Page 6 - GLNG Week 31 2021

GLNG COMMENTARY GLNG

Novatek doubles down

on ESG concerns

Russian LNG exporter Novatek put further emphasis

on environmental, social and corporate governance

concerns in its second-quarter earnings call

ENERGY RUSSIA’S biggest LNG exporter Novatek put Gyetvay confirmed that the company had just
TRANSITION further emphasis on environmental, social and signed a pre-FEED contract on the project, add-
corporate governance (ESG) concerns in its lat- ing that the scheme could still produce some
WHAT: est corporate call on July 29, while also announc- LNG in addition to chemicals. But ammonia is
Novatek emphasised ing plans to expand oil production. expected to be the main focus.
ESG concerns during its As analysts at BCS Global Markets (BCS GM) “We are analysing the markets and talking
second-quarter earnings noted, “ESG dominated the presentation, with with our Asian and European partners to under-
call. eight of the first 12 slides devoted to sustaina- stand their long-term perspectives,” Gyetvay
bility.” Among the highlights, Novatek noted explained. “To us, ammonia represents a new
WHY: that up to 20-30% of gas usage at its Yamal LNG market and not just for fertiliser consumption,
LNG producers are project could be replaced with hydrogen. In the as it could be used in ship transport, electricity
trying to compete in an company’s future LNG projects, the ratio could generation and industrial consumption.”
increasingly crowded reach 40-50%. He also stressed ammonia’s importance as a
field. Novatek has been working since last year with useful carrier of hydrogen, given its lower vol-
Baker Hughes and Siemens on the potential of ume density.
WHAT NEXT: its gas turbines to run on hydrogen in order Novatek has often said it offers some of the
The company says that up to lower direct emissions from its production cleanest gas available on the market. It esti-
to 20-30% of gas usage activities. Hydrogen can be produced from mates that its greenhouse gas (GHG) intensity
at its Yamal LNG project natural gas without emissions if the CO2 that is ratio dropped 1% to 295 kg of CO2 equivalent
could be replaced with released is captured and stored. per barrel of oil equivalent (boe) last year, versus
hydrogen. “Preliminary analysis shows that at the cur- an industry average of 359 kg of CO2, despite a
rent production sites, 20% to 30% of natural gas 3.1% climb in its hydrocarbon output.
used in turbines can be replaced with hydrogen, The company also delivered a 19% reduction
and on future production sites, it is estimated in Scope 1 GHG emissions in 2020 thanks to
that we can replace up to 40% to 50% with increased utilisation of associated petroleum
hydrogen,” Novatek CFO Mark Gyetvay said. gas and energy efficiency measures. Scope 1
Novatek is also reconfiguring its Obsk LNG and 2 emissions accounted for only 5% of the
project to produce the low-carbon chemi- company’s total direct and indirect emissions,
cals blue ammonia, hydrogen and methanol. Gyetvay said, meaning that Scope 3 emissions

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