Russia's government has highlighted the importance of hydrogen in its European energy-export strategy, with Novatek — the country’s largest independent gas producer — taking the lead in formulating plans for hydrogen production and exports.

The move comes as the nation tries to combat its negative image in Europe amid new sanctions after the poisoning of Kremlin critic Alexei Navalny.

Speaking in a video address to an international industry event, Novatek executive chairman Leonid Mikhelson said the company is planning to build facilities on the Yamal Peninsula to produce and export hydrogen to international markets.

The company already operates Russia's flagship liquefied natural gas plant, Yamal LNG, and is preparing to bring online a neighbouring project, Obsky LNG, between 2024 and 2025.

Blue hydrogen

According to Novatek executives, work on the facilities will be accompanied by a carbon capture and storage project to enable the company to deliver blue hydrogen that meets European standards for carbon dioxide emissions.

Mikhelson said that, while hydrogen will represent “a [noticeable] share in global energy consumption ... between 30 and 40 years from today”, Novatek is ready to start talking with potential international partners to join such projects.

“Hydrogen is a next step in the global energy market development,” he said, adding that Novatek is ready to consider steam-methane conversion and other hydrogen production methods.

Novatek has become known for its ability to deliver capital-intensive and technically complex projects on time despite their remote locations and external pressures, such as US and European sanctions that were imposed on the company in 2014 in response to Russia's annexation of the Crimea Peninsula from Ukraine.

Project support

Novatek may qualify for support of its hydrogen projects similar to the wide-ranging state support for its LNG developments.

The gas producer — together with state-controlled gas giant Gazprom and state-owned nuclear power corporation Rosatom — is considered a prime candidate to help Russia establish itself as a key hydrogen exporter.

A hydrogen roadmap, which the Russian Energy Ministry released earlier this summer, has identified general goals and steps for these players.

It reiterated an earlier announced target of starting Russian hydrogen exports in 2024 at a rate of 200,000 tonnes per annum, increasing to 2 million tpa by 2035.

Tatiana Mitrova, director of the Energy Centre at the Moscow-based Skolkovo business school, has pointed out that Russian energy industry players remain uncertain over profitability of hydrogen-exporting projects, with natural gas seen as a preferred choice of investment.

Changing tone

However, Deputy Energy Minister Pavel Sorokin said last week that Russia has “all necessary resources, wishes and platforms to play a key role in the hydrogen economy of the future".

That struck a different tone than his critical comments in September that the Western “climate agenda is just cynicism and hypocrisy, unable to exist independently without state subsidies and unlimited [state] financing”.

Mitrova said that in the long run, Russian industry players may find the European market shutting down for their gas imports, with hydrogen producers from other countries taking the lead in delivering carbon-free fuel to customers in Europe.

Meanwhile, reports have surfaced in Moscow recently that Gazprom may build a third subsea export pipeline across the Baltic Sea to Germany — Nord Stream 3 — to deliver hydrogen that meets European environmental requirements.

Some analysts in Moscow believe such a proposal is aimed primarily at persuading Germany and other European countries not to block the resumption of pipelaying work for the Gazprom-led Nord Stream 2 gas pipeline project.

Construction of the remaining segment of Nord Stream 2 in Danish waters was abruptly halted in December 2019, on the eve of introduction of US sanctions against pipeline contractors in the project.