According to Kommersant’s information, NOVATEK is negotiating with the Japanese Mitsui on entering the export project for the production of ammonia in Sabetta – Obskiy GCC. Thus, NOVATEK can attract a partner to the project, which will also act as a buyer of ammonia. The first stage of the plant with a capacity of 2.2 million tons, according to Kommersant, should be launched in 2026, and the second stage is also possible. The project envisages CO2 capture and utilization. According to analysts, investments in the Obskiy GCC may reach $ 2.2-2.4 billion.
NOVATEK may sell a stake in the Obsky GCC ammonia production project to Japanese Mitsui, sources familiar with the negotiations told Kommersant. According to them, the Japanese company can also act as the main buyer of ammonia. The share of entry and the main conditions have not yet been determined, but NOVATEK is going to retain control, the interlocutors of Kommersant add. Mitsui, as part of a consortium with JOGMEC, already owns 10% in another NOVATEK project – Arctic LNG-2. At the same time, a large shareholder of NOVATEK and its key partner in the LNG business, France’s Total, is not going to enter the ammonia project yet, Kommersant sources say.
The project for the construction of an ammonia plant in Sabetta, Yamal, is needed by NOVATEK as a technological solution for the storage and transportation of hydrogen. We are talking about the so-called “blue” hydrogen, during the production of which from methane by the method of steam reforming, the released CO2 will be captured and injected into the reservoir. In April, the head of NOVATEK, Leonid Mikhelson, announced that the volume of ammonia production could reach 2.2 million tons, specifying that two options are being considered: to build capacities for 2.2 million tons at once with two lines for 1.1 million tons, or to make them in stages. According to Kommersant, the launch of the first stage is scheduled for the end of 2026, but the possibility of construction of the second stage is being considered. The PreFEED project should begin in the near future, the sources of Kommersant clarify.
“Today, ammonia has begun to be used as a fuel in the electric power industry, there is consumption, there are orders from the Japanese market,” Leonid Mikhelson explained in April. At SPIEF-2021, he announced that NOVATEK would offer Japanese companies participation in their production assets, without specifying which assets and companies in question.
NOVATEK and Mitsui did not respond to Kommersant’s request.
Initially, NOVATEK planned to build a liquefied natural gas plant in Sabetta – Obskiy LNG – with a capacity of 5 million tons and launch in 2024–2025. As part of this project, NOVATEK intended to test its own large-tonnage liquefaction technology, the Arctic Cascade, on the basis of which the fourth Yamal LNG line with a capacity of 0.9 million tons was built. But due to delays in its launch, the company has postponed these plans for now. On June 23, NOVATEK’s Chief Financial Officer Mark Jetvey announced that the Obskiy Mining and Chemical Combine will produce clean fuels: ammonia, hydrogen and methanol. Leonid Mikhelson said in April that SIBUR is considering the possibility of producing methanol, not excluding the possibility that the companies may start developing a joint project. A Kommersant source familiar with the situation claims that there are no specific agreements with SIBUR on this issue yet.
According to Alexander Sobko of Rupec, the typical cost of building an ammonia production facility is around $ 1–1.2 thousand per tonne. Then the volume of investments in the production of 2.2 million tons can be estimated at $ 2.2-2.4 billion, but these figures may turn out to be higher due to climatic and logistical difficulties during construction. The volume of CO2 emissions (at a gas consumption rate of 1 thousand cubic meters per 1 ton of ammonia) for such a project, according to his calculations, can reach 4.4 million tons per year. If we estimate the cost of capture and storage at the upper limit of $ 50 per ton, then this will increase the cost of ammonia produced by $ 100 per ton, he notes.
Artem Lebedskaya-Tambiev from Vygon Consulting adds that ammonia plants are quite carbon intensive. Thus, in Russia, in the production of a ton of ammonia by the method of steam reforming of methane, up to two tons of CO2 are emitted into the atmosphere on average. The cost of installations for capturing, storing and pumping such a volume of carbon dioxide, which makes it possible to capture up to 90–95% of all emissions, is about $ 0.4–0.5 thousand per ton of ammonia capacity.