Total Says it Can’t Cut all Ties with Russia
TotalEnergies announced on Mar. 22 that it would stop buying Russian oil by the end of 2022 and refrain from concluding any new investment projects in the country. A day later, it modified the announcement, saying that the decision does not apply to natural gas.
The French energy and petrochemicals group, which had been accused by some, including its own shareholders, of committing war crimes by remaining in Russia, said that withdrawing from both oil and gas would lead to a partial economic shutdown in Europe.
In a scarcely veiled reference to the situation in other countries, CEO Patrick Pouyanné said that in contrast to North America and the UK, from where the war crimes barbs apparently have been tossed, he stressed that Europe does not have its own natural gas reserves.
Pouyanné said the group’s withdrawal from gas projects would require it to “effectively hand over $13 billion” to its Russian partners. He gave no scenario for the oil purchase withdrawal.
The only way to pull out of Total’s 25-year gas supply contracts, Pouyanné suggested, would be for European governments to impose sanctions on Russian gas. Companies involved could then declare force majeure and safely exit.
Total is a minority shareholder in several privately owned Russian energy companies but contrary to remarks by the group’s accusers, the CEO said it does not operate any oil and gas fields in Russia or any LNG plants. It has, however, played a role in financing LNG exploration projects.
The group said it will continue to supply liquefied natural gas to Europe through a facility that it owns in part, called Yamal LNG, as long as governments “consider that Russian gas is necessary.”
Total also has obligations to supply Russian oil to the Leuna refinery in eastern Germany up to the end of 2022. Pouyanné said this contract will not be renewed but will be replaced by an alternative solution, which foresees drawing gas from Poland.
While the Total chief said he saw “no future growth” for Total in Russia, in either gas or oil, analysts said the French oil and gas giant may find it difficult to extricate itself from the country as it is one of the largest foreign investors.
According to data from research firm Kpler, the Paris-based player was one of the larger buyers of shiploads of Russian crude in 2021, averaging 186,000 bbl/d.
Author: Dede Williams, Freelance Journalist
