“Nord Stream – 3” will supply Europe with fuel of the future

By | October 3, 2020

Russia has not yet completed the second “Nord Stream”, and already started talking about the third. The new pipe from Russia to Germany is needed to transport hydrogen, to which Europe wants to fully transition in 30 years. The first two gas pipelines will also be put into operation. However, Moscow will again have to convince Europe of the benefits of buying gas from Russia, and the Americans will once again compete.

In the future, Russia may use Nord Stream 1 and Nord Stream 2 to supply blue and turquoise hydrogen to Europe as well as build Nord Stream 3 for this purpose. This opinion was expressed by Vladislav Belov, Deputy Director of the Russian Academy of Sciences Institute of Europe.

This is supported by the EU plans for the long term. Europe is building plans to fully switch to green hydrogen by 2050. However, it will not be able to do this, so it will have to buy blue and turquoise hydrogen from Russia, the expert believes.

It can be pumped through the existing Russian gas pipelines and a new one will have to be constructed. The Ukrainian GTS is likely to be overboard. First, where Ukraine will find hydrogen, it will have nothing to produce it from. Kyiv has nuclear power plants, but they will have to be decommissioned in ten years’ time, said Stanislav Mitrakhovich, a senior research fellow at the Finance University under the Russian government and leading expert at the National Energy Security Fund. Secondly, the Ukrainian gas transportation system is very old, and its pipes are hardly suitable for hydrogen transportation. Ukraine will need huge investments in infrastructure, the expert points out. It will be easier to build a new gas pipeline directly from Russia.

“Due to its condition, the Ukrainian pipe will definitely not be able to be used for transportation of hydrogen, Russian more modern pipes are likely to require higher pressure, and pumping losses will be significantly higher than those of methane (gas). However, the preferred method of pipeline transfer of hydrogen will be the construction of a special pipeline with new reinforcement coatings to prevent gas losses during transportation,” said Maxim Khudalov, senior director and head of the AKRA Sustainable Development Risk Assessment Group.

“For Russia, hydrogen is a topic to be tackled. It is more logical not to oppose gas and hydrogen but, on the contrary, to use their symbiosis.

We can combine gas and hydrogen history. If it succeeds, it will be good,” Mitrakhovic believes.

But the important question is whether the EU will have demand for blue or turquoise hydrogen. The Europe plan presented this summer implies a complete abandonment of hydrocarbons and the transition to green hydrogen by 2050, which it wants to produce itself. The EU is going to sell 630 billion euros of hydrogen annually and provide about 1 million jobs. It was estimated that building infrastructure within the EU will cost between 27 billion and 64 billion euros. “In Europe, we are considering ambitious plans to create a hydrogen market with exchange pricing, and to use the existing infrastructure for natural gas,” said Vitaly Gromadin, senior analyst at BKS Mir Investments.

For Gazprom, which sells about 200 billion cubic meters of natural gas under normal conditions, this is an extremely unpleasant plan. Apart from the reorientation towards gas sales to China, which Gazprom is actively engaged in, they also conduct research on hydrogen.

Nord Stream - 3

The problem is that Europe wants to produce and import exclusively green hydrogen, while Russia intends to offer it another color of hydrogen.

It is worth explaining the differences in fuel types. Green hydrogen is obtained through electrolysis from renewable energy sources (RES). Whereas blue and turquoise – from gas. “Blue hydrogen is a steam conversion of methane, which uses methane as raw material, equipped with a system of capture and disposal of CO2. Turquoise hydrogen is also derived from methane, but in the process of pyrolysis, carbon is obtained immediately in a solid form, which makes CO2 emissions minimal,” explains Maxim Khudalov, senior director and head of the AKRA Sustainable Development Risk Assessment Group. There is also yellow hydrogen, which Rosatom deals with, as it is hydrogen-based on nuclear energy.

“The question is whether the European Union will buy hydrogen of other colors from Russia. Everything will depend on negotiations with European consumers,” Mitrakhovich said. In addition, the production of blue hydrogen, which Russia knows how to do (this topic is dealt with by Gazprom and Novatek), is more economical than the production of green hydrogen, on which Europe is obsessed. A large-scale replacement of hydrocarbon fuel with green hydrogen would require too high power generating capacity due to the low efficiency of the electrolysis process, says Vitaly Gromadin.

In fact, most of the hydrogen is now produced from natural gas. “The gas industry is already actively involved in the hydrogen power generation development – currently, 76 percent of the world hydrogen is produced from natural gas. At the same time, gas consumption as a feedstock for this amount of hydrogen production amounts to 205 billion cubic meters,” Oleg Aksyutin, Deputy Chairman of the Gazprom Management Committee noted in an interview with the corporate magazine.

For example, in Saudi Arabia there is a blue hydrogen project that mixes hydrogen with nitrogen and transports it as ammonia to Asia; in some countries, the goal is to add about 10 percent of hydrogen to natural gas, Gromadin notes.

Nord Stream - 3

“If Europe is willing to pay for more expensive but cleaner fuel from the environmental point of view, Russia looks like a natural partner. The infrastructure for natural gas makes it possible to switch to hydrogen, which, however, is less dense and preferably transported as ammonia. In order to keep up with Saudi Arabia, it is already possible to implement individual projects for the production of blue hydrogen, so that if requested by Europe, it would be possible to scale production volumes relatively quickly along the already well-established path,” Gromadin believes.

Currently, about 120 million tons of hydrogen are produced in the world, but in 30 years this amount may increase fivefold. The Americans, of course, are going to become the leaders of hydrogen energy by 2050. However, Russia is not going to give up this market without a fight.

Nord Stream - 3

The new energy strategy of Russia adopted in April this year includes hydrogen energy among its priorities. According to the plan of its development in Russia for 2020-2024, from 2021 it is planned to form the reputation of Russia as a supplier of hydrogen as an alternative to traditional energy resources. Gazprom and Rosatom are to start producing hydrogen as early as 2024, and by 2035 Russia is to reach 2 million tons per year of export deliveries of hydrogen, the strategy says.

However, Maxim Khudalov is skeptical: “Problems with transportation of hydrogen via gas pipelines make its production promising exactly at the points of consumption. I think that RES plus hydrogen fuel cells, but most likely the same methane will go to Europe and will be transformed into hydrogen using blue or turquoise technology on the spot. At the same time, the suppliers will pay the costs of hydrogen separation and CO2 burial”. In his opinion, the Europeans will try to shift the hydrogen emission costs to gas suppliers, so the Russian gas producers should wait for the margin reduction.