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Novatek eyes CCS

ENERGY RUSSIAN LNG producer Novatek has revealed
TRANSITION plans to take a final investment decision (FID)
next year on what would be Russia’s first carbon
capture and storage (CCS) project.
LNG exporters across the world are under
pressure from investors to reduce their emis-
sions, and Novatek is no exception. The com-
pany, which currently boasts the highest
environmental, social and governance (ESG)
among Russia’s oil and gas majors, is looking
to produce hydrogen at its Yamal LNG in the
country’s far north. Hydrogen, touted as a key
solution for decarbonising heavy industry, can
be produced from natural gas and made carbon
neutral if the CO2 emissions from the process generators. And it has teamed up with German
are captured and safely stored. energy group Uniper to look at developing an
While it is testing the waters of new energy integrated chain for producing, transporting
technologies, Novatek says it still confident and supplying hydrogen. Uniper’s power plants
about the long-term growth potential for natu- in Russia and Western Europe are seen as poten-
ral gas demand. This growth is expected to come tial recipients for the fuel.
on the back of rising economic output and the
phasing out of coal-fired power generation in Other Russian efforts
Asia. Novatek is not the only Russian oil and gas com-
“The world is changing and it needs more gas pany taking steps to improve its environmental
rather than less gas,” Novatek CFO Mark Gyet- credentials.
vay said in a speech at the CERAWeek by IHS State oil major Rosneft recently presented its
Markit conference. 2035 carbon management plan to investors, tar-
Novatek’s flagship project is Yamal LNG, geting a 30% reduction in its upstream Scope
capable of exporting up to 17mn tonnes per 1 and 2 emissions over the next 15 years. The
year of LNG. It will be joined by the company’s company is also seeking to prevent 20mn tpy
20mn tpy Arctic LNG-2 starting in 2023, and of CO2-equivalent emissions, while making
several other projects over the course of the next cuts to its existing emissions, currently at over
decade. 80mn tpy. It wants to develop renewables and
Novatek has recently undertaken a subsurface other clean technologies including hydrogen, as
geological study at the South Tambey field on well as natural carbon sinks, while building up
the Yamal Peninsula that supplies Yamal LNG’s its natural gas business and improving energy
gas. efficiency.
“We know now what reservoirs are available Meanwhile, Novatek’s main domestic rival
for carbon storage and where we can place CO2 Gazprom announced this week it would start
With this in injection wells,” Gyetvay explained. “We have sending carbon-neutral LNG to Europe “in the
mind, Yamal LNG also done the same thing throughout our whole near future.”
“There are not many carbon-neutral LNG
portfolio to identify exactly where we can start
shareholders will injecting carbon.” cargoes shipped around the world yet, and we
There is currently no legislation in place to are taking our first steps here, too,” the head of
be able to take a govern CCS development, but this is something LNG at the company’s export arm Gazprom
final investment that should be addressed this year, the CFO Export, Pavel Sedov, said during a presentation
of a Shell LNG outlook. “And I would like to
continued.
“With this in mind, Yamal LNG shareholders thank Shell for their constructive partnership
decision on the will be able to take a final investment decision approach which helps us find ourselves in this
CCS project by [FID] on the CCS project by early 2022,’ he said. segment.”
Creating a certification process for complying
The shipment of the first carbon-neutral
early 2022. with reduced and zero carbon emissions at LNG cargo “will be a definitive achievement and the
plants is another issue that needs to be over- first step to a more environmentally orientated
Mark Gyetvay come, and this will be key for Novatek to prove portfolio of gas products,” he said.
CFO to its buyers that it is compliant with emissions Gazprom and Royal Dutch Shell work
Novatek standards, Gyetvay said. together at the 11mn tpy Sakhalin LNG plant
Yamal LNG is already equipped with a vapour in the Russian Far East, alongside Japan’s Mit-
recovery system that captures boil-off gas in the sui and Mitsubishi. But Gazprom is developing
liquefaction process. This gas is then re-used as a second, 13mn tpy facility in Ust-Luga, on the
fuel at the facility, helping to reduce emissions. Baltic Sea shore, with its private Russian partner
Novatek is also working on a plan to feed blue Rusgazdobycha. That project is due to deliver its
hydrogen into Yamal LNG’s gas-fired power first gas to markets in 2024-2025.™

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