INVESTOR CLEARWAY ASK TOTALENERGIES TO LEAVE RUSSIA OR SUBMIT TO SHAREHOLDERS’ VOTE
by Simon Jessop and Benjamin Mallet
LONDON/PARIS (Reuters) – Activist investor Clearway Capital has sent a letter to the board of TotalEnergies calling on the French oil and gas giant to cease operations in Russia following the invasion of Ukraine , or to submit this proposal to the vote of the shareholders at the next general meeting.
This is the first public initiative of a fund aimed at denouncing the position of a leading company in the conflict in Ukraine.
Despite the condemnation of Moscow’s actions and the halt to new investments in Russia, TotalEnergies decided last week to keep its investments in the country while excluding new projects.
Russia represented 24% of TotalEnergies’ proven reserves and 17% of its combined oil and gas production in 2020, according to the group’s latest registration document, which in particular holds a 19.4% stake in the capital of the producer of Russian gas Novatek, some of whose directors and shareholders are reputed to be close to the Kremlin.
British energy giants BP and Shell have opted to withdraw entirely from their oil and gas activities in Russia, at the cost of billions of dollars in losses.
After speaking to major shareholders in the group, Clearway Capital founder Gianluca Ferrari on Friday urged TotalEnergies’ board to immediately commit to leaving Russia, according to a letter seen by Reuters.
“We believe there is an outpouring of support within the group’s shareholders for decisive action by TotalEnergies,” Gianluca Ferrari told Reuters.
More specifically, it calls on the group to immediately cease all purchases of Russian hydrocarbons on the spot market, to gradually end existing purchase contracts and to draw up a plan to withdraw from all operations and all other contracts “as soon as possible”.
RISK OF LONG-TERM STIGMA
With regard to Novatek, TotalEnergies must immediately announce its intention to sell its stake and sever all commercial ties, including on the major liquefied natural gas (LNG) projects (Yamal LNG and Artic LNG 2) and operations on Termokarstovoie and Khariaga deposits.
“We firmly believe that Total must prepare for a world where doing business with or in Russia is no longer an option,” Clearway said in the letter, noting that the geopolitical imbalance caused by the Ukraine attack would have a direct impact on the group.
“In the short term, the risk of sanctions and possible retaliation from the Russian state far outweighs any financial benefit of continuing to do business in Russia and doing business with Russian companies,” the statement said. ‘investor.
In the medium and long term, companies with activities in Russia “will be stigmatized by their customers and by their investors, in particular those in the energy sector whose activities directly contribute to the financing of the Russian state”, estimates Clearway Capital. .
This longer-term impact could only be fueled by the global trend towards sustainable investing, which would have a “material and permanent” effect on the company’s valuation, Clearway Capital added in the letter.
Contacted by Reuters, a representative of TotalEnergies reaffirmed the group’s position, namely that it will no longer finance new projects and will apply the sanctions put in place by the European authorities.
If TotalEnergies does not respond to its demands, Clearway has already indicated that it plans to file, with asset management groups, a joint resolution at the May 25 general meeting so that shareholders can vote on the question.
“Although the value of our stake is relatively small compared to that of the entire company, we are confident that there is sufficient support to table a resolution at the next meeting,” Clearway said, without specify the size of the holding.
(Report Simon Jessup and Benjamin Mallet, French version Laetitia Volga, edited by Sophie Louet)