TotalEnergies confirms "gradual suspension" of Russian activities
TotalEnergies said on March 22 that it would "gradually" suspend its activities in Russia while ensuring the safety of its workforce, as the French major responds to mounting criticism from non-governmental organisations.
The company confirmed it will provide "no further capital" to developing Russian projects. This includes construction at Novatek's 20mn metric tons/year Arctic LNG 2 plant, due on stream in 2023. TotalEnergies has a 10% interest in the project.
TotalEnergies said it would also cease to "record" Arctic LNG-2's proved reserves. It still plans to serve LNG from Novatek's existing Yamal LNG terminal, where it holds a 20% interest, to European customers to maintain Russian gas supplies in the near term "in accordance with the EU's decisions".
TotalEnergies believes the European continent lacks the domestic energy resources of Western peers like the UK and US. It argues Europe's weaker gas logistics capacity makes it especially "difficult" to disengage with Russian gas imports, within the next two or three years, without "impacting the continent's energy supply".
Moreover, TotalEnergies defended its decision not to divest its stakes in existing projects, arguing that selling its holdings to a non-Russian investor would not be possible at this time, and would not impact their operation anyway. In addition to its positions at Arctic LNG-2 and Yamal LNG, the company has a 19.4% stake in Novatek itself and a 49% interest in Novatek's Terneftegaz gas project. It also has a 20% interest in the Kharyaga oil production-sharing contract operated by Zarubezhneft.
"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," the company said.
TotalEnergies has already ended spot purchases of Russian gas, LNG, oil and refined petroleum. Before the end of this year, term contracts to supply TotalEnergies' Leuna oil refining plant in Germany will also have ceased, to be replaced by "alternative solutions" for oil imports via Poland.
All Russian gasoil purchase contracts held by TotalEnergies will cease by the end of this year. Instead, TotalEnergies will import gasoil from markets such as Saudi Arabia, where it owns a stake in the Satorp refinery. Europe faces a gasoil shortfall in the wake of the Ukraine war, TotalEnergies said. In 2021, Europe sourced around 12% of its product from Russian suppliers.
BP, Equinor and Shell have all said they will withdraw from Russia's oil and gas industry, and the remaining international oil companies face calls to wind down their Russian activity. On March 10, TotalEnergies received a formal cease notice from Greenpeace France and Friends of the Earth, alleging it was complicit in "war crimes" by continuing its Russian interests.
TotalEnergies dismissed the NGO allegations as "serious and unfounded". It said it will ensure strict compliance with current and future European sanctions, "no matter what the consequences [are]" for managing its Russian assets.
"TotalEnergies reaffirms its firmest condemnation of Russia's military aggression against Ukraine, which has tragic consequences for the Ukrainian population and threatens peace in Europe," the company said.