French oil and gas giant TotalEnergies has announced on Friday it is giving up its stake in Russian gas producer Novatek and withdrawing its two representatives from the company’s board.
The exit will result in a “record” impairment of about $3.7 billion in the fourth quarter as Total will "no longer equity account for its 19.4% stake in Novatek."
The French company said in a statement that the two directors have had to abstain from voting in Novatek board meetings, "in particular on financial matters," due to Western sanctions imposed on Russia.
Unlike BP and Shell, which left Russia shortly after the conflict in Ukraine began in late February, TotalEnergies had held on to its projects in the country and faced international sanctions.
“Under these circumstances, the Board of Directors of TotalEnergies has decided to withdraw the representatives of the Company from the board of PAO Novatek with immediate effect,” the company announced.
The French energy major also said it cannot sell its stake in the Russian firm as "it is forbidden for TotalEnergies to sell any asset to one of Novatek's main shareholders who is under sanctions."
Apart from the stake in Novatek, the French company has minority holdings in Russian liquefied natural gas (LNG) projects Yamal LNG and Arctic LNG. According to Reuters estimates, exiting Russian projects will bring total impairments of TotalEnergies this year to $14.4 billion.
In addition, Total will no longer book reserves for its interest in Novatek, with an impact on the company's reported proved reserves at the end of 2021 of 1.7 billion barrels of oil.
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