World Oil

(Bloomberg) — TotalEnergies SE took a $4.1 billion writedown on its flagship Russian gas project and indicated that it may belatedly join its peers in pulling back from the country two months after the invasion of Ukraine.

TotalEnergies starts pullback from Russia with $4 billion writedown- oil and gas 360

Source: World Oil

The French energy giant initially refused to cut ties with Moscow, despite other oil majors including BP Plc and Exxon Mobil Corp. and Shell Plc announcing they would leave the country in protest at the Kremlin’s military aggression. Since then, new sanctions have cast doubt on the future of TotalEnergies’ flagship Russian project, Arctic LNG 2.

“New sanctions have effectively been adopted by the European authorities, notably prohibiting export from European Union countries of goods and technology for use in the liquefaction of natural gas benefitting a Russian company,” TotalEnergies, which is based near Paris, said in a statement on Wednesday. “It appears that these new prohibitions constitute additional risks on the execution of the Arctic LNG 2 project.”

Major international oil companies are set to take tens of billions of dollars in impairments on Russian assets as they report first-quarter earnings in the coming weeks. The sting of those losses will be offset by the sharp rise in energy prices, potentially driving their combined free cash flow to the highest in 14 years.

TotalEnergies had $13.7 billion of capital employed in Russia at the end of last year, about 10% of its total capital employed for 2021. That was mostly through its 19.4% stake in liquefied natural gas producer Novatek PJSC, as well as interests in the Yamal LNG plant and the Arctic LNG 2 project.

“This $4 billion charge shows that TotalEnergies has started turning a page” in Russia, a spokesman said. “It’s the beginning of a pullback.”

The company already said last month that it won’t make any new investments in Russia. It’s trading division has also stopped handling Russian oil and gas, and the rest of the company will halt purchases of crude and other oil products from the country by the end the year.

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