Gazprom Neft becomes the first Russian oil company to transfer emission reduction units (ERUs) within the framework of the Kyoto Protocol

Press-release

Gazprom Neft announces that it has become the first Russian oil company to complete the transfer of emission reduction units (ERUs) in accordance with the procedures established in Russia for implementing the Kyoto Protocol, where the units are transferred from the national registry to the registry of another nation.

In April Gazprom Neft transferred about 295,000 ERUs from the Russian registry of carbon units to the National registry of carbon units of Japan. The search for end users of ERUs was undertaken by Mitsubishi Corporation – Gazprom Neft's Japanese partner in the joint implementation project (JIP) at the Ety-Purovsk field, which is has been undertaken within the scope of the Kyoto Protocol. In accordance with JIP, marketing of the ERUs fell under the remit of Mitsubishi Corporation. The ERUs will be sold to one of Europe's largest energy companies.

The parties commenced searching for buyers of the ERUs in December 2010, after the JIP at the Ety-Purovsk field was recorded in the Russian registry of carbon units. The project has also been assigned a number in the International Transaction Log (ITL). The ITL is an international registry of deals on quota transfer from one country to another within the scope of the Kyoto Protocol.

The sold ERUs were obtained between the period of August to December 2009. During the life of the project (August 2009 to December 2012) Gazprom Neft expects to receive up to 3.1 million ERUs (each unit corresponds to 1 tonne of CO2).

To convert carbon units to ERUs, in February 2011 Gazprom Neft and Mitsubishi Corporation signed an agreement to perform operations with carbon units. This was done with the participation of Sberbank, the operator of the Russian carbon market following a resolution by the Government of the Russian Federation.

Following the launch of the JIP, a pipeline in access of 70 km was built from the Ety-Purovsk field. This allowed for associated petroleum gas (APG) obtained at the field to be sent for utilisation at the Vyngayakhinsk compressor station by SIBUR. Under the terms of the project, Gazprom Neft was responsible for constructing, management and maintenance of the facilities. The experience of working with Mitsubishi Corporation and JX Nippon Oil & Energy Corporation allowed for a successful operation fully compliant with the Kyoto Protocol. JX Nippon Oil & Energy ensured the Kyoto Protocol methodology was fully adapted to the conditions of the JIP at the Ety-Purovsk field.

Following the commencement of the project in 2009, the first verification of emission reductions took place in September 2010. This procedure is necessary to determine the amount of quotes to be utilised. During verification, independent experts studied all aspects of the project and confirmed the declared volumes of emission reduction and the utilisation of gas was fully compliant with Kyoto Protocol.

Gazprom Neft JIP was the first Russian-Japanese project created to fully comply with the Kyoto Protocol and the first Russian project to obtain approval from the Japanese government. In early July 2010, the project was approved by Sberbank, the authorised government bank which oversees the competitive selection process of JIPs. The Gazprom Neft JIP is included in the confirmed list of projects to be implemented in accordance with article 6 of the Kyoto Protocol which falls under auspices of the United Nations Framework Convention on Climate Change.

Notes for editors

The Kyoto Protocol is an international document accepted in Kyoto (Japan) in December 1997, supplementing the United Nations Framework Convention on Climate Change (UNFCCC). It obliges developed countries and countries with a transitional economy to reduce and stabilise emissions of greenhouse gases in the years 2008-2012 compared with 1990.