by Shadia Nasralla, Benjamin Mallet and Michel Rose
LONDON, March 5 (Reuters) – After deciding to keep its investments in Russia while excluding new projects, the French energy company TotalEnergies is looking like a loner as several Western majors decided to leave the country after the invasion of the Ukraine even if the sanctions aimed at Moscow do not require it for the moment.
“For existing assets, the group says it will abide by European sanctions, whatever the consequences. But for now, on energy, there are none,” said a source familiar with thoughts at TotalEnergies.
TotalEnergies has a forward-looking presence in Russia, with a strategy primarily focused on liquefied natural gas (LNG), with Yamal LNG and Artic LNG 2.
As the world strives to reduce carbon emissions, major oil companies are banking on LNG to replace dirtier coal and oil.
TotalEnergies first bought a stake in Russian gas producer Novatek in 2011 for $4 billion and gradually increased its stake to just under 20% in 2018.
“The company cannot dispose of its assets overnight, unless sanctions force it to do so. We must take the time to reflect,” added the source at TotalEnergies.
The French government declined to comment on Russia and the situation of any particular company.
French President Emmanuel Macron, who held a Franco-Russian forum last Tuesday, did not urge TotalEnergies or any French company to leave Russia, two participants at the meeting told Reuters.
The CEO of TotalEnergies, Patrick Pouyann, took part in this meeting.
BILLIONS OF DOLLARS IN IMPAIRMENTS
On the other hand, across the Channel, the British government immediately welcomed the decision of Shell and BP to leave Russia.
BP boss Bernard Looney told employees that BP “could not reasonably continue in Russia given the conflict in Ukraine”, according to a company source.
For the groups which have announced that they are leaving Russia, such as BP, Shell, Equinor and Exxon, billions of dollars of depreciation will be written off.
For the moment, few potential buyers for the holdings and operations left in Russia have come forward.
On the stock market, the shares of energy groups that have announced they are leaving Russia have outperformed TotalEnergies in recent days.
“We believe that a potential exit from TTE (TotalEnergies, editor’s note) is much more complicated than for its peers,” said RBC equity analyst Biraj Borkhataria on Wednesday. “We consider Russia to be strategically important for TTE, in particular for its LNG business.”
TotalEnergies aims to satisfy 10% of global LNG markets by 2025 with 50 million tonnes per year.
According to RBC, Russia accounts for 6 million tonnes from Yamal and an additional 4 million tonnes will come from Arctic LNG 2 once the site is operational.
Reuters could not verify the returns on investment made in Russia by the oil majors. Nevertheless, it is clear that BP, for example, has already made a return on its investments.
When former US President Donald Trump ordered sanctions against Iran, TotalEnergies maintained its investment in a major gas field and only let it go after it failed to get the sanctions lifted.
At the time, media reported that Patrick Pouyann had told Donald Trump that continued investment could help advance democracy in Iran.
In 2021, TotalEnergies cash flow from Russia amounted to $1.5 billion. The group did not wish to give more details on its investments in Russia, as well as cash flows from previous years.
BP will for its part have to pass a depreciation of 25 billion dollars following its decision to leave Russia and the group will lose the dividends paid by Rosneff which have varied between 300 and 780 million dollars. (French version Matthieu Protard)