Novatek

Novatek has set 2030 emissions reduction targets for its upstream operations and LNG production, as well as a 2030 methane emissions reduction target. However, the company’s ambitions could not be assessed as the company has not reported a base year or clarified the scope of emissions covered by the targets. Novatek needs to publish this data to add credibility to its targets. Furthermore, it needs to set up a scope 3 emissions reduction target to account for the combustion of its sold products, which represent around 80% of the company’s total emissions.

Between 2014 and 2019, the company’s oil and gas volumes extraction increased by close to 40%, with a slightly greater proportion of less emissions-intensive oil extraction in the overall fuel mix (nearly 5% in 2019 as opposed to 1% in 2014) sourced from Russia. This has resulted in a downward emissions intensity trend for Novatek’s oil and gas operations. However, the company is still not aligned with its 1.5°C pathway, which requires a much steeper emissions intensity decrease of close to 10% annually until 2024. Novatek has also already exceeded its carbon budget until 2050 by 35%, which means that the company has no room for even its current assets under its cumulative carbon budget .

Novatek’s low-carbon transition plan is weak. The company has a 2030 emissions reduction target for its operations, but it does not have other low-carbon targets or objectives beyond 2030. The company has not carried out a climate scenario analysis, does not rely on carbon pricing to guide its investment decisions and does not plan to implement carbon pricing in the next two years. Furthermore, climate change risks and opportunities are not overseen by Novatek’s Board but by senior managers and officers, and the company has not established an employee incentive scheme that supports the achievement of climate-related targets.

By 2030, Novatek has committed to reduce its methane emissions in the production, processing and LNG segments by 4% per unit of production. The company has also committed to reduce its greenhouse gas (GHG) emissions per tonne of LNG produced by 5%, and to reduce GHG emissions per unit of production in its upstream segment by 6%, within the same time frame.

Novatek is not actively developing low-carbon business activities. It plans to rely on natural gas to support its low-carbon transition plan as the company considers natural gas to be the primary alternative for renewable energy sources. Novatek is also not investing in low-carbon technologies to support its transition.

Novatek is implementing a pilot project for the sale of liquified natural gas (LNG) as a motor fuel for haul trucks, buses, and other vehicles It is also exploring the usability and rentability of LNG in the maritime industry following new international environmental regulations on marine fuels by the International Maritime Organization (IMO) in 2020.

Novatek has significantly increased its exploration activities in 2019 and discovered new large geological reserves that it plans to rely on to develop large-scale LNG projects in the Arctic zone and ensure it maintains its natural gas production volumes in Russia.

Novatek’s statement that it is making every effort to reduce GHG emissions from its operations cannot be considered credible given the lack of ambition of its emissions reduction targets and the fact that it has already exceeded its carbon budget by 35% based on current assets.