TotalEnergies to exit Arctic LNG 2 plant in Russia, CEO says
TotalEnergies' Stake in Arctic LNG 2: Background and Implications
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By America Hernandez
Announcement of Exit
PARIS, July 23 - French oil major TotalEnergies will exit its stake in the Arctic LNG 2 plant in Russia, CEO Patrick Pouyanne said on Thursday.
Stake Transfer Details
The transfer of Total's 10% stake to Nordline, a subsidiary of the plant's majority owner Novatek, has been approved by Russian authorities and will be completed in the short term, he told analysts on a second-quarter results call.
Sanctions and Strategic Considerations
Following Western sanctions on Russia in the wake of the invasion of Ukraine, Total maintained ownership in key Russian plants exporting LNG — but has considered selling the stakes after European Union sanctions will ban companies from importing that gas in 2027 or selling it in other jurisdictions.
Impact of U.S. Sanctions
"Soon after Arctic LNG 2 became subject to U.S. sanctions in November 2023, Novatek approached us about a potential transfer," Pouyanne said.
Financial Implications
Noting that Total had already taken a $4.1 billion impairment on the project in 2022 and declared force majeure the following year, Pouyanne said he considered the proposal to be in the company's interest.
Compensation and Valuation Uncertainty
The CEO did not use the word 'sale'. A press officer for TotalEnergies did not immediately respond to a request on whether Total expected to be compensated for its stake and at what valuation.
Broader Context: Foreign Firms and Russian Assets
In the wake of the war many foreign firms have sold Russian assets or seen them seized.
Recent Precedent: Gazprom and Sakhalin II
In 2024, Kremlin-controlled energy giant Gazprom acquired a 27.5% stake in Russian LNG project Sakhalin II by decree, previously held by British oil major BP, which took a $1.6 billion impairment.
(Reporting by America Hernandez in Paris, Editing by Charlotte Van Campenhout and Louise Heavens)
