TotalEnergies exits sanctioned Russian Arctic LNG project

French energy company TotalEnergies has completed its withdrawal from a Russian gas project, Arctic LNG 2, due to Western sanctions imposed following Russia's invasion of Ukraine, TotalEnergies announced on Thursday. The company had planned to transfer its 10% stake in the project to majority shareholder Novatek in July, following a US$4.1 billion write-down of its investment in Arctic LNG 2 in 2022.

TotalEnergies retains the right to seek reimbursement from Arctic LNG 2 for a US$1.3 billion loan it provided alongside other shareholders, though repayment appears unlikely due to ongoing sanctions. Most Western companies swiftly divested from their Russian operations or otherwise isolated them following the Ukraine invasion, as trading in most goods has become challenging due to sanctions.

Russia has made it difficult for firms to exit the country, requiring presidential authorization for transactions. TotalEnergies' chief executive, Patrick Pouyanne, confirmed that the stake transfer to NordLine, a Novatek subsidiary, had been finalized, citing an approval from the president in July. TotalEnergies holds a 19.4% stake in Novatek, the company behind the Yamal natural gas field in Siberia, where they jointly developed the Arctic LNG 2 project.