAC and projects in carbon capture, utilisation and
European authorities and they allow Novatek sequestration (CCUS) and ‘blue’ hydrogen/
in particular to get a step ahead of Rosneft, ammonia/other fossil derivatives with a cleaned
Gazprom and Lukoil in creating value-added CO2 footprint,” VTBC added.™
synergies from its output that take advantage

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