TotalEnergies to exit Russia's Arctic LNG 2 project
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TotalEnergies will transfer its 10% stake in Russia's Arctic LNG 2 project to Novatek subsidiary Nordline, CEO Patrick Pouyanne announced on July 23. The deal, approved by Russian authorities, is expected to close shortly. The exit follows US sanctions imposed on the project in November 2023.
The Exit
TotalEnergies will exit the Arctic LNG 2 project in Russia, transferring its 10% stake to Nordline, a subsidiary of majority owner Novatek, CEO Patrick Pouyanne said during a Q2 earnings call on July 23. The transfer has been approved by Russian authorities and is expected to be completed shortly, according to Reuters. Pouyanne did not disclose whether TotalEnergies will receive compensation or the price of the transfer.
Sanctions Context
The US imposed sanctions on Arctic LNG 2 in November 2023, prompting all foreign shareholders — TotalEnergies, China's CNPC and CNOOC, and a Japanese consortium of Mitsui and JOGMEC — to freeze participation under force majeure. EU sanctions will ban Russian LNG imports by 2027 and restrict sales in other jurisdictions. TotalEnergies had retained stakes in key Russian LNG ventures despite Western sanctions over the war in Ukraine.
Project Background
Arctic LNG 2 is a liquefied natural gas production project on the Gydan Peninsula in the Arctic, operated by Novatek, which holds 60%. Construction began in 2019 with French, Chinese, and Japanese investors. Pouyanne noted that Novatek approached TotalEnergies shortly after the US sanctions to propose the asset transfer.
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