TotalEnergies SE will stop providing capital for the 19.8-million tonne/year (tpy) Arctic LNG 2 project on the Gyda Peninsula, opposite the Yamal Peninsula, in West Siberia, Russia, as part of ensuring “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,” the company said in a statement. It issued the statement in response to criticism about its continued business in Russia. TotalEnergies earlier in March halted additional investments in Russian projects in condemnation of Russia’s invasion of Ukraine (OGJ Online, Mar. 1, 2022).
“Concerning the Arctic LNG 2 project in particular, 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 SE 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 company stated.
The company holds a 21.64% interest in Arctic LNG 2. The plant will use three liquefaction trains and produce 1.6 million tpy of condensate in addition to LNG. Construction is ongoing, and the first train is scheduled to start up in 2023, with the second and third trains following in 1-year intervals.
PAO Novatek owns 60% of Arctic LNG 2, with TotalEnergies, China National Petroleum Corp., China National Offshore Oil Corp., and Japan Arctic LNG each directly owning 10%. The balance of TotalEnergies’ stake comes from its holding a 19.4% interest in Novatek. The plant is expected to cost $21.3 billion.
“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,” TotalEnergies stated.
The statement continued: “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 LNG plant within the framework of long-term contracts that it must honor as long as Europe’s governments consider that Russian gas is necessary.”
“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, in order to halt all its purchases of Russian oil and petroleum products as soon as possible and by the end of 2022 at the latest,” the company said.
Christopher E. Smith | Editor in Chief
Christopher brings 27 years of experience in a variety of oil and gas industry analysis and reporting roles to his work as Editor-in-Chief, specializing for the last 15 of them in midstream and transportation sectors.