Russia: "beginning of withdrawal" for TotalEnergies, which depreciates its assets on the Arctic LNG 2 project

Posted 28 April, 2022

TotalEnergies, subject to criticism for its maintenance in Russia, began "the beginning of a decline" by announcing on Wednesday a depreciation of 4.1 billion dollars in assets relating in particular to the Arctic LNG 2 project.

This liquefied gas project is made uncertain by the sanctions imposed on Russia since its invasion of Ukraine, he explained.

The “new bans pose additional risks to the execution capacity of the Arctic LNG 2 project. group in a press release, signaling there "the beginning of a decline", according to a spokesperson.

The French hydrocarbon giant had already decided on March 22 to no longer register proven reserves for Arctic LNG 2 and to no longer contribute capital to the project, "given the uncertainties caused by the technological and financial sanctions on the ability to carry out the project under construction".

But since that date, April 8, "new sanctions have actually been adopted by the European authorities, prohibiting, in particular, the export from the territory of the European Union of goods and technologies intended for the liquefaction of natural gas for the benefit of a Russian company", notes the group on Wednesday.

"TotalEnergies draws the consequences of what is happening. This provision of 4 billion dollars shows that TotalEnergies has started to turn the page", indicates the spokesperson.

This gigantic Arctic LNG 2 production site, of which the company owns 10%, was to make its first delivery of liquefied natural gas (LNG) from Siberia in 2023.

 

Strategic country

 

TotalEnergies had already taken some distance from Russia, a strategic country for it, by announcing in March that it would renounce all purchases of Russian oil, diesel and petroleum products by the end of the year at the latest. He had also announced that he would no longer provide capital for new projects there.

However, it has not withdrawn from this country where it has been established at the beginning of the 1990s, and where it produces 16.6% of its hydrocarbons and even 30% of gas alone.

The group is a 19.4% shareholder in the Russian gas giant Novatek and holds a 20% stake in the Yamal LNG gas field, a project launched at the end of 2017 in the Russian far north and which has produced more than 18 million tonnes. of LNG in 2020.

For him, it would be counterproductive to abandon these stakes, he had previously explained, failing to find a non-Russian buyer to buy them in the current context. “Abandoning these participations without financial compensation would therefore contribute to enriching Russian investors in contradiction with the very purpose of the sanctions,” the company explained in March.

"Withdrawing me is giving [...] 13 billion to Russians, for zero because no one can buy" the factories in which the group has invested, said its CEO Patrick Pouyanné at the time.

TotalEnergies has been the subject of strong criticism for its maintenance, the environmentalist presidential candidate Yannick Jadot having even accused it of "complicity in war crimes". The multinational had announced defamation lawsuits.

The group has also been publicly taken to task by the investor Clearway Capital to ask it to cease its activities in Russia or to consult its shareholders on its continuation in the country.

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