RWE, a multinational energy company based in Essen, Germany and Novatek, the second largest natural gas producer based in the Yamalo-Nenets Autonomous Region in West Siberia, have signed a Memorandum of Understanding envisaging the supply of (still to be produced) low-carbon ammonia and hydrogen.
In the first phase, Novatek is targeting production of about two million tons of ammonia and about 120,000 tonnes of hydrogen from natural gas per year, with more than 90% of scope 1 and 2 emissions to be captured and stored underground.
RWE Supply &Trading said that it expects ammonia and hydrogen to be delivered from the Yamal Peninsula to its customers in Germany and other European markets. In addition, the trader expects to be able to negotiate long term LNG purchase contracts from another Novatek-led development in the Russian Arctic region – Arctic LNG 2 – and other company’s LNG projects in the same region, according to Novatek.
The trader’s parent company, RWE, is currently operating the second-largest gas-fired power station fleet in Europe via its subsidiary RWE Generation. These existing gas-fired power stations, the company said, are part and parcel of a roadmap to permit a gradual transition to using more hydrogen and thus reducing the burning of natural gas.
RWE said earlier that it aims to invest about €50 billion ($56.5 billion) through to 2030 to grow its green and flexible generation portfolio.
Javier Moret, Global Head of LNG at RWE Supply & Trading said: “Europe has set ambitious climate targets. To achieve them, renewables must be expanded massively and quickly. At the same time, however, we need a flexible generation as a back-up to guarantee security of supply. 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. But until that point is reached, bridge solutions such as gas, LNG and blue hydrogen will be needed. We are therefore very pleased to be working with Novatek to evaluate possibilities to supply Europe with large quantities of blue and green hydrogen."
For Novatek' part, Lev Feodosyev, First Deputy Chairman of the Management Board, noted “we are very well positioned to benefit from the transition of global economies to low carbon energy. Natural gas including LNG, is already replacing other types of fuels with higher carbon footprint, and we are working on decreasing the already low carbon footprint of LNG produced by our projects in the Russian Arctic. Now we are undertaking the pre-FEED study for the blue ammonia and hydrogen plant with CCS facilities nearby our LNG cluster in Yamal for the delivery to final customers of low-carbon products in Europe and Asia.”