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While it does not operate any oil and gas fields or LNG plants in Russia, the French oil and gas company has minority stakes in several non-state-owned Russian oil and gas companies.
These include Novatek (19.4%), Yamal LNG (20%), Arctic LNG 2 (10%) and TerNefteGaz (49%). TotalEnergies is also a 20% partner in the Kharyaga joint venture operated by Zarubezhneft. TotalEnergies contributed to the construction phase of these companies’ projects but has no activity or operational responsibility on those sites. Additionally, TotalEnergies has decided to put on hold its business developments for batteries and lubricants in Russia.
Amid the worsening conflict in Ukraine and tightening sanctions, TotalEnergies is halting further capital for the development of energy projects in Russia. This includes the massive 19.8-mta Arctic LNG-2 project currently under construction. TotalEnergies SE will no longer record proved reserves for the project in its accounts. Production from the first train at Arctic LNG-2 was expected to start in 2023.
Gas resources for Arctic LNG-2 come from the Utrenneye onshore gas and condensate field. The project involves installing three concrete gravity-based structures in the Gulf of Ob, on each of which will be located a 6.6-mta liquefaction train.
Current European sanctions and Russian laws controlling foreign investments prevent TotalEnergies from securing a non-Russian buyer for its minority interests, said the company in a press statement. “Abandoning these interests without consideration would enrich Russian investors, in contradiction with the sanctions’ purpose. 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.”
As a European energy company, TotalEnergies said it must contribute to the supply security of the European continent. This means TotalEnergies will continue to supply the continent with LNG from the Yamal LNG plant within the framework of its long-term contracts — and in accordance with current European policy. Current European 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, said TotalEnergies.
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 expects to halt all its purchases of Russian oil and petroleum products no later than the end of 2022.
TotalEnergies halted all spot market trading of Russian oil and petroleum products In February. This is also the case for spot trading transactions concerning Russian natural gas and LNG.
TotalEnergies has term contracts to purchase Russian oil and petroleum products that end on 31 December 2022. It will also terminate its Russian gasoil purchase contracts no later than the end of 2022, and plans to import petroleum products from other continents, notably its share of gasoil produced by the Satorp refinery in Saudi Arabia.
