Putin approves TotalEnergies exit from Arctic LNG 2 project

(Bloomberg) – Russian President Vladimir Putin authorized TotalEnergies SE to sell its stake in a U.S.-sanctioned liquefied natural gas export project in the Arctic, a rare move that will allow the French major to exit a project strangled by western restrictions. 

TotalEnergies will be allowed to transfer its 10% stake to a company called NordLine LLC, according to a presidential order. According to Interfax, the company is a newly created subsidiary of Novatek, which owns 60% of Arctic LNG 2. No terms were set out. 

TotalEnergies previously wrote down the value of its interest in Arctic LNG 2 because of Russia’s war in Ukraine, and has consistently said it’s taken no revenue from the project.

The $21 billion-plus Arctic LNG 2 was sanctioned by the U.S. in late 2023 in an effort to curb Russia’s ability to expand exports of the super-chilled fuel. The facility began shipping the fuel via shadow fleet vessels the following year, and has slowly ramped up output—even though it’s operating far below intended capacity. So far, shipments have only been delivered to a single port in Southern China.

The move will consolidate Russia’s hold over its largest LNG export project by capacity, as part of a wider strategy by Moscow to expand sales to Asia. The European Union will ban all gas purchases from Russia from 2027.

TotalEnergies was among a handful major Western energy companies that retained stakes in a strategic Russian projects after the invasion of Ukraine. While a number of foreign investors have exited Russia since then, Kremlin approvals for the sale of significant assets have become relatively rare in recent years.

TotalEnergies declined to comment The major still holds stakes in other assets in Russia, including the Yamal LNG export project—which isn’t directly sanctioned—and Novatek itself. TotalEnergies agreed to take the stake in Arctic LNG 2 in 2018.

Novatek didn’t immediately respond to a request for comment.