Total concluded that the new sanctions constituted additional risks for the Arctic LNG 2 project, which led to its decision to write down its balance sheet (source: Novatek)
April 28, 2022by Riviera News
Oil major TotalEnergies will record a $4.1 billion write-down in its first-quarter 2022 financial statements following the outbreak of the Russian-Ukrainian war
On March 22, Total announced that given the uncertainty created by the technological and financial sanctions on the ability to carry out the Arctic LNG 2 project currently under construction and their likely tightening with the worsening of the conflict, the company has decided to no longer reserve proven reserves for the project.
On April 8, new sanctions were adopted by the European authorities, in particular prohibiting the export of goods and technologies from EU countries intended for the liquefaction of natural gas for the benefit of a Russian company.
These sanctions cover the banning of vessels flying the Russian flag from entering EU ports and all imports of Russian coal. Major liquefaction and cryogenic equipment are included in the list of prohibited goods.
Total concluded that the new bans posed additional risks to the Arctic LNG 2 project, leading to its decision to write down its balance sheet.
Russia plans to increase its share of the global LNG market to 20% by 2035 and the $21 billion Arctic LNG 2 project is key to realizing this ambition. In addition to Arctic LNG 2, Russia’s big plans include adding 40 mta of additional capacity during the next phase of expansion of Arctic LNG 1 led by Novatek, Russian Far East LNG and Ust Luga, bringing production to 80-140 mta of LNG by 2035, from the current level of 30 mta.
