Moscow — Global oil companies investing in the Russian energy industry, including BP, Shell and Total, reaffirmed March 26 their readiness to work with Russia on achieving net-zero goals, adding they seeing many opportunities for low-carbon projects in the country.
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Challenges in decarbonization of Russia's oil and natural gas industry were discussed in a virtual low-carbon dialog organized by the Moscow School of Management's Skolkovo Energy Centre with the participation of global and regional heads of energy companies, as well as Russian policymakers.
"Russia is rich in terms of forest and land and this should help launch projects with negative emissions, while developed gas transportation systems can help Russia establish itself as a strong hydrogen player," Irina Gayda, the Skolkovo center's director, said.
Hydrogen, as well as LNG, were singled out by the energy company representatives as priorities for lowering emissions.
"Customers ask from us clean LNG. In Russia, when I think of huge reserves in Yamal, I also obviously think of clean hydrogen," Total CEO Patrick Pouyanne said, adding that resources were low-cost, too. "That's why we continue to invest in Russia," he said.
Pouyanne's opinion was backed by BP's Russia chief, David Campbell, who noted the quick evolvement of Russia's green agenda in the past few years due to the government's ambitious climate goals.
BP put its focus in Russia on hydrogen, carbon trading, renewable and forestation projects, as well as carbon capture, utilization and storage, or CCUS, Campbell said. This will be part of a recently signed deal with Rosneft to work on joint energy transition projects, including low-carbon technologies.
"I think now we open a new chapter with Rosneft and with Russia to serve our clients in a low-carbon way," Campbell said.
Natural sinks, tech
The foreign energy investors participating in the dialog all agreed that putting oil and gas out of the majority of the energy mix before 2050 "was out of question" and that enhancement of operational efficiency, as well as compensatory mechanisms would be needed to continue meeting goals under the Paris climate deal, while also boosting output to meet demand.
The first place for Russia to start with would be lowering methane emissions from the value chains for gas and LNG, according to Shell Russia CEO Cederic Cremers.
"I'm quite excited that the oil and gas methane partnership that was established internationally has been joined by Gazprom, Novatek and Rosneft," he said.
Additional opportunities lie in nature-based solutions and carbon capture and storage to offset emissions that can't be avoided.
"All these huge opportunities apply to Russia... and we need to deploy all of them in order to meet the target given the huge challenge," Cremers said.
Thomas Morris, head of Russia Upstream at OMV, one of financial investors in the Nord Stream 2 project, agreed. "We need spectrum of technologies," he said.
Over the past few years, Russia has introduced several state incentives aimed at keeping up with the rising role of renewables in the energy mix.
This spring, Russia may enact legislation on reducing greenhouse gas emissions into law, which should stimulate companies to invest in green projects and help achieve goals under the Paris climate accord.
"It also opens the way for creation of a free market for carbon quota trading," said Valery Seleznev, first deputy chairman of the State Duma's Committee on Energy. The pilot project for carbon trading will first be launched and tested in Russia's Far East Sakhalin region in 2023-2025, which then may be extended to the whole country, if successful, he added.
In response, Cremers said Shell is "very keen to work with the Sakhalin region on the pilot of this emission trading system."
BP's Campbell cited the importance of Russia's carbon trading system getting internationally recognized.
"International methodology, taxonomy is really important, and we should spend some time on that," he said, adding that the regulatory base on renewables in Russia was equally critical.
In addition to such incentives, Russia in 2020 extended its state renewable energy program until 2034, aiming to support renewable projects and bring renewables in its energy mix to 4%-5% from 2% currently.
The Russian government has also been working on a plan to develop green hydrogen, as Russia's energy strategy through 2035 envisions the country as one of the world leaders in production and exports of hydrogen.