Page 6 - FSU OGM Week 11 2021

FSUOGM COMMENTARY FSUOGM

downstream industries that consume gas to car- “We anticipate demand for carbon-mitigat-
bon-neutral LNG. ing energy solutions to grow as the world focuses
Nohata reportedly declined to comment on on achieving net zero,” added Vitol’s head of
the cost of carbon-neutral LNG, according to emissions trading, Michael Curran.
Reuters, citing confidentiality obligations. Other steps towards tracking – and ulti-
This comes after Mitsui & Co. announced last mately reducing – the emissions associated
month that it had agreed to supply carbon-neu- with LNG cargoes have already been reported
tral LNG to Hokkaido Gas. And both develop- on by GLNG in recent weeks. These include the
ments are playing out against the backdrop of deal struck in February by Singapore’s Pavil-
Japan’s nationwide net-zero emissions goal, for ion Energy with Chevron in February, under
which it has set a deadline of 2050. Tokyo Gas which around 500,000 tonnes per year (tpy) of
has voiced hopes that more LNG producers LNG will be supplied to Singapore from 2023.
will offer a carbon-neutral version of their fuel, Each LNG cargo delivered under this agree-
so that the company can work on widening its ment will be accompanied by a statement of its
sources of supply. GHG emissions, measured from wellhead to
discharge port.
Other moves Pavilion already has a similar agreement
The news about the Japanese consortium comes in place with Qatar Petroleum (QP), having
around the same time that a number of other launched a tender last year seeking partners that
moves have been made, either involving car- would help it to develop an industry standard for
bon-neutral LNG or a shift towards the con- measuring LNG emissions. It was also seeking to
cept. Also this week, Russia’s Gazprom reported mitigate its own emissions, and ultimately make
that it had delivered the first carbon-neutral its own purchases carbon-neutral.
LNG cargo to reach Europe, in collaboration Also in February, leading US LNG producer
with Royal Dutch Shell. The super-major took Cheniere Energy announced that it would start
delivery of the cargo, which was sourced from supplying information on the emissions asso-
Novatek’s Yamal LNG project in Russia, at the ciated with its cargoes to customers. Cheniere’s
Dragon LNG terminal in Wales. president and CEO, Jack Fusco, noted at last
According to Shell, an average LNG cargo week’s CERAWeek by IHS Markit conference
of about 70,000 tonnes emits roughly 240,000 that the company had reduced its emissions
tonnes of carbon dioxide equivalent (CO2e) intensity by de-bottlenecking its plants, adding
across the value chain. that it expected to continue leading on climate
Shell has been involved in the shipping of a issues.
handful of carbon-neutral LNG cargoes to date,
including the one received by Tokyo Gas in 2019 What next?
– one of the first two such cargoes in the world There is some way to go until the new generation
at that time. of proposed low-emissions LNG plants will be
Separately, commodity trader Vitol built – assuming they proceed to construction.
announced on March 1 that it was launching a However, the developments seen in recent weeks
green LNG product that will allow customers illustrate that both buyers and sellers of LNG are
to offset the greenhouse gas (GHG) emissions beginning to take steps towards carbon-neutral
associated with their cargoes. Vitol said in a cargoes.
statement that all of its LNG customers would Little has been said about cost by those begin-
be offered the opportunity to convert cargoes to ning to trade carbon-neutral LNG, because the
green LNG through carbon offsets, with emis- price of individual cargoes is generally confiden-
sions to be offset estimated using the Wood Mac- tial, but it will be higher than that of standard
kenzie LNG Emissions Tool. The offsets will be cargoes. This presents a challenge for those seek-
sourced from Vitol’s existing portfolio and from ing to be competitive by lowering costs. While
the wider market. the cost of carbon-neutral LNG will come down
Vitol’s head of LNG, Pablo Galante Escobar, over time, this is set to be one of the major chal-
commented that “the bar for transitional energy lenges involved in the shift towards low-carbon
solutions is rightly being raised”. and carbon-neutral variants of the fuel. ™

P6 www. NEWSBASE .com Week 11 17•March•2021