Russia’s largest independent gas producer Novatek has applied for another licence at its carbon capture and storage project on West Siberia’s Yamal Peninsula, despite uncertainty in the country’s oil and gas sector due the impact of Western sanctions.
Yevgeny Petrov, the recently-appointed chair of state subsurface agency Rosnedra told Moscow’s Interfax news agency that, in total, Novatek has filed applications for three blocks, each permitting the company to use their subsurface reservoirs to store carbon dioxide.
During a February earnings call, Novatek confirmed that it is already in possession of two blocks — Obsky on the Yamal Peninsula and Tadebyayakhsky on the Gydan Peninsula — with each capable of storing at least 600 million tonnes of CO2.
A Novatek spokesperson was unable to comment to Upstream on the location of the third licence mentioned by Petrov.
On the Yamal Peninsula acreage, Novatek is planning the Obsky Gas Chemistry Complex (OGCC), with the aim of producing blue hydrogen from the West Seyakhinsky and Upper Tiuteysky tracts.
OGCC would have two processing trains to convert gas output from the two tracts into about 5 million tonnes per annum of blue ammonia, with resulting CO2 captured and stored underground.
The company has not yet provided additional information about its plans other than that the project is still in the pre-front-end engineering and design phase.
Industry analysts in Moscow are sceptical about Novatek’s ability to proceed with the OGCC project in the current market environment of Western sanctions.
International competences and know-how were expected to be tapped through partnerships in which Russian companies would be contracted to build and operate carbon capture equipment, taking advantage of technology transfers.
Before the sanctions were imposed following Russia’s invasion of Ukraine, a number of Western contractors were already positioned to enter the OGCC project, including technology and catalysts supplier Haldor Topsoe, ammonia specialist Casale and engineering and construction giant Amec Foster Wheeler.
However, it s unlikely that these contractors will now be able or willing to provide their services.
Another milestone agreement for the Obsky GCC project that has been affected by the sanctions is the deal with Germany’s Uniper to deliver up to 1.2 million tonnes of ammonia to the German market.
Uniper said in March that it is exiting Russia and divesting its assets in the country.
The company recently backed a German government plan to reduce the country’s dependence on Russian gas supplies by investing into floating liquefied natural gas import terminals at home.
In yet another blow to Novatek, leading German technology provider Siemens announced its withdrawal from Russia last week, including its joint ventures with Russian partners, after taking more than two months to assess whether to remain in the country.
“Siemens will exit the Russian market as a result of the Ukraine war. The company has started proceedings to wind down its industrial operations and all industrial business activities,” Siemens said.
Siemens has been a key technology supplier to Novatek’s LNG projects and its legacy upstream developments in West Siberia’s Yamal-Nenets region.
Both companies have been also working on a project to reduce CO2 emissions from Novatek’s LNG operations on the Yamal Peninsula, by adding and replacing gas with hydrogen at compressors and turbines at the Yamal LNG and planned Arctic LNG 2 projects.
In his interview with Interfax, Petrov said Novatek was not the only possible domestic player for CCS.
He referred to five more applications filed by smaller and mid-size private players interested in using blocks for subsurface carbon dioxide storage, but he did not identify them.
“Despite the circumstances”, these companies apparently continue to see this business as attractive, Petrov claimed.