Reduction of emissions

At this stage, the key contribution to the reduction of GHG emissions is through the implementation of projects for the efficient use of APG at oil and gas producers in Russia.

In order to reduce APG flaring, Russian entities have been implementing a program to expand efficient use since 2003The program covers a 3-year period and is revised and approved by management of PJSC LUKOIL on an annual basis. The program for 2019–2021 was approved in 2018. During the previous reporting period, the program for 2018–2019 was in effect., covering the activities for the construction of new facilities and the reconstruction of older facilities for APG preparation, transportation and processing.

APG is used for injection into formations to maintain formation pressure and to generate heat and electricity for consumption by oil and gas producers, as well as delivered to gas refineries and supplied to gas distribution systems of other entities.

The construction and reconstruction of facilities allow increasing the APG use as a raw material for power and petrochemical plants and as a product supplied to external consumers. The selection of economically viable APG use options depends upon the conditions of specific fields, the composition of raw materials, availability of the gas transportation and processing infrastructure, as well as upon the distance to target markets. In general, deep APG processing is considered to be most cost-effective for sufficient production volumes.

In 2019, nine projects for the construction and reconstruction of facilities for efficient APG use were completed in the Perm Territory, the Komi Republic, the Khanty-Mansi Autonomous Area – Yugra and in the North Caspian. The summary effect from APG flaring reduction activities made up 27.2 million cubic meters.

LUKOIL was the first Russian oil company to join the World Bank’s initiative for zero routine APG flaring by 2030 (announced in 2015), which combines the efforts of governments, oil companies and public organization to increase APG useful life. The initiative covers two projects in the Perm Territory and the Khanty-Mansi Autonomous Area – Yugra entailing expected reduction of GHG emissions of about 105 thousand tonnes of СO2E by 2022.

The Perm Territory is implementing an investment project for the construction of a system to collect and transport APG from the Zhilinskoye, Belskoye and Rostovitskoye fields. In 2019, construction and installation work was performed at the following facilities:

  • Zhilinskoye–Chashkino gas compressor station (GCS) gas pipeline, a receiving separator at the Chashkino GCS;
  • Chashkinskaya gas turbine electric power station (GTEPS) with the capacity of 16 MW (4х4 MW), a 6 kW distribution substation, a block gas preparation unit and a booster pump station;
  • 6 kW cable line to connect the 16 MW EGTS to the 110/35/6 kW Chashkino substation and electricity supply to the grid;
  • 35 kW air line connecting the 110/35/6 kW Chashkino substation with the 35/6 kW Zhilinskaya substation; and
  • 35/6 kW Zhilinskaya substation.

During the preparation of this Report, startup operations were underway at those facilities. The commissioning of all facilities under this project is scheduled for 2020. As a result, the conditions for the efficient APG use of up to 47 million cubic meters per year will be created, and oil production facilities of OGPW-12 will be provided with their own electricity.

The Khanty-Mansi Autonomous Area – Yugra continued implementing the project for the reconstruction of the Povkhovskaya compressor station with an annual capacity of 600 million cubic meters: the tender was held to source the contractor, and the agreement for supplying equipment (three compressor units) was concluded.

In general, the APG flaring volume has almost halved over the period 2017−2019. The indicator boundaries cover Russian exploration and production entities and foreign entities LUKARCO B.V. (in proportion to the share in the Tengiz project in Kazakhstan) and LUKOIL Overseas Kumkol B.V. (in proportion to the share in the Kumkol project in Kazakhstan). In Egypt and Iraq, the entire volume of APG produced is contractually owned by the host countries.

2017 2018 2019
Total volume of APG (hydrocarbon) flaring across LUKOIL Group, million cubic meters, including: 574.867 328.377 309.534
  • Russian entities
555.327 312.925 298.933
  • Foreign entities
19.540 15.452 10.601
Level of APG use across LUKOIL Group, %, including: 95.4 97.4 97.6
  • Russian entities
95.2 97.3 97.5
  • Foreign entities
97.6 98.1 98.9
Financing of APG use activities, RUB billion
2017 2018 2019
Total across Russian LUKOIL Group entities 15.0 8.4 10.4

Note. The indicator covers the expenses on the construction and reconstruction of APG preparation, transportation and processing facilities, as well as heat and electric power generation facilities in Russia. The change of the indicator is accounted for the completion of the plan of key activities under the effective APG use program. For examples of such activities, see the 2019 Annual Report.

Reduced gas leaks during repairs

We strive to minimize natural gas leaks into the atmosphere caused by scheduled repairs and equipment failures at oil and gas producers.

In its efforts to identify such gas leaks, Russian LUKOIL Group entities are governed by regulations, federal policies and procedures of the oil and gas sector, as well as by corporate standardsFZ-116 on the Industrial Safety of Hazardous Production Facilities, FZ-22 on Making Amendments to the Federal Law on the Industrial Safety of Hazardous Production Facilities, STO LUKOIL 1.19.1-2012, Federal Policies and Procedures on the Rules for the Safe Operation of In-Field Pipelines..

Production facilities make use of mobile and standalone gas leak controls. In the follow-up of the audit and diagnostics, repair works at gas transportation pipelines and gas collection and compression facilities (compressor stations) are scheduled. The audit and diagnostics of equipment are conducted on a regular basis.