TotalEnergies Moves to Exit Arctic LNG 2 Stake

On July 23, French oil major TotalEnergies (TTEF.PA) announced that it will transfer its 10 % stake in the Arctic LNG 2 liquefied natural gas project in Russia to Nordline, a subsidiary of the plant’s majority owner Novatek. Russian authorities have approved the transfer, which TotalEnergies expects to complete in the short term.

Reuters

The decision follows a series of Western sanctions imposed after Russia’s invasion of Ukraine. Arctic LNG 2 became subject to U.S. sanctions in November 2023, prompting Novatek to approach TotalEnergies about a potential transfer. The European Union is set to ban companies from importing Arctic LNG 2 gas in 2027 or selling it in other jurisdictions, creating additional regulatory pressure on foreign investors.

Reuters

TotalEnergies had already recorded a $4.1 billion impairment on the Arctic LNG 2 project in 2022 and declared force majeure on the venture the following year. The CEO emphasized that the proposed transfer aligns with the company’s interests, though he stopped short of describing the move as a “sale.” A TotalEnergies press officer declined to comment on whether the company expects compensation for the stake or on the valuation terms.

Reuters

Patrick Pouyanne told analysts on a second-quarter results call that the transfer “is in the company’s interest” and noted the timing of Novatek’s approach after U.S. sanctions were applied. The press officer’s refusal to comment leaves the financial terms of the exit undisclosed.

Reuters

• “Soon after Arctic LNG 2 became subject to U.S. sanctions in November 2023, ?Novatek approached us about a potential transfer,” — Patrick Pouyanne, CEO

Reuters