As bombs rain down on Ukraine and European and US sanctions mount to strangle the Russian economy, the war is also upsetting the energy world. And it is increasing pressure on major Western oil and gas companies with a historical presence in Russia to exploit its hydrocarbons.
Including France’s TotalEnergies group, which relied heavily on Vladimir Putin’s country to develop its liquefied natural gas (LNG) strategy. After 2014 and the Russian annexation of Crimea, the tricolor TNK has already done everything to implement the Yamal LNG project to produce LNG in northern Russia at all costs, despite Western sanctions.
While Economy Minister Bruno Le Maire now points to the fundamental problem of working with any political or economic figure close to the Russian government “, and confirmed on Tuesday that he was going to” discuss it with the President of Total “, the latter does not intend to leave in the near future. And he is content with promising that ” it will no longer provide capital for new projects in Russia “.
But in this strategy, TotalEnergies finds itself in complete isolation. Because most of the big Western oil groups left Vladimir Putin’s country overnight after his attack on February 24th. First of all, British BP and Shell, which on February 27 and 28, respectively, announced their intention to withdraw from the Russian oil giant Rosneft for BP (in which it owns 19.75%), and from the Gazprom gas group for Shell. As well as the Norwegian company Equinor, which abandoned its stake in Rosneft and the Salym and Sakhalin-2 projects, which at the end of 2021 were worth about $3 billion.
Even US oil and gas giant ExxonMobil decided on Wednesday to gradually freeze its investments in Russia, while Italy’s Eni promised to sell its 50 percent stake in the Blue Stream gas pipeline destined for the Turkish market.
“All these divestments are primarily meant to send a very strong signal to Putin. The one that Western private companies do not wait for a political decision to act. Even if in fact, behind the scenes, they received directives from the authorities, ”comments John Plassard, deputy director of the Swiss banking and financial group Mirabaud.
Projects at the heart of the company’s growth strategy
But with TotalEnergies the situation is different, explains Gallery Ahmed Ben Salem, oil and gas consultant at Oddo BHF. ‘Cause his projects on the spot are touching” key areas of the growth strategy “, – he explains. Specifically, TotalEnergies owns a 19.4% stake in the giant Novatek, the second largest Russian gas giant, and owns a 20% stake in Yamal LNG., which produced more than 18 million tons of LNG in 2020 (this is transit by sea, not pipeline). The Group also owns a 10% stake in Arctic LNG 2, which is scheduled to launch in 2023. And if we take into account the shares in Novatek itself, then TotalEnergies even owns 29.7% of Yamal LNG and 21.64% of Arctic LNG. 2.
“These are all facilities for the exploitation of liquefied natural gas. However, according to Patrick Pouyanne [le PDG de TotalEnergies, ndlr]If we are to succeed in getting rid of oil, we must turn to renewable energy as well as gas. Thus, LNG is a core activity in his transition plan, and abandoning it today is not in line with his long-term strategy at all! “Slips La Tribune a source close to the company.
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However, in terms of financial assets, BP is even more vulnerable than TotalEnergies. But unlike TotalEnergies, BP is not necessarily interested in dragging its feet in Russia, Ahmed Ben Salem argues.
“BP ended up in Russia rather by force, after the acquisition of TNK-BP by Rosneft in 2012,” he clarifies.
Established in 2003 by BP and a consortium of Russian oligarchs, Alfa Access Renova (AAR), TNK-BP has indeed been mired in shareholder conflict since the signing of an alliance between BP and Rosneft to develop the Arctic, which ultimately collapsed due to outside opposition. AAR.
Thus, BP finally found a compromise and sold its stake in Rosneft, regaining more than 19% of the Russian public group. “ Thus, for BP, the current situation represents an opportunity to get out of it. “- says Ahmed Ben Salem. Moreover, the risk that all the assets of Rosneft will be requisitioned by the state (which already owns 40%) is not zero in the current situation.
” Some of the companies that have invested in these Russian state hydrocarbon monopolies also see this as an opportunity to draw the line on these assets. Because they were a problem both from a geopolitical point of view and from the point of view of triggering the energy transition. Otherwise, they would probably resist political pressure pushing them out of Russia. “, replete Jeremy Haddad, EY partner and energy specialist. As is the case with TotalEnergies.
“During the last general meetings of shareholders, we saw that these groups finally understood that their business, as usual, is not sustainable, and that it is necessary to offload the most problematic part of their portfolio. We can hypothesize that by the end of 2022 we will find ourselves with BP significantly reorganizing its asset portfolio rather than towards renewable energy and clean tech, giving analysts visibility and lowering their reputational risk.
However, no one really knows who will be sold shares in BP, Shell and other Equinor. ” They won’t put any more capital into it, but there won’t be a buyer for a while. Moreover, when the latter comes, he will demand a low price, since today no one wants to acquire Russian assets. Ahmed Ben Salem said.
“Either the Russians will buy them out, but in the short term it is difficult to imagine, especially since financial transactions are blocked. Or they will be sold to other players less attentive to the current war and climate issues. For example, the Chinese, who are striving to secure their energy supply,” says Jeremy Haddad.
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But if, in fact, Equinor, BP, Shell or Exxonmobil fail to immediately sell their assets, this does not mean that their departure will not have consequences for the health of Russian interest groups. ” They need the know-how of Western companies ” explains Ahmed Ben Salem.
For Arctic LNG 2, with the support of Novatek and Total Energy, the French engineering company Technip Energy the only one who knows how to build construction modules “, – illustrates the analyst. As for TotalEnergies, its know-how in trade, especially the client portfolio and the management of its teams, remain valuable to Novatek in terms of LNG exports. If the two French companies decide in turn to leave the ship, the Russian gas company could be in serious trouble.
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