BusinessDay

TotalEnergies says oil majors’ exit from Russia won’t be easy

Despite the current quest by oil majors to leave Russia following the country’s invasion of Ukraine, Patrick Pouyanne, CEO of TotalEnergies, has stated that it is easier said than done and that firms from the United States and the United Kingdom are still stuck with their Russian assets.

TotalEnergies has a future-oriented position in Russia, heavily weighted towards liquefied natural gas (LNG), with stakes in the yet-to-be-built $21 billion Arctic LNG 2 project as well as in the producing Yamal LNG operation.

While other oil majors are fleeing Russia, Only TotalEnergies has not announced an immediate withdrawal from Russia, drawing a lot of criticism from investors and campaigners.

“Everybody’s telling me that my Anglo-Saxon competitors are leaving,” TotalEnergies’s CEO Pouyanne told France’s RTL radio today. “None of my competitors has left Russia, and knows how to leave Russia,” he added.

“Do you want me to abandon assets in Russia to enrich Russians whom we have placed under sanctions? I won’t give in to it, because that’s demagogy,” said Pouyanne, as quoted by Bloomberg.

On Tuesday, TotalEnergies shared its view and steps it had taken regarding its business in Russia “after the serious and unfounded accusations of “complicity in war crimes” leveled against TotalEnergies.”

Condemning the Russian invasion of Ukraine once again, the company said it would not provide further capital for the development of projects in Russia, and it would no longer enter into or renew contracts to purchase Russian oil and petroleum products, “in order to halt all its purchases of Russian oil and petroleum products as soon as possible and by the end of 2022 at the latest.”

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TotalEnergies said it does not operate any oil and gas fields or any liquefied natural gas (LNG) plants in Russia.

Moreover, the company said that “The current environment of European sanctions and Russian laws controlling foreign investments in Russia would prevent TotalEnergies from finding a non-Russian buyer for its minority interests in Russia. Abandoning these interests without consideration would enrich Russian investors, in contradiction with the sanctions’ purpose.”

In 2021, TotalEnergies’ cashflow from Russia amounted to $1.5 billion. It declined to give further details on its Russian investments and previous years’ cashflows.

Meanwhile, BP faces a write-down of up to $25 billion for dropping Russia and losing out on annual dividends from Rosneft which have fluctuated between around $300 million and $780 million, according to its quarterly results.

But the cashflow it has received from Russia over the years might soothe some of that pain.

Competitor BP will sell its 19.75% stake in Rosneft, which it has held since 2013. Its Russian assets totaled about $14 billion last year.

“The decisions we have taken as a board are not only the right thing to do, but are also in the long-term interests of BP,” said chief executive Bernard Looney. He and former BP executive Bob Dudley resigned their seats from Rosneft’s board Sunday. The company said it could be charged as much as $25 billion for ending its Russian investments.

Competitor BP will sell its 19.75percent stake in Rosneft, which it has held since 2013. Its Russian assets totaled about $14 billion last year.

“The decisions we have taken as a board are not only the right thing to do, but are also in the long-term interests of BP,” said chief executive Bernard Looney. He and former BP executive Bob Dudley resigned their seats from Rosneft’s board Sunday. The company said it could be charged as much as $25 billion for ending its Russian investments.

“Russia’s attack on Ukraine is an act of aggression which is having tragic consequences across the region. BP has operated in Russia for over 30 years, working with brilliant Russian colleagues,” BP’s chairman Helge Lund said in a statement.