Moscow, August 12, 2010 - On July 23, 2010, the World Bank’s first Joint Implementation (JI) Gas Recovery Project in the Komsomolskoye Oil Field was approved by the Ministry of Economic Development of the Russian Federation. It was one among 15 other projects in Russia selected under this flexibility mechanism of the Kyoto Protocol. The Associated Gas Recovery Project in the Komsomolskoye Oil Field is located in the region of Yamal-Nenez, and is jointly developed by OJSC NK Rosneft (“Rosneft”) and the World Bank.
“The Russian government has taken a significant step forward in its efforts to combat climate change with the approval of the first Joint Implementation projects in the country. This project is one of five that will eliminate the burning of petroleum gas, showcasing important carbon finance incentives to fight this large source of carbon dioxide emissions in the country's oil and gas industry”, emphasized Pedro Alba, World Bank Country Director for Russia.
As trustee of the Carbon Fund for Europe as well as the Danish, Italian and Spanish Carbon Funds, the World Bank signed an Emission Reduction Purchase Agreement (ERPA) with Rosneft in 2008 to purchase the carbon credits generated by this project. The project will build a new infrastructure to process and transport the recovered gas from the field to the domestic gas market through Gazprom pipelines, generating up to 4 million Emission Reduction Units (ERUs) by 2012, of which the World Bank’s Carbon Funds is the buyer. These ERUs can be used by the Participants of the Carbon Funds for compliance under the Kyoto Protocol or in the EU Emissions Trading Scheme.
“We greatly appreciate efforts of the Russian Government aimed at increasing revenues from efficient consumption of associated gas recovery. The joint implementation JI project at the Komsomolskoye oil field is a unique demonstration of the synergy of interests, including the ones of the government, business community and the general public. The implementation of Kyoto Protocol mechanisms will help reduce economic barriers to the modernization of the Russian oil and gas industry as well as foster implementation of new important projects in this area.”, commented in “OJSC "NK Rosneft".
Russia is the third largest emitter of greenhouse gases (GHG) in the world and this project is part of a larger scheme to reduce greenhouse gases in Russia. In February, Russia launched a JI project tender through the state-owned Sberbank, hoping to attract companies to cut additional GHG emissions in return for ERUs. In total, 37 JI projects aimed at reducing emission by the equivalent of 74.7 million tons of carbon dioxide by 2012 were submitted for approval. Of these, 15 projects were approved, with the potential to generate 30 million ERUs by 2012.
Russia ratified the Kyoto Protocol in 2005 and has committed to maintaining its annual emissions at 1990 levels by 2012. Approval by the Russian authorities of the first projects is a positive signal to the international community and demonstrates Russia’s strong interest in climate change initiatives and its potential to play an important role in the international carbon markets.