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Total withdraws directors from Novatek, writes down US$3.7Bn
French oil major TotalEnergies holds a 19.4% stake in Novatek, Russian’s second-largest natural gas producer behind Gazprom
In view of the European sanctions in force since the beginning of the war in Ukraine, the company said Dominique Marion and Arnaud Le Foll, the two directors representing TotalEnergies on Novatek’s board of director, will abstain from voting in meetings of the board of directors, in particular on financial matters.
In a statement, TotalEnergies said “They are therefore no longer in a position to fully carry out their duties on the board which might become an issue for the governance of this company.”
“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.”
As a result, Total’s 19.4% stake in Novatek will no longer be reflected in the company’s accounts and it said this will result in an impairment of approximately US$3.7Bn in the balance sheet for Q4 2022. But neither can the company sell its stake given the prevailing shareholders’ agreements, as it is forbidden for TotalEnergies to sell any asset to one of Novatek’s main shareholders who is under sanction.
In addition, the company 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. Total did not comment on the status of the dividends it receives from the stake it currently holds.
The French oil major is still exporting LNG to Europe from its Yamal plant, as that is allowed under Western sanctions.
The first train at Novatek’s 20-mta Arctic LNG-2 project is still on track to begin next December. Speaking at the Eurasian Economic Forum in October, Novatek chief executive Leonid Mikhelson said the project was 70% complete.
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