Novatek and RWE Agree on Supply of Low-Carbon Fuels

Photo: Novatek

Novatek and RWE Agree on Supply of Low-Carbon Fuels

Obskiy Gas Chemical, a major chemical project in the Russian Arctic, is taking shape with Novatek and RWE Supply & Trading signing a Memorandum of Understanding to cooperate in supply of low-carbon fuels and LNG. The memorandum envisages the supply of low-carbon ammonia and hydrogen by Novatek to RWE. The fuel is to be produced at Novatek’s planned Obskiy Gas Chemical Complex (Obskiy GCC) and will be delivered to RWE and its customers in Germany and other European markets via the Northern Sea Route.

Obskiy GCC is a project to launch blue ammonia and hydrogen production in the vicinity of Sabetta, Yamal Peninsula with a planned output of 2.2 million metric tons of ammonia and 0.13 million tons of hydrogen per year. Production may start in 2027, with the final investment decision being expected in 2022.

The two companies also intend to deepen their cooperation in supply of LNG (including carbon-neutral LNG) by Novatek to RWE by expansion of existing spot supplies as well as possible long-term supplies of LNG to be produced by Arctic LNG 2 and other Novatek’s projects.

Novatek is currently conducting a pre-FEED study for its carbon capture and storage facilities to be constructed in Yamal at the company’s LNG production cluster with a capacity of capturing around 5.2 million tons of CO2 per year. 5 million tons are expected to be captured at Obskiy GCC and 0.2 million at the Yamal LNG plant on a yearly basis.

Signing this memorandum is yet another step towards increasing Russia’s participation in the global energy transition effort. The Russian Arctic will play a major role in this as a territory both providing resources that are vital for the energy shift and securing a Russian niche in the world market of low-carbon and carbon-free fuels.

Arctic Today is a column by PORA CEO Alexander Stotskiy analyzing major international, national and regional events and trends in the Arctic.
Alexander Stotskiy
8 December 2021
Arctic Today