France’s TotalEnergies said on Tuesday it would continue to supply LNG from Novatek’s Yamal LNG export plant in Russia to Europe, while the firm said it would not provide any more capital for the Arctic LNG 2 project.
Besides a 19.4 percent interest in Russian LNG exporting giant Novatek, TotalEnergies holds 20 percent in Novatek’s Yamal LNG project and 10 percent of the Arctic LNG 2 development that should start first exports next year.
“Given the uncertainty created by technological and financial sanctions on the ability to carry out the Arctic LNG 2 project currently under construction and their probable tightening with the worsening conflict, TotalEnergies has decided to no longer record proved reserves for Arctic LNG 2 in its accounts and will not provide any more capital for this project,” the firm said in a statement.
In accordance with the European Union’s decisions to maintain at this stage Russian gas supplies, TotalEnergies continues to supply Europe with LNG from the Yamal plant, within the framework of long-term contracts that it must honor, the firm said.
This would continue as long as Europe’s governments “consider that Russian gas is necessary,” it said.
Contrary to oil, it is apparent that Europe’s gas logistics capacities make it difficult to refrain from importing Russian gas in the next two to three years without impacting the continent’s energy supply, the firm said.
“However, given the worsening situation in Ukraine and the existence of alternative sources for supplying Europe, TotalEnergies has unilaterally decided to no longer enter into or renew contracts to purchase Russian oil and petroleum products,” it said.
TotalEnergies plans to halt all its purchases of Russian oil and petroleum products “as soon as possible” and by the end of 2022 at the latest.
New steps
In a previous statement where it did not reveal much information, TotalEnergies said it would no longer provide capital for new Russian projects.
“After the serious and unfounded accusations of “complicity in war crimes” leveled against TotalEnergies, the company shares with its stakeholders its principles of conduct regarding its Russian related businesses in order to allow them understand how our company is acting in a responsible manner,” it said announcing the new moves on Tuesday.
“TotalEnergies reaffirms its firmest condemnation of Russia’s military aggression against Ukraine, which has tragic consequences for the Ukrainian population and threatens peace in Europe,” the company said.
TotalEnergies said it has defined clear principles of conduct for managing its Russian related business.
The firm would ensure strict compliance with current and future European sanctions, “no matter what the consequences on the management of its assets in Russia, and gradually suspend its activities in Russia, while assuring its workforce’s safety,” it said.
Limited number of secondees
TotalEnergies said that, contrary to remarks made by several commentators, it does not operate any oil and gas fields or any LNG plants in Russia.
Besides stakes in Novatek and the two LNG export plants, TotalEnergies has a 49 percent stake in TerNefteGaz.
These companies are managed by their own staff with a limited number of secondees from TotalEnergies, according to the firm.
TotalEnergies is also a 20 percent partner in the Kharyaga joint venture. Zarubezhneft operates this venture.
The company did indeed contribute to the construction phase of these companies’ projects but has no activity or operational responsibility on those sites, it said.
TotalEnergies had only 11 secondees in these companies as of February 24, 2022, and only 3 seconded expatriates are in Russia as of today, it said.
“TotalEnergies has thus initiated the gradual suspension of its activities in Russia, while assuring its teams’ safety. Similarly, TotalEnergies has decided to put on hold its business developments for batteries and lubricants in Russia,” it said.
Abandoning interests would “enrich” Russian investors
TotalEnergies said the current environment of European sanctions and Russian laws controlling foreign investments in Russia would prevent the firm to find a non-Russian buyer for its minority interests in Russia.
“Abandoning these interests without consideration would enrich Russian investors, in contradiction with the sanctions’ purpose,” it said.
In addition, abandoning these minority interests held by TotalEnergies would have no impact on the companies’ operations and revenues, since these companies have their own employees and are managed autonomously,” the firm said.