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Total sells stake in Russian gas field after military jet fuel claims

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TotalEnergies is selling its 49 percent stake in a Siberian gas field to Russian energy producer Novatek, days after allegations that the asset supplied raw material for jet fuel believed to have been used by the Russian military.

Unlike other oil majors such as Shell, BP and Equinor, which announced their exit from Russia soon after Vladimir Putin ordered a large-scale invasion of Ukraine, the French group has resisted pressure to exit all of its holdings or joint projects with state-owned Russia energy. company.

Total’s decision on Friday to sell its minority stake in Terneftegaz, a joint venture with Novatek, marks a significant reduction in its stake in Russia since the country invaded Ukraine, although it has already written off $7.5 billion in Russian assets this year.

“On July 18, 2022, TotalEnergies agreed to sell Novatek TotalEnergies’ 49% stake in Terneftegaz,” the company said in a statement. Russia agreed to the sale on Thursday, and on Friday the companies signed a final agreement, according to the French group.

Total, which still holds a 19.4 percent stake in Novatek, Russia’s biggest gas producer after state giant Gazprom, has become a totem of corporate France’s reluctance to pull out of Russia, even as Western energy and commodity traders cut ties and wrote off. multi-billion dollar investments in resource extraction projects in the country.

Total said the move was in line with its policy announced in March for the “gradual suspension” of its activities in Russia that do not contribute to European energy security. It said it also completed the sale of its 20 percent stake in the Kharyaga oil project to Russian state oil company Zarubezhneft in August.

Total retained its stake in the Yamal liquefied natural gas export plant in northwestern Siberia, as well as its stake in a $21 billion Arctic LNG project due to start exporting in 2023.

The sell-off comes at a difficult time for European politicians, with gas prices quadrupling to a record 343 euros per megawatt hour since early June, threatening to plunge the region into a deep recession.

Other shareholders of Novatek include Volga Group, the investment vehicle of Gennady Timchenko, which has become the target of EU sanctions.

Leonid Mikhelson, chief executive and major shareholder of Novatek, is under sanctions from the UK and Canada but has not yet faced restrictions from the US or the EU – a rarity among Russia’s richest men.

This week, NGOs Global Witness and Le Monde accused Total’s joint venture of supplying gas condensate, which is used to make jet fuel, which was then used by Russian planes to attack Ukraine.

Total on Friday denied producing jet fuel for the Russian military, saying products made using its gas condensate are “exclusively exported from Russia”. The company said the sale of the Terneftegaz stake was announced this week, as negotiations were already underway, was a coincidence.

On its home turf in France, Total is among the big companies under heavy pressure from environmentalists and left-wing politicians who want the government to impose windfall taxes given the high profits some made during the war and energy crisis.

When the Global Witness allegations emerged, Clément Beaune, the transport minister and an ally of President Emmanuel Macron, called for clarification on whether “sanctions were violated voluntarily or involuntarily or energy supplies were diverted from the French company”.

Oil majors are trying to find willing buyers for their stakes in Russian projects.

Putin signed a decree this month banning investors from designated “enemy countries” from selling stakes in key energy projects and banks until the end of the year without his personal approval.

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