Page 9 - FSUOGM Week 12 2022

FSUOGM COMMENTARY FSUOGM

TotalEnergies says Russian

divestments would only

"enrich" Russia

The French major continues to resist calls to withdraw from Russia

RUSSIA TOTALENERGIES continues to resist calls to suspend its activities” in Russia, but it is unclear
withdraw from Russia despite mounting pres- how long that process will take. In addition to
WHAT: sure from NGOs, which have accused the French its shares in Arctic LNG-2 and Yamal LNG, it
TotalEnergies has said oil major of being complicit in Moscow’s “war also has a 19.4% stake in Novatek itself, a 49%
it will not divest from crimes” in Ukraine. It argues that it would be holding in another Novatek gas project called
Russia but will stop unable to sell its Russian holdings at this time to Terneftegaz, and a 20% interest in Zarubezhneft’s
financing at Arctic LNG-2. anyone other than a Russian investor, essentially Kharyaga joint venture. It argues that divesting
enriching rather than punishing Moscow. these properties now would be counterproduc-
WHY: Other international oil companies includ- tive to the goal of ratcheting up economic pres-
The company faces legal ing BP, ExxonMobil and Shell have already sure against Russia.
action from NGOs in announced their intention to divest from Rus- “The current environment of European
France over its refusal to sia, although it remains to be seen how long it sanctions and Russian laws controlling foreign
leave the country. will take for them to find buyers given complica- investments in Russia would prevent TotalEn-
tions caused by sanctions and the Russian gov- ergies from finding a non-Russian buyer for
WHAT NEXT: ernment temporarily prohibiting divestments. its minority interests in Russia,” the company
It remains to be seen TotalEnergies’ initial approach was to announce explained. “Abandoning these interests without
whether Arctic LNG-2 it will keep its assets but suspend future invest- consideration would enrich Russian investors,
will be impacted by the ments in the country. However, it faces legal in contradiction with the sanctions' purpose. In
decision. action in France, after Greenpeace and Friends addition, abandoning these minority interests
of the Earth claimed that by remaining in Russia, held by TotalEnergies would have no impact on
TotalEnergies was complicit in Moscow’s “war the companies' operations and revenues, since
crimes” in Ukraine. these companies have their own employees and
In a fresh statement on March 22, TotalEn- are managed autonomously.”
ergies increased its commitments. Critically, it TotalEnergies also said it would not enter into
said it would not provide any further capital for or renew any contracts for purchasing Russian
Novatek’s Arctic LNG-2 project, due on stream oil and petroleum products, with existing con-
in 2023. The French major has a 10% stake in tracts due to end by the end of 2022 at the latest.
the terminal, where a final investment decision Earlier it also halted spot market trading of these
(FID) was already taken several years ago. Pre- products. Some of its existing contracts cover
viously it ruled out suspending investment at Russian oil supplies to the Leuna refinery in Ger-
Arctic LNG-2, instead pledging not to commit many, TotalEnergies said, noting it would work
to any further, pre-FID projects in Russia. It also with the German government to terminate those
said it would no longer record proven reserves agreements as soon as possible and put in place
for Arctic LNG-2 on its books. alternatives, potentially securing oil via Poland.
It remains to be seen whether TotalEnergies However, the company will honour its long-term
ending funding at Arctic LNG-2 and broader contracts for gas supply from Yamal LNG, it said,
sanctions against the Russian oil industry will arguing that ending these would exacerbate the
have any bearing on the project’s completion. energy supply crisis unfolding in Europe.
Italy has notably frozen its loans for the $21bn “TotalEnergies reaffirms its firmest condem-
project, casting further doubt. Arctic LNG-2 nation of Russia’s military aggression against
is also dependent on large loans from Russian Ukraine, which has tragic consequences for the
lenders, many of which have now been cut off Ukrainian population and threatens peace in
from global financial systems and are struggling Europe,” the company said. But it said accusa-
under Russia’s spiralling economic collapse. tions of its “complicity in war crimes” were “seri-
TotalEnergies said it would “gradually ous and unfounded." ™

Week 12 23•March•2022 www. NEWSBASE .com P9