Sustainability in Gazprom Gas Production - Assignment Example

Sustainability in Gazprom Gas Production Executive Summary The energy sector has attracted a lot of controversy as a major source ofgreenhouse gases that result in global warming. Gazprom is a leading generator of gas in Russia and has been extensively involved in sustainability measures to ensure that the company produces low-carbon gas. The EU, as the largest market for natural gas is highly liberalized thereby setting a strategic market for Gazprom to open its market to global gas users. By 2050, Gazprom seeks to be the leading producer of natural gas and importer in the EU region. This is following the current market trends which show that there is an increasingly high number of gas consumption the globe that is likely to increase in the future. With regards to this, Gazprom should invest more in R&D in order to allow for production of de-carbonized gas that is sufficient enough to meet the needs of the international gas market. The reason for choosing this business is because it is the leading natural gas producer in the leading gas producing country-Russia. Sustainable energy policy Gazprom should design itself to create a sustainable energy policy by 2050, which will assure the security of gas supply and competitive advantage in line with European Union (EU) energy policy. The demand of gas and other natural gases is growing in Europe exponentially, this means that Gazprom will have an increased demand by 2050. To ensure sustainability, it will be fundamental to explore other sources of natural gas to make sure that it serve Europe with sufficient and efficient energy. It will also be important for Gazprom to formulate strategies that are aimed to empower consumers in order to achieve an impeccable level of safety and security in matters concerning energy. Technology is very dynamic, Gazprom should emphasis on researching on technology that will help to conserve the environment. The innovation should be very keen in ensuring that Gazprom comes with more renewable energy since to sustain and conserve the current natural gases that it explores (Hanson 2009). Gazprom is a company that deals with natural gases. This scenario makes it inevitable to release hydro-carbons. Due to this fact there is emissions of greenhouse gases from the company, which will have a very intense implication if it is not taken care of properly. Greenhouse emissions should be reduced by over 80% by the year 2050 to ensure that the community lives in an environment that is conducive. According to EU and UN a commitment to revolutionize the energy system will be required in respect to reduction of greenhouse gases by 80-95% by 2050. The EU also aspire to achieve a low-carbon economy that will see an upsurge in the usage of electricity, it is also aimed to decarbonize power generation as well as make sure that the building and transport sector adopt an alternative fuel. In line to this view of EU, Gazprom will have to strategize and formulate ways that will ensure that it has completely decarbonized its power generation (Morozov 2008). Rationale for a Future Gazprom Scenario The future underlying principle of Gazprom in its gas sector is heightened sustainability as an integration of economic growth through increased gas production and importation while ensuring maximal conservation of the environment. Gazprom has increasingly invested billions of dollars in environmental programs. The UN, EU and Government of the Russian Federation has set out roadmaps, measures and policies to ensure global conservation of nature. The globe is moving towards de-carbonization of energy as it is has proven to be an environmentally sound strategy that will sufficiently address the issue of global warming and environmental deterioration. With regards to mitigating climate change and reduction in global warming in 2050, the EU objective is to retain the climate change at an increase of 2% by 2100. To achieve this, the EU’s objective is to reduce the emission of greenhouse gas by 80-95 % by 2050 by using 1990 as the benchmark year. Another Russian government had also set their vision in the “Energy Strategy of Russia up to 2030” which sets out the requirements of the energy sector in providing energy efficiency of the economy and ensuring safety of the public as a priority for Russia. The Russian state policy objective by 2050 is to improve the ecological safety of the Russian economy, promote clean energy and ensure financially stability by ensuring increased energy efficiency and saving. The state targets to achieve this by stimulating the use of new technologies that will oversee a reduction of the GDP energy intensity by 40% by 2020 (Aalto 2008). Gazprom is a key player in the world energy production. This is because it accounts for 70% of the total gas reserve in Russia, which is one of the countries with the largest natural gas reserves amounting to 48 trillion cubic. On the other hand, the European Union is the leading market for natural gas with an integration perspective that allows companies like Gazprom to benefit from globalization. The production of gas in the EU is declining and therefore requiring more importation in order to meet the demand of the market. Due to liberalization of the natural gas market, Gazprom targets to increase its exportation of gas on the EU. However, the EU seeks to address the reduction in the indigenous natural gas production by devising new ways that will ensure a reduction in the use of gas. It is imperative to note that trends in gas consumption is are difficult to predict and therefore, gas is likely to remain as the second widely used fuel in the world therefore increasingly its demand in the EU natural gas market (Hanson 2009). Gazprom endeavors to achieve high level CO2-emission reduction by investing in de-carbonization practices. By achieving de-carbonization of gas energy and increase productivity, Gazprom targets to be a leading natural gas market leader. This is because market trends and consumption levels indicate a future increase in gas consumption. This scenario mean that gas has a great potential of increasing its energy mix share by 2050. For instance, the attachment of carbon capture and storage (CCS) in electricity generation plants that are fired by gas could permit production of low carbon electricity sourced from gas. As such, gas will not only retain its current uses, but also increase its application due to a reduction in the carbon level and increased production. Gazprom will benefit from this move as gas is more flexible in its use as it can also be employed in providing for back up of renewable energy sources like solar and wind generation energy (Morozov 2008). Challenges of Gazprom in Terms of Environmental Risks and Socio-Political Issues Gazprom has various challenges that it experiences in its quest to sustain clean gas production (Bahgat 2006). The main challenges are as a result of environmental and social-political issues. This challenges include; 1. There is a challenge to ensure that effectiveness of the production, extraction and processing of gases (LPG) in ensuring that there is unlimited demand. This is a social and political issue since pressure will mount from authorities if the demand of gases is not met to the convenience of the society. 2. Gazprom has the largest market share in Europe, countries in Europe economically want to make sure that they modernize and create state of the art infrastructure that as way of economic development. There is huge challenge since the company has to position itself to make sure that its infrastructure are in line with the country’s economic strategies. 3. Another challenge is to make sure that the gas is raised to create an ecological efficiency of the Europe economy and the whole energy industry, this will require a change in structural change that require a technology to aid conserve the natural gases. 4. There is a significant decline gas production in EU, this a challenge to Gazprom since it means that demand is increasing whereas the supply is limited. How Gazprom will adapt to the identified environmental limitations and the main socio-political issues Gazprom can adapt the following strategies to achieve the desired result in terms of curbing the environmental limitations and the main social-political issues. The Gazprom as a business that offers the large market share in EU, this means that Gazprom and should co-operate in order to maximize the upstream by instilling innovation in terms of technology to advance the exploitation of the upstream. It is very critical for the two parties to form an alliance for the benefit of social and political environment as well as increasing the supply of gas. Policies and practices that are deemed to be best should be exchanged by both the parties. There are also some technological and commercial barriers that are put in place by EU as a regulatory measure. If a conducive agreement is adopted there will be improvement in the utilization of natural gas efficiency, which will aim to protect waste of valuable natural resources sand air pollution. This will be very beneficial in terms of making the environment sustainable even after the 2050. Research and Development (R&D) should be carried out to increase the production of renewable natural gases, this can be from sources such as biogas. If such sources are utilized and developed properly supply of gas will increase. R&D will also make sure that the transportation of natural gas is made in a manner that is efficient, which will ensure the safety and security of the citizens. The EU is very eloquent in terms of making sure that decarburization goals are achieved, which gives Gazprom no option but to comply and make sure that it has attained this goal by 2050. Technological innovation have to be created to enhance make sure that production is done without carbonization. Environmental issues are very important in international politics, there has been a lot of measures that have been put in place to make sure that the greenhouse gases are reduced to almost 100%. It will be therefore very important for the company to make sure that it has placed mechanisms that will reduce greenhouse gases to almost 100% in their production of natural gases. Energy Strategy To ensure sustainable innovation that will provide value creation and competitive advantage, Gazprom should invest in innovative activities and strategies that will ensure cutting edge success in the market. Decarbonisation is a strategy that has the potential to influence the future of the hydrocarbon by reducing carbon emission. This will in turn reduce the amount of greenhouse gases released into the environment. Effective de - carbonization and production of low-carbon gas could be effected by implementation of technologies that have the potential to reduce gas flaring. In its energy strategy, Gazprom can implement cutting-edge engineering solutions. This can be achieved through adequate investment in R&D which should be applied in all segments of gas production and marketing. R&D is effective in improving the business processes quality through creation of new ideas, new values and technologies. Gazprom can also pursue sustainable development by creating technologies with the ability to ensure efficient growth of unconventional resources and small gas fields (Schmidt-Felzmann 2008). For its natural gas market expansion, Gazprom can integrate its current research and development plans and findings with those of the EU especially for those issues related to CCS. This can be helpful in allowing Gazprom assess the gas prospects in order to ensure economic and technical viability of the company and that of the country. Gazprom can also gain competitive advantage over other companies in Russia and in globally by coordination of its R&D with those of the international market with regards to transportation and supply of gas. With respect to the increasing use of natural energy, Gazprom can seek to improve its application in the production of renewable sources of energy by discussing and coordinating the methods through which natural gas can be promoted for use in CCGTs. Innovative uses of gas can also be generated by extensive market research such as low-carbon gas application by means of NGVs and CHG. By applying this energy strategy, Gazprom will be able to provide clean gas to Russia and globally by 2050 while sustaining environmental protection and increased production. References Aalto, P. and Westphal, K. (2008) Introduction. In: P. Aalto (ed.) The EU-Russian Energy Dialogue: Europe‟s Future Energy Security. Hampshire: Ashgate, pp. 1-21 Bahgat, G. (2006) Europe‟s Energy Security: Challenges and Opportunities. International Affairs 82 (5), pp.961-75 Hanson, P. (2009) The sustainability of Russia‟s energy power: Implications for the Russian economy. In: Perovic, J., R.W. Orttung, and A.Wenger (eds.) Russian Energy Power and Foreign Relations: Implications for conflict and cooperation. London: Routledge, pp.23-50 Morozov, V. (2008) Energy Dialogue and the Future of Russia: Politics and Economics in the Struggle for Europe. In: P. Aalto (ed.) The EU-Russian Energy Dialogue: Europe‟s Future Energy Security. Hampshire: Ashgate, pp.43-61 Schmidt-Felzmann, A. (2008) Editorial: The European Union‟s External Energy Policy. Journal of Contemporary European Research 4 (2), pp.67-70 Read More