Russia's largest independent gas producer, Novatek, is targeting the start-up of commercial hydrogen production and carbon capture and storage projects on the Yamal Peninsula in West Siberia within the next five years.

Speaking during a Q&A session on energy transition issues, organised by the Skolkovo School of Management in Moscow, the head of Novatek’s department for alternative energy and offshore technologies, Dmitry Akimov, said it intends to implement these projects “concurrently to achieve synergy”.

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“Economic efficiency of [hydrogen and CCS] units will grow if they are implemented on [a] large scale,” Akimov said.

Carbon dioxide captured during hydrogen and liquefied natural gas production processes will be pumped underground into storage reservoirs, he said.

However, Novatek also expects to see some form of governmental support or subsidies for its decarbonisation initiatives as such projects carry additional financial burden for the operator, Akimov added.

Speaking during a conference call earlier this week, Novatek deputy executive board chairman Mark Gyetvay said that earlier in July, the company ordered a pre-front end engineering and design study to understand the potential options for the design, capacity and location of the Obskiy Gas Chemistry Complex (OGCC).

OGCC is the reincarnation of Novatek’s earlier plan to build a second LNG plant next to its flagship Yamal LNG facility in the port of Sabetta to commercialise gas reserves of the Upper Tiuteyskoye and the West Seyakhinskoye fields on the Yamal Peninsula.

The research is due to be completed before the end of this year.

Gyetvay said that Novatek will “consider producing blue ammonia, hydrogen and other clean-burning fuels, like methanol”, at OGCC. However, the company does not exclude an option that some LNG would also be produced at the facility as part of “a broader concept”.

Novatek is also “analysing the markets and talking to Asian and European partners to understand their long-term perspectives”, he added.

For Novatek, “ammonia represents a new market and not just for fertiliser consumption, as it could be used in ship transportation, electricity generation and industrial consumption”.

“Ammonia is a good way to transport hydrogen and Novatek will consider options to produce hydrogen at downstream consumer sites rather than directly at upstream processing sites [in West Siberia],” Gyetvay said.

“The company will use the same marketing principles as its does on its LNG projects and consider both the Atlantic and Pacific basins for consumer deliveries”, he added.

Furthermore, to reduce the carbon footprint, Novatek has already established that at current production sites such as Yamal LNG, 20% to 30% of the gas used in the turbines at the liquefaction plant can be replaced with hydrogen.

Hydrogen boost

At future project sites such as its two Arctic LNG projects on the Gydan Peninsula, Novatek expects that it may replace up to 40% to 50% of the gas in turbines with hydrogen, Gyetvay said.

Novatek is also continuing work on carbon capture and storage at Yamal LNG and other potential sites, as well as using renewables in power generation, he added.

However, Novatek still believes its major contribution to decarbonising society will be through developing its hydrocarbon resources and bringing more gas to global markets.

“The company will make the appropriate capital investments to successfully execute its long-term strategy to increase LNG output to up to 70 million tonnes per annum by 2030 and more beyond, in an environmentally responsible manner," Gyetvay said.

This represents the company’s contribution to “this quest, and Novatek will focus efforts on further decarbonising its already low LNG value chain”, he said.