With recurring energy demand at the global level, Russia has been wealthy in natural gas supplies and has made it a tradition to supply energy to the international market. However, a new and surprising factor can significantly change the future of energy markets. Natural (or white) hydrogen may have a big potential in the global energy transition, and Russia, through Gazprom, is already considering this option. However, to create this hydrogen, Russia may need to change the contemporary method of production, which involves limiting the exportation of natural gas globally. So this is what we know about this new exciting energy sector.
Russia’s ambitious exploration of white hydrogen: A game changer for energy
It has sought to meet the extraction of natural hydrogen from the gas fields of Eastern Siberia, particularly in places such as Chayandinskoye and Kovyktinskoye. It is suggested that these fields consist not only methane but also hydrogen, which is produced in natural conditions and with other gases deep underground. Thus, while methane is extracted intentionally for the market, hydrogen can become a mostly unlooked byproduct with increasing global demand.
At the International Hydrogen Energy Conference in October 2024, Gazprom CEO Konstantin Romanov disclosed that the company is studying how this natural hydrogen is produced. Hence, hydrogen, especially low carbon white hydrogen, is perceived as a better solution than traditional fossil-based energy and thus promising application in areas like energy storage and decarbonization.
Hydrogen is widely being embraced around the world in the drive towards the use of clean energy. Hydrogen is considered a way around the fluctating supply of renewable resources in the European Union. Excess power produced from wind turbines can be used to produce hydrogen that is green, and can then be used at periods of high demand.
The roadblocks to hydrogen extraction: Why there are big challenges for Gazprom’s execution of its strategy
Thus, for Gazprom it is possible to assume that the market of hydrogen in Europe is one of the potentially promising directions for the further development. Nevertheless, transporting hydrogen over long distances poses a major problem in terms of logistics. However, transporting hydrogen is more complex than natural gas mostly because of storage and transportation challenges. European countries have been trying to localize hydrogen production to evade such costs and this has made it difficult for Gazprom to gain market in that market.
Nonetheless, the idea of using natural hydrogen from Gazprom’s potential is more attractive with numerous technical and economic barriers present. Present facilities and equipment in the gas fields of Eastern Siberia are configured for methane rather than hydrogen production, despite these fields not having been designed with hydrogen extraction in the first place.
Lack of steady market for hydrogen on the global level and steep extraction costs mean that, despite setting ambitious goals for hydrogen production, Gazprom faces many challenges. In addition, the company’s hydrogen strategy may be threatened by other countries, as Norway and Germany for instance halted their hydrogen
Global gas supply at risk: The question is what will occur if Russia decides to bet on hydrogen?
It is important to note, if Gazprom changes its plan of using technological advancements to extract methane this change may impact global natural gas markets. Russia is among the leading producers of natural gas that it supplies to other countries such as China and most around Europe. Transition to hydrogen production will have consequences for the ways Russia deals with its gas fields which could mean less methane available to be exported.
For the rest of the world, Russia’s shift to hydrogen could be a new type of energy boom, with natural hydrogen being an essential piece in the low-carbon energy puzzle. But this could occur over many years and the opportunities – and dangers – that various economically and geopolitically motivated changes present are threats to a worldwide energy security.
Russia’s foray into the production of white hydrogen is the way to go in the future of energy production. Although the production of natural hydrogen is currently in its infancy, there is little doubt that the resource could take on a major role in the international energy mix in the future. However, while moving in this direction, this initiative will face certain technical problems, market prospects, and geopolitical consequences for Gazprom.
