26 Apr 2023 09:17

Russian oil cos could earn $13 bln per year extracting lithium from brine - report

MOSCOW. April 26 (Interfax) - Russian oil companies could become major producers of lithium by extracting the metal from brine at previously drilled oil and gas wells, and potentially generate up to $13 billion of additional revenue annually by 2040, Vygon Consulting said in a study.

Global demand for lithium will reach 3.4 million-6.1 million tonnes of lithium carbonate equivalent (LCE) by 2040, foremost on the back of growing production of batteries for electric vehicles, Vygon forecast. The potential supply of lithium, meanwhile, is expected to total 3.9 million tonnes by this time. Due to demand outstripping supply, the price of lithium is expected to be about $35,000 per tonne of LCE or higher in the period from 2025 to 2040, which is far above production costs.

The resource base for lithium in Russia, after calculation of profitable reserves, could be increased from 5 million tonnes to 114 million tonnes of LCE, Vygon said. The company's experts believe the most promising way to produce the metal is to extract it from brine at previously drilled oil and gas wells. This would save on capital expenditures thanks to developed infrastructure. Vygon estimated the potential reserves in Russia at 108 million tonnes of LCE.

Russia could be producing 250,000 to 600,000 tonnes of LCE annually by 2040, which would amount to 15% of potential global demand, Vygon said. The company's optimistic scenario sees Russian producers earning about $20 billion annually from lithium sales, with oil and gas companies extracting lithium from brine earning 75% or $13 billion of this revenue.

"We believe that for oil companies this is basically a strategic option that could enable them to enter the most promising market, the battery production market, in future. We have colossal potential: high lithium content in formation waters makes it possible to commercially extract it using evaporation technology. Considering that prices are currently above $60,000 per tonne of lithium carbonate, while the production cost will be about $5,000/tonne, we have all the prospects," Vygon Consulting managing director Grigory Vygon said at the National Oil and Gas Forum.