Gazprom Confronts Europe's Hydrogen Push

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Russia is exploring new ways to court its largest gas buyer, the EU, as the bloc moves toward greater uptake of hydrogen. For gas giant Gazprom, its preference would be to keep shipping gas to Europe for use in "blue" or "turquoise" hydrogen rather than export hydrogen produced in Russia. The strategy is understandable. Existing gas export pipeline capacity of more than 200 billion cubic meters per year (19.3 billion cubic feet per day) -- including the new Turk Stream and Nord Stream 2 projects -- otherwise risks becoming redundant. Gazprom thinks it would be uneconomic to upgrade the infrastructure to carry hydrogen. Gas consumption in Germany, Gazprom’s largest export market, will drop significantly as it targets carbon neutrality by 2045. On a recent visit to Kiev, outgoing Chancellor Angela Merkel said that means the country won't need Russian gas -- and warned Ukraine to prepare for a halt in transit shipments in the long run. More broadly, Russia is assessing various hydrogen production technologies in a bid to remain a major global player even after oil and gas demand plummet. A government document released in August suggests that, out to 2035, it will focus on producing blue hydrogen from steam methane reforming and carbon capture and storage and, where economically feasible, green hydrogen from renewables. But it also plans to work on new technologies such as methane pyrolysis -- turquoise hydrogen, which competes directly with blue hydrogen -- and nuclear-powered technologies to bring costs down. The document says hydrogen could be transported via pipeline, in liquefied or compressed form, or in ammonia or other hydrogen carriers. Gazprom Grappling The government backs plans to produce hydrogen from Russian gas close to foreign customers, which should help maintain gas sales. That looks particularly important to Gazprom, which helped draft the document. The company said recently that its preferred option would be to use its gas to produce turquoise hydrogen in Central Europe. Electricity would come from the grid or from renewables. In either case, the carbon footprint would be lower than for traditional gas exports -- 55% lower with grid power and 80% lower with renewables. Given Europe's push to go net zero by 2050, Gazprom is expected to lobby hard for its gas-based technologies to be recognized as low carbon. “The criteria are wide enough. ... As long as certification and monitoring are done properly and acceptably, in a single European market individual member countries won’t be able to exclude one sort of hydrogen or another,” Simon Blakey, senior adviser at IHS Markit, told a recent webinar. More Solutions Gazprom has also considered exporting hydrogen in a 10% hydrogen-methane blend via the Nord Stream and Nord Stream 2 pipelines to Germany. But that would cut the carbon footprint by just 1% and require heavy investment in the upgrade of pipes and associated compressor and other equipment, as well as in a facility to split the blend back into hydrogen and methane, Konstantin Romanov, CEO of Gazprom’s recently established Gazprom Hydrogen subsidiary, told the same webinar. Another possibility would be to produce hydrogen where the pipes make landfall in Germany and then ship the 10% hydrogen-methane blend elsewhere in Europe via the existing grid. But that would reduce the carbon footprint by just 2% and still require pipe upgrades. Romanov said it would also entail installing costly infrastructure for both the production and separation of hydrogen. Vitaly Sokolov, Moscow This story first ran in sister publication World Gas Intelligence.

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