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TotalEnergies puts a giant gas project in Russia on hold

2022-04-28T18:59:24.001Z


Consequently, the group had to record in its accounts a depreciation of assets of 4.1 billion dollars.


A few days after the invasion of Ukraine by Russia, TotalEnergies announced that it would “no

 longer bring capital to new projects in Russia 

”, without withdrawing from those in which it is currently invested.

 We never said we would stay in Russia.

We simply did not say that we would leave, it is a little different 

, "said, Thursday, during an exchange with analysts, Patrick Pouyanné, the CEO of TotalEnergies, about the presence of the major French in this key country for the exploitation of LNG.

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But the group had to give up - perhaps temporarily - on Arctic LNG2, a giant liquefied natural gas (LNG) site located on the Gydan Peninsula on the Siberian coast in Russia.

This project was to come into operation next year.

It is located not far from another LNG complex where TotalEnergies is present, Yamal, whose production started in 2017.

The Arctic LNG 2 project is “

 made uncertain 

” by the sanctions taken against Moscow and against Russian companies.

These prohibit “

 the export of LNG technologies for the benefit of a Russian company 

”, recalls TotalEnergies.

The group had to record in its accounts a depreciation of assets of 4.1 billion dollars.

Melting, at the same time, its adjusted net profit which stood for the first quarter, excluding depreciation, at 9 billion dollars.

A performance due to the spectacular rise in energy prices in the first quarter.

Read alsoDeparture from Russia: French companies at an impasse

Production of Yamal continues

Technically, the construction of the Arctic LNG 2 liquefaction site requires importing the majority of the parts to Russia.

 It is difficult to believe that it can be built, because of the sanctions, estimated Patrick Pouyanné.

We look step by step at what the sanctions are, what they could be and that's how we came to the conclusion for Arctic LNG 2 and other assets. 

TotalEnergies holds a 10% direct stake in the Arctic LNG 2 project alongside Russia's Novatek (60%), China's Cnooc (10%) and CNPC (10%) and a Mitsui-Jogmec consortium, Japan Arctic LNG (10%).

The French giant also has an indirect stake of 11.6% in the project via the 19.4% it holds in the capital of Novatek,

Read alsoRussia: “beginning of withdrawal” for TotalEnergies, which depreciates its assets on the Arctic LNG 2 project

In this country, TotalEnergies is now concentrating its strengths in Yamal LNG (29.7%), which produces 4 to 5 million tonnes of LNG.

 The volume on this contract is huge, it is a lot of money and we have to honor it as long as the sanctions allow us to do so.

And if that is not possible, then we will act accordingly 

,” said Patrick Pouyanné.

The executive added that while these LNG volumes were in question, other opportunities would keep TotalEnergies afloat.

"

 You may have other announcements in a few weeks telling you how we're going to replace them.

I don't expect a break in our growth profile in LNG, even if we were to leave Russia completely, which is not the case today, but which is a possible scenario. 

The French group produces 16.6% of its hydrocarbons in Russia, and even 30% for gas.

SEE ALSO

- Emmanuel Macron says he wants to "

let the companies

" still active in Russia "

decide for themselves

"

Source: lefigaro

All business articles on 2022-04-28

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