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Monday, September 29, 2008

Rosneft cuts flare deal with World Bank

29 September, 2008 - Upstream OnLine - The World Bank has signed a deal with Russian oil producer Rosneft to cut flaring by making use of gas from the Komsomolskoye oilfield rather than flaring it off, Rosneft said. Rosneft will cut the equivalent of 5.3 million tonnes of carbon dioxide emissions in 2008-2012, which can then be sold as carbon offsets, under the Kyoto Protocol, to European countries trying to meet climate targets. Kyoto's joint implementation mechanism allows investors to fund the reduction of greenhouse gases in former communist countries, then make a profit on these investments by selling the emissions cuts in the developed world. Developed economies and companies in the West buy these cuts to meet their commitments under the Kyoto Protocol, an international treaty to stave off global warming by reducing the world's emission of harmful gases such as carbon dioxide, a Reuters report said. State-controlled Rosneft will achieve the emissions cuts by harnessing associated gas at Komsomolskoye in Yamal-Nenets, the company said in a statement. Associated gas in Russia is most often flared. Trapping the gas for use can result in vast emissions cuts. Under the deal, the World Bank will act on behalf of the European, Danish, Italian and Spanish Carbon Funds, which will buy these cuts in the form of emissions reduction units (ERUs), which are traded on the global carbon market. "The World Bank...will formalise transactions with ERUs, as well as monitor and control compliance with procedures governing project implementation," the Rosneft statement said. Rosneft is ready to invest 4 billion roubles ($159 million) in the associated gas project and hopes to sell the ERUs, it said.

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