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Even so, PGNiG says the transaction will enable More talk of carbon-neutral LNG
it to boost its output in Norway by 45% to 0.9 The idea of carbon-neutral LNG is being talked
bcm in 2021 versus the level last year. It expects about with increasingly frequency, although
to net 0.2 bcm in annual gas supply from it accounts for only a miniscule fraction of the
the fields between 2023 and 2028. LNG market to date.
Six cargoes of LNG that can be described as
If you’d like to read more about the key events shaping carbon-neutral have been traded to date. Four of
Europe’s oil and gas sector then please click here for these were cargoes sold by Royal Dutch Shell that
NewsBase’s EurOil Monitor. involved full-lifecycle carbon offsets, while one
was a partial offset by Japan’s JERA.
FSU: Rosneft projects take shape There has also been a tender by Pavilion
Russia’s Finance Ministry has submitted several Energy for offsets up to the point of delivery.
bills to the State Duma that would radically over- Earlier this month, carbon-neutral LNG Two sets of
haul the country’s oil taxation system, largely at a was discussed at the Gastech Virtual Summit,
cost to producers. where speakers noted that the growing appe- buyers could
The ministry has proposed changes to the tite for offsetting emissions from the fuel would
excess profits tax (EPT) regime introduced last raise its costs. However, such an increase in the emerge on
year, which it previously said had caused a loss of price of LNG would come at a time when low
over $3bn to the budget. It has also called for the natural gas prices are key to displacing com- LNG markets
removal of tax breaks at specific projects, moving peting fuels, including coal, and to penetrating if carbon-
some of those fields to the EPT regime instead. emerging, price-sensitive markets in Asia. As
As analysts note, the changes appear to go a result, the industry would need to be careful neutral LNG
further than simply increasing oil industry tax to balance decarbonisation with remaining
revenue. Rather, they seem aimed at streamlin- cost-competitive. becomes more
ing Russia’s excessively complex oil tax regime. Wood Mackenzie’s principal analyst for
Generally, though, the impact will be nega- Asia-Pacific gas and LNG, Lucy Cullen, told commonplace
tive for oil producers, while gas producers are Gastech that two sets of buyers could emerge on
unaffected. Gazprom Neft will be hit hardest, the LNG market if carbon-neutral LNG becomes
losing up to 21% of its EBITDA if the ministry’s more commonplace. The first set would be those
proposals are adopted. Tatneft might lose 20%, that are more carbon-conscious and the second
while Lukoil’s earnings could lose 8%. would be those that are more sensitive to price.
However, Russia’s biggest oil producer Ros- The discussion about carbon-neutral LNG
neft will fare relatively well from the many comes as Qatar – one of the leading producers
changes. Not only this; while the ministry’s pro- of the super-chilled fuel – is seeking to undercut
posals are generally aimed at increasing the tax competitors by developing significant new low-
burden, it has also called for greater tax breaks to cost LNG capacity. This week, a warning came
be provided to Rosneft’s Priobskoye and Vankor that this push to bring down the cost of LNG
oilfields. The latter will play a key role in the could make it more difficult for producers in
company’s Vostok Oil megaproject in the Rus- Australia and elsewhere to sanction new lique-
sian Arctic. faction projects.

If you’d like to read more about the key events shaping If you’d like to read more about the key events shaping
the former Soviet Union’s oil and gas sector then the global LNG sector then please click here for
please click here for NewsBase’s FSU Monitor . NewsBase’s GLNG Monitor.

Week 38 24•September•2020 www. NEWSBASE .com P9