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Novatek mulls wind farm to
make Yamal LNG cleaner
ENERGY RUSSIA’S Novatek is reportedly considering the company in general, Novatek could generate
TRANSITION construction of a wind farm on the Yamal Pen- some premium for its clean LNG,” analysts at
insula in order to limit Scope 2 emissions at its VTB Capital (VTBC) said. “On top of that, it
Yamal LNG plant. might further improve how ESG-focused funds
Like other Russian oil and gas companies, perceive the company.”
Novatek is under heightened pressure to reduce Novatek is looking to reduce its CO2 emis-
the emissions from its products, in order to boost sions by 5% by 2030. The company recently
its environmental, social and governance (ESG) revealed it would convert its Obsk LNG project
rating and make its gas more attractive to buyers. to produce clean fuels ammonia, hydrogen and Danish developer
The proposed plant at the port of Sabetta would methanol, in a bid to improve its climate creden-
have a capacity of up to 200 MW, Moscow-based tials further. Vestas is
Kommersant reported on June 28 citing sources, “The practical effect on the environment of
and analysts estimate it would cost RUB12-14bn adding wind to the power mix at Yamal LNG, considered
($166-194mn) to build. Danish developer Vestas of course, would be limited, but the effect on
is considered the most likely company to win the the attractiveness of Novatek’s products on the most likely
construction contract, the newspaper said. the European market would be material,” ana- company to win
By powering Yamal LNG with wind energy, lysts at BCS Global Markets (BCS GM) added.
Novatek will reduce the facility’s CO2 emis- “Buyers there – especially those that are publicly the construction
sions by 240,000-260,000 tonnes per year (tpy), traded – are under pressure to show progress on
according to Kommersant. In the longer term, it decarbonisation.” contract.
could be used to produce green hydrogen, which BCS GM said it expected so-called green
could also be used as a low-carbon energy source LNG to generate a premium on the market,
at Yamal LNG and other Novatek projects in the meaning that the wind project could generate a
area. “reasonable return” on investment for Novatek.
Analysts believe that while the reduction in “Ultimately, whether or not wind power is
emissions is fairly insignificant for the company, a positive-NPV project may be irrelevant to
it will benefit from the fact its gas will be per- Europe’s equity investors,” BCS GM analysts
ceived as cleaner. continued. “Themselves under pressure to
“While the targeted decrease in CO2 emis- improve the ESG attractiveness of their portfo-
sions and the green hydrogen production vol- lios; this project may increase their appetite for
umes are likely to be not that significant for the Novatek’s shares.”
Week 26 02•July•2021 www. NEWSBASE .com P11
