Gazprom

Gazprom targets a 16.4% reduction in scope 1 emissions intensity to reach 0.23 tonnes of CO2 equivalent per tonne of oil equivalent by 2030, compared to 2014. Based on its reported data, Gazprom is on track to achieve this target. However, the target is not aligned with its 1.5°C pathway, which requires a reduction in scope 1 and 2 emissions intensity from 2019 of approximately 65% by 2030. Gazprom’s other targets are limited and focus on reducing methane or emissions during transportation, or extend only until 2020. Gazprom should set long-term targets and intermediate targets aligned with its 1.5°C pathway and include scope 3 emissions.

If the company utilises all its reserves and fields currently under production, its scope 3 in-use emissions are expected to exceed its 1.5°C carbon budget by 29% between 2019 and 2050. This does not account for the development of any new, unsanctioned oil and gas fields, which cannot be approved under the International Energy Agency’s (IEA’s) 1.5°C scenario. Despite this, in 2019, Gazprom conducted exploration activities in almost all oil and gas regions of the Russian Federation.

Gazprom does not provide detailed disclosure of its capital expenditure (CapEx) in low-carbon and mitigation technologies. In 2019, the company designated RUB 5.8 billion (USD 89.6 million) to climate mitigation and atmosphere protection and RUB 3.4 billion (USD 52.5 million) to renewable and secondary energy resources. Only CapEx on renewable energy is not disclosed by the company.

Low-carbon CapEx represents a maximum of 0.5% of Gazprom’s total CapEx of RUB 1.8 trillion, while the sectoral expectation for oil and gas companies is to invest 77% of CapEx in low-carbon and mitigation technologies. Gazprom should commit to increasing its CapEx in line with this sectoral expectation and provide detailed disclosure on its planned CapEx.

Although Gazprom produces 350,000 tonnes of hydrogen annually, it cannot be considered a low-carbon activity because it is not green hydrogen. The company recognises the potential of hydrogen as an energy source in the low-carbon transition and is undertaking research and development (R&D) in hydrogen technologies. This includes hydrogen production from methane with zero greenhouse gas emissions to “diversify and improve the efficiency of pipeline gas use”. However, the company does not disclose further details. Gazprom should consider diversifying its sold product mix and reducing reliance on hydrocarbons by researching low-carbon technologies, such as green hydrogen.

Although Gazprom aims to improve energy efficiency and increase renewable energy generation by 100 megawatts (MW) before 2025, there is no indication that it is committed to the low-carbon transition. It bases its transition plan on increasing production and use of natural gas and promotes the uptake of natural gas vehicles. This is not aligned with the 1.5°C scenario, which requires a reduction of natural gas use for energy supply by 2050. With no plans to reduce production, significantly invest in low-carbon activities or undertake carbon capture and storage (CCS), Gazprom’s transition plan lacks the ambition required to align with its 1.5°C pathway.

Gazprom’s most forward-looking target is to reduce scope 1 emissions intensity to 0.23 tonnes CO2 equivalent per tonne of oil equivalent by 2030 compared to 2014. This represents a 16.4% reduction based on Gazprom’s reported emissions intensity in 2014.

Gazprom aims to make energy efficiency improvements, incorporate 100 MW of renewable energy into its portfolio between 2023 and 2025 and research hydrogen production. However, Gazprom’s long-term focus remains on its oil and gas activities, particularly accelerating its natural gas production.

Gazprom strongly advocates for the continued use of natural gas, as it believes natural gas to be a key transition fuel. The company is vocal in supporting the role of natural gas as a vehicle fuel. The company has converted over 10,000 of its own vehicles to run on natural gas and built over 40 new gas refuelling facilities.

Gazprom’s hydrocarbon extraction volume increased by 12.5% between 2014 and 2019. The company saw a small increase in the proportion of gas in its sold product mix, which resulted in a marginal reduction in its scope 1, 2 and 3 emissions intensity. However, this reduction is far from the annual reduction rate of 4% required by the company’s 1.5°C pathway.

Gazprom’s actions are driven by protecting its natural gas interests rather than a strong climate ambition. Much of the company’s focus, particularly its CapEx, is directed towards continuing oil and gas exploration and production. Further, its targets are not aligned with the 1.5°C pathway and do not cover scope 3 emissions.