TotalEnergies Exits Russia’s Sanctioned Arctic LNG 2 Project

French oil and gas supermajor TotalEnergies has completed the transfer of its 10% stake in the Arctic LNG 2 to operator Novatek, ending its participation in the sanctioned Russian export project.

TotalEnergies on Thursday confirmed that the transfer of its 10% interest in Arctic LNG 2 to NordLine, a subsidiary of the project’s operator, Novatek, has been completed.  

TotalEnergies is therefore no longer a shareholder in Arctic LNG 2, said the French major, which had announced in its second-quarter earnings call in July that an exit from the sanctioned project was imminent.

As part of the transfer agreement, TotalEnergies retains its rights to be reimbursed by Arctic LNG 2 for its share of the loans provided by the shareholders to the project, for an amount of around US$1.3 billion. Such reimbursement might be implemented in the future, subject to applicable sanctions, the French company said.

TotalEnergies fully wrote off its $4.1 billion stake in 2022, chief executive Patrick Pouyanné said on the earnings call last month.

Following the UK, EU, and U.S. sanctions on Arctic LNG 2, the French group immediately initiated the suspension of its rights and obligations under the contracts related to Arctic LNG 2, the executive added.

“Novatek approached us indeed and initiated discussions for the transfer of our 10% in Arctic LNG 2 to one of their own subsidiaries, Nordline,” Pouyanné said, adding that the transfer was authorized by Russia’s authorities in June.

“We, on our side, consider that it’s in the joint interest of TotalEnergies and Novatek to dispose of our Arctic LNG 2 shares, which again were fully impaired in 2022,” he added.

While TotalEnergies was looking for a way out of Arctic LNG 2, Russia appears to have recently added four LNG carriers to its growing dark fleet of tankers exporting cargoes from the sanctioned project.

By Tsvetana Paraskova for Oilprice.com

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