4.3 Climate: Greenhouse Gas Emissions Management

One of the significant environmental aspects of 2018 was methane emissions to the atmosphere in course of gas pipeline repairs. Those activities account for 70% of gross methane emissions and for unit emissions of nitrogen oxides in course of gas compression.

The emission reduction target is set at 2014 level and equals 62.7%The share of actual methane emissions in planned exhaust volumes in course of gas pipelines repair. and 4.32 tons per mcmRatio of nitrogen oxides emissions to fuel gas consumption for internal process needs  under the comparable goods transportation operations. respectively. In 2018, the target was achieved.

Pursuant to the PJSC Gazprom Innovation Development Program, the key target of improving environmental performance of the production process is КРI4 key performance indicator describing reduction of unit GHG emissions in СО₂ equivalent. The target value of КРI4 until 2020 is 6.6% of the baseline level of 2014, the target value of КРI4 for 2021–2025 is to maintain the achieved level. The Company also intends to add implementation of GHG emissions accounting system throughout the supply chain.

In 2018, the Road Map of Greenhouse Gases Emissions Management System at Gazprom Group Companies until 2020 and for the Longer Term until 2030, was developed taking into account multi-variance of development scenarios and environmental priorities.

The document sets forth the target values of the projected indicators of GHG unit emissions for 2020, 2025 and 2030, as well as the steps to achieve them.

In 2018, the total direct GHG emissions of the Gazprom Group’s facilities amounted to 239.975 mmt of СО₂ equivalent, which is 6.14 mmt of СО₂ equivalent more than in 2017. Growth of the indicator is driven by the increase of production volumes in all segments of the Group’s operations.

The key Gazprom’s activities aimed at GHG emissions reduction in 2018 were prevention of natural gas exhaust to the atmosphere in course of the gas trunkline repairs, which amounted to 725,900 tons or 17,858 thousand tons of СО₂ equivalent.

In 2018, PJSC Gazprom became the first Russian energy company where independent audit (assurance) of corporate reporting on GHG emissions was carried out under International Standard 3410 Assurance Engagements on Greenhouse Gas Statements, including energy indirect GHG emissions.

PJSC Gazprom does not use ozone-depleting substances on an industrial scale.

APG flaring is a topical issue of oil and gas sector: it results in economic losses and causes environmental risks. It becomes even more pressing during the economy transition to low-carbon and energy efficient development path.

Gazprom consistently reduces APG flaring by implementing APG utilization investment projects at the fields. The Group’s objective is to achieve at least 95% APG utilization in compliance with Resolution No. 1148 of the Government of the Russian Federation dated November 8, 2012.

In 2018, APG beneficial use indicator was 97.7% at the fields of PJSC Gazprom’s gas production subsidiaries (including OJSC Tomskgazprom), 78.3% at the Gazprom Neft Group, 97.4% at Sakhalin Energy.

Gazprom Neft develops the program to increase APG at Gazprom Neft utilization at all production assets. The objective is to increase at least 95% APG utilization in growing production environment at the assets with well-developed gas infrastructure in 2020, and in 2022 throughout Gazprom Neft, including new assets.

In 2018, APG utilization was 78.3% in Russia. Since 2016, gas utilization level was 92–99% at mature assets with well-developed gas infrastructure.

In general, APG beneficial use increased throughout Gazprom Neft in Russia in 2018 by 29.6% vs 2017. That was achieved through:

• Ensuring high on-stream availability factor of gas equipment (96%);
• Maintaining high APG utilization level at the assets with well-developed gas infrastructure;
• Beginning of commercial operation of Stage 2 of gas treatment plant at the Novoportovskoye field of GazpromNeft — Yamal LLC, as well as CS at TL-4 of the Eastern Section of the Orenburgskoye OGCF owned by GazpromNeft-Orenburg LLC.

Increase of APG flaring at Gazprom Neft since 2016 is driven by development of new projects where APG utilization infrastructure is under construction. In particular, Gazprom Neft completes such infrastructure construction at Archinsk group of fields, the Southern Part of the Priobskoye field and the Novoportovskoye field, where production growth caused increase of APG flaring indicator in 2018.

In 2011–2018, PJSC Gazprom saved 22.5 million tons of fuel and energy resources in terms of reference fuel (659 million GJ). In particular, natural gas savings amounted to 19.1 bcm (for example, that is comparable with annual gas consumption in the Moscow Region), electric power savings amounted to 2.2 billion kWh, and heat energy savings amounted to 1.8 million Gcal. The Company’s unit consumption of gas and electric power for internal needs declined by 18.5% since 2011.

During the previous years, PJSC Gazprom established an effective corporate system of energy saving and energy efficiency management. According to the latest State Report on Energy Saving and Energy Efficiency Improvement in the Russian Federation prepared by the Ministry of Energy of Russia, it became the best-performing system among the companies of the fuel and energy sector in 2012-2017 by fuel and energy resources saving volume. At the same time, PJSC Gazprom continues systemic work aimed at its further improvement and preparation for certification in compliance with ISO 50001 International Standard.

In 2018, PJSC Gazprom Management Committee approved Energy Efficiency and Energy Saving Policy in furtherance of the OJSC Gazprom Energy Saving and Energy Efficiency Concept for 2011–2020.

Activities aimed at improving energy efficiency of PJSC Gazprom production and operational processes are carried out on the basis of implementing a wide range of economically justified energy-saving activities both during the facilities operation stage and during their construction and commissioning in operation.

Pursuant to three-year programs, PJSC Gazprom carries out the following energy saving and energy efficiency improvement activities:

• Optimization of power equipment operation at the process facilities;
• Reduction of gas losses;
• Implementation of streamlined lighting, heating and ventilation schemes;
• Reduction of gas consumption for process needs through optimization of trunklines operating schedule;
• GCUs upgrading and replacement with high-performing new generation units with higher efficiency;
• Reduction of fuel gas consumption by replacing changeable flow channel for inertial gas compressors;
• Well surveying using remote metering devices without gas exhaust in the atmosphere;
• Increasing the volume of saving gas exhausted in course of repair activities.

The indicators of reduction in the consumption of fuel and energy resources for internal needs, as well as GHG unit emissions reduction, are included in PJSC Gazprom management appraisal system and are among the key indicators of the PJSC Gazprom Innovative Development Program. In 2018, the target value of this indicator (KPI3) was achieved. The target reduction was set at 3.56%, and the actual reduction was 4.2% as of 2018.

The PJSC Gazprom Energy Saving and Energy Efficiency Improvement Program for 2019–2021 stipulates implementation of over 2,800 activities and achieving the total fuel and energy resources saving of at least 7.43 million tons of reference fuel, including:

• 6.19 bcm of natural gas;
• 635.75 million kWh of electric power;
• 529,840 Gcal of heat.

In value terms, PJSC Gazprom’s expected energy saving benefits shall be at least RUB 24.21 billion.

Gazprom Neft pursues the Energy Policy that is the foundation of the Energy Management System (EnMS), which is implemented gradually across the enterprises since 2011. PJSC Gazprom Neft EnMS meets the requirements of ISO 50001:2011 international standard. The key tool ensuring delivery of the planned energy efficiency indicators is the Energy Saving and Energy Efficiency Improvement Program.

In 2018, the most significant activities of the Downstream Energy Saving and Energy Efficiency Improvement Program were:

• Upgrading of the process furnaces and retrofitting of the boilers (increasing combustion gases waste-heat recovery);
• Optimization of compressor equipment operation, upgrading of the lighting systems;
• Optimization of heat supply systems layouts, process flow waste-heat recovery (using the heat of the product flows to heat feedstock or other process flows).

In 2018, the Refinery Energy Saving and Energy Efficiency Program contributed significantly to the Downstream results. That program is a part of large-scale refining assets modernization program. Under that program, new modern processing units are built, automatic management and control systems are implemented, and obsolete processing facilities are decommissioned at the refineries. In 2018, the economic benefits from energy-saving activities implemented at the Omsk and Moscow Refineries was RUB 447.4 million, which is 50% above the plan. In total, 25 energy saving projects were implemented in 2018 at the Omsk and Moscow Refineries.

The key driver of the Downstream energy efficiency improvement in course of technological activities is upgrading the oil production equipment. Artificial lift accounts for the majority of power consumption in course of oil production. Well operations are optimized: they are switched to short-term or periodic operation mode, and energy efficient downhole equipment is implemented. The most important technological activities include the upgrading of pumping units, use of energy efficient rotors and installation of variable speed drives in the formation pressure maintenance system, as well as in oil treatment and pumping.

Significant energy resources saving was achieved as a result of well interventions aimed at reducing formation water production and its injection in the formation. The key organizational activities are energy audits, the energy efficiency control system and IT projects pertaining to energy saving and energy efficiency projects.

Pursuant to the legislative requirements, Gazprom Energoholding companies developed energy efficiency and energy saving program documents.

The total fuel saving achieved through the change in specific consumption in terms of reference fuel is both due to commissioning the facilities under the CSA, and to other activities: inefficient equipment decommissioning, shifting thermal capacity from boiler houses to power plants, implementation of energy saving technologies.

The overall reduction of specific reference fuel consumption for electric power generation purposes at Gazprom Energoholding equalled almost 11 g/kWh or 3.6% between 2015 and 2018.

At Gazprom Energoholding, reduction of the specific reference fuel consumption for electric power generation purposes is driven by the increase of generation by CSA facilities and inefficient equipment decommissioning.

And in 2015–2018, the specific reference fuel consumption increment was 1.7 kg/Gcal or 1.2%, which is driven mainly by the increase of heat generation at CHPP peak water boilers.

The Gazprom Group supports use of alternative energy sources in cases when that is justified from economic and technical points of view, in particular, in remote or technologically isolated areas. The Group uses renewable energy sources and secondary energy resources to generate energy for internal needs and for sale to third-party customers. Solar and wind generators, gas flow heat and energy converters in electric power are applied at the production facilities, gas trunkline facilities and gas distribution networks for routine power supply to remote metering systems, electrochemical protection of gas trunklines, lighting, etc.

Hydrogeneration accounted for 12.84 billion kWh of electric power generated by the Gazprom Group. The hydroelectric power plants of PJSC TGС-1 make a noticeable contribution to green power sector of the Northwestern Federal District of Russia and account for the majority of production.

In 2018, Gazprom Group used 2,154 secondary energy resources- and renewable energy sources-based power generation units, other than hydroelectric sets, e.g. turbo expanders, thermogenerators, solar generation modules and batteries, wind generators. The total electric power generated by those power units amounted to 582,660 kWh.

Methane and carbon dioxide emissions are among the key risks of oil and gas production business as related to climate impact. Pursuant to the Russian legislation, methane is both a GHG and a pollutant substance. Carbon dioxide is included in the GHG list.

In accordance with sustainability principles, Gazprom Group adheres to the international and national legislation as related to climate change. Reduction of GHG emissions is a part of PJSC Gazprom’s corporate strategy. The Group’s activities aimed at reducing the climate impact are based upon the provisions of:

• Energy Strategy of Russia for the period of up to 2030;
• State program of the Russian Federation Environmental Protection for 2012–2020;
• Climate Doctrine of the Russian Federation approved by Presidential Executive Order No. 861-rp of December 17, 2009;
• Presidential Decree No. 752 On Reduction of Greenhouse Gas Emissions dated September 30, 2013;
• Action plan on 75% Greenhouse Gas Emission Reductions Below 1990 Levels by 2020 approved by Russian Federation Government Resolution No. 504-r of April 2, 2014;
• Methodology Guidelines for the Development of Greenhouse Gas Emission Reduction Indicators by Sectors of Economy, approved by Order of the Ministry of Economic Development of the Russian Federation No. 767 of November 28, 2014;
• Concept for the Development of a System for Monitoring, Reporting and Verification of Greenhouse Gas Emission Volumes in the Russian Federation, approved by Russian Federation Government Order No. 716-r of April 22, 2015.

The Company’s standpoint is consistent with the national target of the Russian Federation approved by Presidential Decree No. 752 of September 30, 2013. The goal is to bring greenhouse gas emissions by 2020 to no more than 75% of what they were in 1990.

In 2018, PJSC Gazprom signed the Guidelines for Methane Emissions Reduction in the Natural Gas Value Chain. That document was developed in collaboration, in particular, with the United Nations Environmental Program, the International Energy Agency, the International Gas Union, the International Oil and Gas Climate Initiative Organization, the Environmental Protection Fund, the Gas Industry Sustainability Institute. Having signed that document, the Company assumed the obligations to reduce methane emissions further at its production facilities, as well as engage in that process all other gas market players at all steps of the value chain — from producing entities to the end customer. Previously, the Guidelines for Methane Emissions Reduction in the Natural Gas Value Chain were signed by other companies, such as BP, Eni, ExxonMobil, Repsol, Shell, Statoil, Total and Wintershall.

The Paris Climate Accord that took effect on November 4, 2016 opens up new prospects for gas consumption. A number of European countries, for instance, Germany and the Netherlands, declared their intention to cut the coal intensity of power and heat generation, and, ultimately, to abandon coal altogether. Giving up this fuel will boost gas consumption, and that factor will be an additional opportunity to increase natural gas supplies and to improve low-carbon development of the EU countries.

Use of natural gas can promote implementation of the EU’s Long-Term Low Greenhouse Gas Emission Development Strategy to 2050 by the following ways.

1. A well-developed gas infrastructure helps cut emissions promptly and without any significant expenses while replacing coal-based power and heat generation with natural gas. Additionally, reduction of emissions can be ensured by converting transport to natural gas. Those measures will make it possible to cut greenhouse gas emissions in the EU quickly by 13–18% from the current level and ensure achievement of the EU’s proclaimed 2020 targets (to the 1990 level) within the set timeframes.
2. Taking into account capabilities of the existing gas infrastructure for the transportation and storage of those energy resources, use of a new low-carbon fuel based on methane-hydrogen mixtures in the EU energy industry and transport sector will help reduce GHG emissions by 25–35% and, consequently, will drive achievement of the EU climate targets for 2030.
3. Development and wide-scale adoption of economically effective technologies of hydrogen production from natural gas without CO₂ emissions (cracking, pyrolysis, cold plasma, etc.) will bring about an 80% reduction of GHG emissions in the EU by 2050.

Utilization of readily available, cheap, eco-friendly gas in combination with renewable energy sources will help find economically and environmentally efficient solutions for sustainable development.

Within the framework of scientific and technological collaboration between PJSC Gazprom and N.V. Nederlandse Gasunie, the meeting of the Strategic Collaboration Task Force Natural Gas Decarbonization Using Hydrogen and Other Innovative Technological Solutions was held, where hydrogen production, transportation and storage were discussed and the potential promising option of hydrogen production from natural gas without any carbon dioxide emissions was presented.

PJSC Gazprom is engaged continuously in the international activities aimed at promoting sustainable energy sector. In 2018, the Company participated in a number of events. Use of natural gas for economy decarbonization were discussed at the meeting of the UN Economic Commission for Europe Gas Panel (Switzerland, Geneva, March 20–22, 2018), the Round Table of the Global Gas Center Natural Gas as the Key Decarbonization Element (Germany, Berlin, March 2018), meetings of the Domestic Markets Task Force of Russia — EU Gas Advisory Panel, committees of the International Business Congress.

Taking into consideration the attention paid by the international community to gas leak matters, PJSC Gazprom presents on a regular basis information regarding its activities aimed at cutting methane emissions and the best practices applied. At the meeting of the STC Coordination Council, PJSC Gazprom and Gasunie presented the report on Methane Emissions Accounting and Control System — PJSC Gazprom Practices. In August 2018, the report on Innovative Technologies Application for Improvement of Gas Trunkline Transportation Process Energy Efficiency was presented at the meeting of PJSC Gazprom and KOGAS scientific and technological collaboration sub-group in St. Petersburg, and the schedule of Energy Saving and Energy Efficiency technological discussions was developed within the framework of PJSC Gazprom and KOGAS STC Program for 2018–2020. Within the framework of experience sharing with the European Partners, PJSC Gazprom’s practices were presented at the methane emissions workshop held at the Florence School of Governance.

Implementation of Methane Role in Climate Change project was completed within the framework of the International Business Congress, in which PJSC Gazprom and the international partners took part. Based on the expert estimates, human-induced methane does not produce any significant impact upon the climate: for example, the global oil and gas industry methane emissions account for only 0.1% of the total global greenhouse gas emissions. Isotope analysis confirms that the key reason of methane concentration increase in the atmosphere is biogenous methane, namely, emissions from rice fields, live-stock animals (cows), waste. Gas from the Russian deposits is excluded from the list of reasons of increase of methane concentration in the atmosphere⁽¹⁾.