French energy giant TotalEnergies has exited the Russian Arctic LNG 2 liquefied natural gas project, transferring its 10 percent stake to Nordline, a subsidiary of Russian gas producer Novatek. TotalEnergies announced the transfer of its interest in an official press release.
Despite relinquishing the holding, the French energy group stated that it retains the legal right to receive reimbursement amounting to 1.3 billion dollars for the equity. The company indicated that those funds could be transferred in the future, taking into account active international sanctions against Russia.
Government Approval and Negotiations
Russian President Vladimir Putin paved the way for the transaction in June by issuing an order that allowed Nordline to buy out the TotalEnergies stake. Nordline had been established by Novatek in May, just one month prior to the presidential authorization.
TotalEnergies confirmed in July that it was engaged in talks regarding the equity transfer with Novatek, which controls and leads the development of the Arctic energy venture.
Novatek is Russia's largest independent producer of natural gas. TotalEnergies, based in France, is a global multi-energy company operating across oil, gas, and power generation sectors.
Asset Write-Downs and US Sanctions
Patrick Pouyanné, the chief executive officer of TotalEnergies, recalled that all Russian assets owned by the company were written off in 2022 following the start of military operations in Ukraine. Those holdings consisted primarily of equity in Arctic LNG 2, with a combined value estimated at 4.1 billion dollars at the time of the impairment.
Arctic LNG 2 is currently subject to blocking sanctions imposed by the United States. The restrictions have significantly complicated construction efforts at the facility and created severe obstacles in identifying international buyers for its output.
Liquefied natural gas is natural gas supercooled into liquid form to enable transportation over long distances aboard specialized sea tankers without requiring pipeline infrastructure.
Production Lines and Deliveries to China
Despite commercial hurdles and Western sanctions, the Arctic LNG 2 facility began selling liquefied natural gas to buyers in China in August of last year.
The original development plan for the industrial project provided for the construction of three technological production lines. However, operators have launched only two of the planned trains to date.
