TotalEnergies (LON:TTE) has denied charges of complicity in war crimes and signalled its determination for a “gradual suspension” of its work in Russia.
The French company has a 19.4% stake in Novatek, 20% in Yamal LNG, 10% in Arctic LNG 2 and 49% in TerNefteGaz. It also has a 20% stake in the Kharyaga joint venture.
French NGOs raised the possibility of Total, and its managers, being criminally liable for war crimes last week.
Total has seconded only 11 workers to the companies as of February 24 and it has only three expatriates in Russia now. “TotalEnergies has thus initiated the gradual suspension of its activities in Russia, while assuring its teams’ safety.”
The company went on to say it was putting its work on batteries and lubricants in Russia on hold.
As a result of uncertainty on the continued work at Arctic LNG 2, Total will no longer record proved reserves from the project. It will also not provide any more cash.
Under sanctions, Total could not find a non-Russian buyer for its Russian assets. Abandoning these without payment would “enrich Russian investors”, the company said, which contravenes the purpose of the sanctions.
Other majors pulling out of Russia have tended to say they would simply write off their investments. BP (LON:BP), for instance, has warned of a potential $25 billion impact.
Abandoning the stakes would also have no impact on their operations or revenues.
Security of supply
Total reaffirmed its condemnation of Russia’s invasion of Ukraine. However, it also highlighted the need to ensure security of supply for the European Union.
The company said it would be essential to continue importing LNG from Yamal LNG under long-term contracts. This will continue for as long as European states believe that Russian gas is necessary.
However, Total said it would halt all purchases of Russian oil and products as soon as possible – and by the end of 2022 at the latest. It ditched spot purchases of Russian supplies on February 25, including oil, petroleum, gas and LNG.
Total has term contracts to purchase Russian supplies until the end of this year. This focuses on crude supplies to the Leuna refinery, in Germany, via the Druzhba pipeline. Russia also provides a substantial share of Europe’s diesel needs, around 12% in 2021.
Total has begun cutting these term contracts where possible. It is in talks with the German government on this. As an alternative, the company will import crude via Poland.
The company will cut its gasoil purchases by the end of the year at the latest. It will substitute supplies from other sources instead, in particular its gasoil share from Saudi Arabia’s Satorp refinery.
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