TotalEnergies announces’ start of recession ‘for Russia’ s largest gas pipeline

TotalEnergies announces' start of recession 'for Russia' s largest gas pipeline

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Two months and three days after the start of the war in Ukraine, Western sanctions against Russia led the French company TotalEnergies (formerly Total) to launch “The beginning of a retreat”, according to a spokesman. On the night of Wednesday 27 April, the oil and gas company announced an asset impairment of $ 4.1 billion (€ 3.9 billion), in particular for the large Arctic LNG 2. gas production project. Giant liquefied natural gas plant, located on the Gydan Peninsula in northern Siberia, could be stopped dead.

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TotalEnergies is planning an early withdrawal from the site, forcing it to record the forecast in its accounts for the first quarter of 2022, which was presented on April 28. Without this planned $ 4.1 billion deduction, the company recorded adjusted net income of $ 9 billion. This is three times more than the same period of 2021.

As of February 24, the Russian offensive on Ukrainian soil has pushed up oil and gas prices, amplifying the effects of a strong economic recovery in 2021. Overall hydrocarbon tensions. “Consumer countries and markets fear potential risks to future oil and gas suppliesrecalls Francis Perrin, director of research at the Institute for International and Strategic Relations in Paris. Especially since the Organization of the Petroleum Exporting Countries and its allies, including Russia, are keeping an unchanging roadmap for the time being, as if there is no war. »

Central strategic part

To justify its initial withdrawal of the Arctic LNG 2, TotalEnergies underscores Western sanctions against Russia. these “Pose additional risks to the project’s ability to perform”, states a company announcement. Since April 8, the European Union, for example, has banned its member states from exporting goods and technologies needed to liquefy gas in Russia.

On March 22, the company had already stated its choice to no longer record proven inventories for the Arctic LNG 2, “given the uncertainty created by technological and economic sanctions regarding the ability to execute the project under construction”. It currently owns 21.6% of the project, mainly through its presence in the capital of the private Russian group Novatek. On the other hand, TotalEnergies has so far remained very present in the neighboring field, that of Yamal.

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The country is at the heart of the group’s industrial strategy: it is increasingly betting on gas, which is being presented as a less harmful energy than coal and therefore as a possible alternative to the Chinese market. Russia alone accounted for 31.5% of the company’s gas production in 2021.

Unlike other heavy-duty hydrocarbon companies (BP, Shell, Equinor, Exxon), the multinational is currently refusing to announce the withdrawal of all its Russian assets, despite strong pressure from environmental NGOs or politicians.

“It is cynical to simply predict in its accounts the possible financial consequences of a withdrawal from the Arctic LNG 2”now criticizes Lorette Philippot, spokeswoman for Friends of the Earth. “The multinational must stop supporting Putin’s war effort today and abandon its major gas project in the Russian Arctic. »

In the midst of the presidential campaign in March, environmental candidate Yannick Jadot went so far as to accuse the company of “Complicity in war crimes” for his refusal to leave Russia. “Leaving these holdings without financial compensation would help (…) to enrich Russian investors “, then the company responded, while announcing defamation lawsuits.

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