Russia has taken its first steps towards regulating carbon emissions since joining the Paris climate agreements in 2019 with the signing by President Vladimir Putin in early July of legislation requiring the largest emitters of greenhouse gases to country’s greenhouse (GHG) to report carbon data to a new government agency.

The new law makes carbon reporting mandatory from January 2023 for companies emitting 150,000 tonnes of carbon or more, and in January 2025 for carbon emitters between 50,000 and 150,000, according to the Russian news agency TASS .

“An accounting system is being introduced, carbon dioxide is becoming a substance subject to government regulation,” Greenpeace spokesman Vladimir Chuprov told Reuters. “An emissions accounting and reduction system is emerging. It is a prerequisite for a greenhouse gas emissions trading system.”

With such measures in place, Russia aims to deliver on the Paris Agreement promise to reduce emissions by 2030 to 70% of 1990 levels.

It’s no surprise that Russia’s oil and gas industry is paying the price for the new law. Russia burns more associated gas than any other country in the world: 24.6 billion m3 in 2020, an increase of 8% from the previous year, according to the World Bank Gas Flaring Monitoring Report published in april (Fig. 1).

The problem concerns not only the upstream, but also the middle and downstream of Russia, including the petrochemical industry which has grown in recent years as Russia diversifies and moves away from dependence on oil. with regard to crude exports and turns to the production of higher value-added petroleum products for export and domestic consumption.

Rise in flaring hits arctic and eastern Siberia

Russia began to take flaring seriously after a 2012 World Bank report estimated the practice was costing the economy $ 5 billion in annual losses.

As a result, flaring has become less of a problem in traditional oil-producing regions of Russia. For example, the Khanty-Mansiysk semi-autonomous region (KMAO) in West Siberia, home to the country’s largest oil field and 70% of Russian oil production, has seen an 80% decline since the mid-2000s. .

At the end of 2014, KMAO claimed it had met federal requirements to use 95 percent of the gas it could otherwise flare, the World Bank reported.

But as flaring has declined in West Siberia, carbon emissions are increasing in new development areas such as Yamal in the Arctic, the site of Russia’s major new gas and liquefied natural gas (LNG) projects; also, in eastern Siberia, where the development of new facilities occurs in remote areas devoid of infrastructure to capture and transport the associated gas (Fig. 2).

According to Bloomberg, oil and gas exports will account for 40% of Russia’s state budget in 2021, and as Europe’s appetite for oil wanes, Russia is boosting investment in eastern Siberia’s production, like Rosneft’s Vostok project to supply Asia where demand for oil continues to grow. .

In midstream and petrochemicals, Russia’s largest petrochemical producer, SIBUR, is in talks with Baker Hughes to optimize torch performance across SIBUR’s industrial assets to ensure torch combustion efficiency by 98% or more, SIBUR said in a press release.

SIBUR and Bentley Nevada, a firm of Baker Hughes, signed a memorandum of understanding in June during Russia’s C-suite meeting at the St. Petersburg Economic Forum to explore the implementation of the platform Bentley Nevada machine conditioning remote monitoring software and other technologies, including torch monitoring. and cybersecurity at more than 10 SIBUR sites.

Also in St. Petersburg, the Russian oil major Gazprom Neft announced that it had agreed to collaborate with the metallurgical companies Severstal and EVRAZ on the production, transport, storage and use of hydrogen technologies, as well as on reducing carbon emissions.

The companies aim to convert certain steel infrastructures to hydrogen to reduce GHGs. In its press release, Gazprom Neft noted that “base blue hydrogen” production technologies involving steam methane reforming (SMR) actually involve recycling carbon dioxide.

Gazprom Neft, through its joint venture with the Serbian national oil company NIS, has been involved in a high CO content collection and purification project₂-natural gas content of various fields since 2015. CO₂ extract is then injected into reservoirs more than 2,500 m deep, according to the press release.

In Saint Petersburg, Gazprom Neft and Shell also reaffirmed their intention to collaborate in the deployment of carbon capture, use and storage (CCUS) solutions in their two Russian joint ventures: Salym Petroleum Development, which produces the Salym field group. in Khanty in Western Siberia. -Mansiysk; and a joint venture to explore and develop a large geological prospecting group covering the Pukhutsyayakhsky and Leskinsky license blocks in the Gydan peninsula, in the new Yamal area.

Russia’s target to start reporting its GHG emissions in 2023 coincides with the same date in 2023, when the EU will implement a border carbon tax that the Bank of Russia estimates could cost Russia up to 8.2 billion euros ($ 9.7 billion) per year; Russia’s Oil Ministry estimates that domestic oil and gas companies stand to lose up to $ 4 billion, Bloomberg reported.

“Russia needs an agreement with the Europeans to recognize our efforts in the transition to a green economy,” said the country’s Finance Minister Anton Siluanov, adding that Russian efforts to reduce environmental damage should be taken into account. account when determining the cross-border tax. obligations of Russian exporters.

Siluanov will make his case at the gathering of G-20 finance ministers and central bankers that begins July 9 in Venice, Italy. While the intention of the meeting is to decide how to present a proposal for a 15% global corporate income tax at the G-20 leaders’ summit in Rome in October, a session on climate change will be held in October. margin, according to VOA (Voice of America.)