LNG vs hydrogen

While Russia is developing projects on natural gas liquefaction, the world starts creating infrastructure for production, storage and transportation of hydrogen. Yet, experts forecast the gas era to last long enough. Moreover, leading gas exporters can start importing Russian LNG.

As infrastructure on production and liquefaction of natural gas is being boosted in Russia parallel to construction of powerful icebreakers and ice-class ships, replacement of gas with hydrogen starts coming into focus worldwide. That is driven by a global course to “zero-carbon future” where LNG does not fit properly (special article of the latest PortNews Magazine edition considers if zero-carbon transition is a myth).

As of today, the largest exporter of LNG is Australia with Qatar left behind. However, Aleksey Goncharov, Executive Secretary of Australia Russia Dialogue said at St. Petersburg International Gas Forum that new gas liquefaction expansion projects are under a question in the country since LNG is only considered as an energy source of the transition period. Over the long term, Australia is set to replace LNG production with production of hydrogen.

“An ambitious goal is actually in replacement (of LNG with hydrogen – Ed.)... but that is a far-off goal... Most of large companies ... understand the need to focus on the transition period which is to last long and to depend considerably on LNG. However, I would like to emphasize that long-term prospects on considerable expansion of LNG facilities are questionable”, said the representative of the nongovernmental organization.

When speaking about near-term prospects, Aleksey Goncharov said that Australia can start importing LNG from Russia. According to analysts, he said, contracted volumes of LNG produced in eastern Australia  from coalbed methane exceed real production capacity thus threatening with LNG deficit within Australia. A terminal can be built on the eastern shore of the continent to import Russian LNG. The project is currently under consideration.

As for production of LNG for domestic consumption (including bunkering of ships, perhaps) most of large-scale LNG projects are planned for implementation in the Far East, Aleksandr Klimentyev, expert, National LNG Association, said at the Forum. According to him, some 70% of such projects are to be implemented in Yakutia, Primorsky Territory, Sakhalin and Khabarovsk Territory. “High coal and oil product prices offer good opportunities for using LNG”, said the expert.

Albeit in its early phase, hydrogen is also under the spotlight in Russia. The Leningrad Region authorities have already selected sites for a possible accommodation of production facilities and shipment terminals near the port of Ust-Luga.

However, Dmitry Yalov, Deputy Prime Minister of the Leningrad Region Government says there are no investors for such projects so far.

“We are also in negotiations with potential investors in wind farms needed to produce green energy for hydrogen production”, said Dmitry Yalov adding that the bulk of hydrogen will be produced in the region from natural gas, which is “blue hydrogen” production.

Yury Dobrovolsky, Head of Special Materials Division, Institute of Problems of Chemical Physics of RAS, said in his turn that storage and transportation expenses will make two thirds of the export hydrogen cost price. According to him, it is not right to speak about hydrogen energetics: with its low efficiency, hydrogen combustion is not economically reasonable, hydrogen is rather considered as an instrument for storing energy. In the segment of transport including water transport, hydrogen fuel cells will be used with some ships of that kind already existing.

“There will be hydrogen exports … despite participation of Russia or other countries … DENA estimates the demand for hydrogen at 90 terabyte hours by 2030 with only 14 terabyte hours available … That is why Germany is the first to ask for hydrogen. It is followed by Japan, Korea and countries experiencing shortages of energy. And we should occupy that niche since it is quite reasonable believed that those failing to occupy it within three years will never occupy it”, said the speaker adding that the share of “blue hydrogen” will be show a drastic decrease. It will be produced from renewable sources which can be easily located close to consumers. That offers only a short time window for organization of hydrogen exports.

When it comes to global hydrogen infrastructure, all hydrogen projects announced worldwide are estimated at $260 while decisions on investment in those projects are estimated at only $40 billion, Maksim Malkov, Director of strategic and operational consulting practice of KPMG in Russia and CIS, said at the Forum.

By Vitaly Chernov

news@portnews.ru

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