Russian steel conglomerate Severstal has signed pacts with compatriot energy giants Novatek and Gazprom Neft to study initiatives aimed at driving down carbon emissions.

The memoranda of understanding (MoU) will see the companies establish joint study groups that will consider carbon capture and storage (CCS) projects to cut carbon footprints, Severstal's head of decarbonisation projects, Ilya Pavlov, told Upstream.

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As emissions of carbon dioxide are inevitable in the blast furnace steel production process in use at Severstal smelters, the company is lining up emissions-mitigating measures in anticipation of the introduction in Europe and elsewhere of carbon taxes on imported steel, Pavlov said.

Additionally, Severstal is aiming to reduce its own greenhouse gas emissions by 3% by 2023 on 2020 levels, with realistic targets for further CO2 cuts at its facilities being determined for between 2023 and 2030, he added.

CCS options

Initially, Severstal is aiming to identify locations for potential underground storage near its smelters in Russia with the assistance of geologists and engineers from gas independent Novatek and oil producer Gazprom Neft.

Although Severstal is in discussions on decarbonisation options with other companies, Gazprom Next and Novatek have been chosen for MoUs at this stage because of existing contract ties, as Severstal has been supplying line pipe and other steel products for them for years.

Additionally, Severstal expects potential joint business opportunities with Novatek and Gazprom Neft to emerge as other Russian companies press ahead with their own decarbonisation measures, Pavlov said.

Severstal expects its two partners may require line pipe for future pipelines to transport captured CO2 to their oil and gas fields that will be converted into underground storage sites.

According to Pavlov, joint study groups have been tasked with looking at the cost of building dedicated pipelines to carry carbon dioxide from Severstal's steel smelters to dedicated CO2 storage facilities, to be operated by Novatek and Gazprom Neft.

Novatek and Gazprom Neft may also become major producers of blue hydrogen in the long term because of their vast and inexpensive gas resources, which may require the installation of pipelines for hydrogen transport.

Pipelines for hydrogen transportation have to be made of special fragility resistant steel that Severstal hopes to supply as demand for such facilities grows.

Hydrogen as fuel and coke replacement

As part of its decarbonisation efforts, Severstal will also research the usage of a larger share of hydrogen in steel production in a blend with natural gas as fuel.

It will also keep an eye on the progress of trials in Sweden and other European countries on the use of hydrogen to replace coke in iron ore smelters, while it awaits the availability of technologies to produce its own hydrogen, Pavlov said.

He has acknowledged that, while joint groups may consider a wide array of opportunities for joint projects, profit-oriented Severstal is keen to see them being commercially attractive before any commitment is made.