Novatek, RWE form decarbonisation, LNG pact

Russian gas supplier Novatek and German energy group RWE have entered into a pact to work together in the fields of decarbonisation and LNG supply, including the delivery of carbon-neutral LNG, the companies said on December 7.

The memorandum of understanding (MoU) the pair have signed envisages the supply of low-carbon ammonia and hydrogen produced at Novatek's planned Obskiy gas chemical complex to Germany and other European markets. The partners also plan to expand spot sales of LNG and potentially LNG under long-term contracts from Novatek's Arctic LNG-2 terminal.

"We are very well positioned to benefit from the transition of global economies to low carbon energy sources," Novatek's first deputy chairman Lev Feodosyev said in a statement. "Natural gas including LNG is already replacing other types of fuels with a higher carbon footprint, and we are working on decreasing the already low carbon footprint of LNG produced by our projects in the Russian Arctic."

Novatek had planned to make its Obskiy project LNG-focused, but it reconfigured the scheme to produce ammonia, hydrogen and methanol earlier this year. Novatek is currently undertaking a pre-FEED study on this plan, which would also comprise carbon capture and storage facilities.

The first of the 20mn metric ton/year Arctic LNG-2 plant's three trains is due online 2023. It will be Novatek's second LNG export terminal following the launch of the Yamal LNG facility in late 2017.

RWE Supply & Trading's head of LNG, Javier Moret, said that while renewables needed to be expanded for Europe to meet its climate targets, "a flexible generation as a back-up to guarantee security of supply" was also needed.

"The ultimate goal is for plants powered by green energy sources to take over this task, such as gas-fired power plants fuelled by green hydrogen," Moret said. "But until that point is reached, bridge solutions such as gas, LNG and blue hydrogen will be needed."