TotalEnergies partially succumb to pressure. A French oil company announced on Tuesday that it would not buy a single drop of Russian oil by December 31st. As a major announcement, European countries have so far not agreed to order an embargo on black gold from Russia. The TotalEnergies decision will not be fully effective by the end of the year, but its direct impact on Russia’s finances will be limited.
In a statement, the group said, “Given the worsening situation in Ukraine and the existence of alternative sources to supply Europe, TotalEnergies has decided not to conclude or renew purchase contracts for Russian oil and petroleum products. We are doing it in a targeted manner. ” This will stop “all purchases of Russian oil or petroleum products as soon as possible, by the end of 2022 at the latest”.
The day after the invasion of Ukraine, a French major announced that it would abandon “all trading operations in the spot market” for oil and refined products from Russia. This Tuesday’s announcement goes a step further as it relates to a supply contract that will last until December 31, 2022.
They are particularly related to the German refinery of TotalEnergies in Leuna, which is supplied by the Russian oil pipeline Druzhba. This group promises to find an alternative source “in close consultation with the German government”, especially by importing oil via neighboring Poland.
No more Russian diesel
TotalEnergies will also terminate the purchase contract for diesel in Russia. Recall that the old continent, which is in the red in the region, imports 12% of diesel from Russia, up to 25% in France. Tankers are planning to import from “other continents” as an alternative, especially from Saudi Arabia’s refinery Satorp, which is a shareholder alongside Saudi Aramco.
Meanwhile, the group maintains its position on gas, which is far more strategically important to gas in Russia. He will maintain a 20% stake in the capital of Russian gas company Novatek and a direct minority stake in Siberian liquefied natural gas plants at Yamal (20%) and Arctic LNG 2 (10%). And make sure that you “no longer provide capital” to the Arctic LNG2 under construction.
This project is not included in the proven hydrocarbon reserves. In addition, TotalEnergies will suspend all “spot” transactions of Russian gas, but will continue to respect its long-term gas contracts.
“There is no future growth in Russia”
The group repeats the discussion. The context of sanctions and Russian law “will prevent TotalEnergies from finding non-Russian buyers to take over its shares,” he says. “Therefore, abandoning these participations without financial compensation would contribute to the enrichment of Russian investors, inconsistent with the very purpose of the sanctions.” Such decisions do not interfere with the company’s operations and profits, as the company “has its own staff and is managed independently.”
The CEO sought to minimize the importance of Russia to the future of his group. “Russia was 5% of our cash flow. It was 10% of the result, not zero. It was an important reserve, but it turned out not to bring a lot of money,” said Wednesday morning. Patrick Pouyanné explained in RTL. “The company isn’t at stake at all (…) It’s clear that the result (…) after Mr Putin decides to invade Ukraine is that he isn’t. There is no future growth in Russia because of it, “he added.