TotalEnergies explains its principles of action in Russia

( — Following the serious and unfounded accusations of “complicity in a war crime” made against him, Total Energies shares with its stakeholders its principles of action in the development of its activities in relation to Russia so that they can understand how our Company acts responsibly. Faced with the escalation of the conflict, TotalEnergies is also taking additional measures.
TotalEnergies reaffirms its strongest condemnation of Russia’s military aggression against Ukraine, which has tragic consequences for the Ukrainian population and threatens peace in Europe.

In order to act responsibly, as a European company and in accordance with its values, TotalEnergies has defined clear principles of action to manage its activities in relation to Russia:
-Guarantee strict compliance with current and future European sanctions, whatever the consequences may be for the management of its assets in Russia and initiate the progressive suspension of its activities in Russia, ensuring the safety of its personnel.
TotalEnergies recalls that it does not operate any oil or gas fields, or any liquefied natural gas (LNG) plants in Russia, contrary to the idea conveyed by several commentators.
TotalEnergies is a minority shareholder in several Russian private companies, Novatek (19.4%), Yamal LNG (20%), Arctic LNG 2 (10%), TerNefteGaz (49%) and these companies are managed by their own staff with a limited number of TotalEnergies secondments TotalEnergies is also a 20% partner in JV Kharyaga operated by Zarubezhneft. The Company has certainly contributed to the construction phase of these companies’ projects, but has no activity or operational responsibility at these sites.
TotalEnergies had only 11 employees attached to these various companies as of February 24, 2022 and there are currently only 3 expats attached to Russia. TotalEnergies has thus initiated the gradual suspension of its activities in Russia, while guaranteeing the safety of its equipment. In the same spirit, TotalEnergies has decided to suspend its business developments in the areas of batteries and lubricants in Russia.

-They no longer provide capital for the development of projects in Russia.
In particular, in relation to the Arctic LNG 2 project, given the uncertainties posed by the technological and financial sanctions on the ability to carry out the Arctic LNG 2 project under construction and its probable increase in power in the face of the worsening of the conflict, TotalEnergies SE has decided to stop recording proven reserves in its accounts for this Arctic LNG2 project and will no longer contribute capital to the project.

-Do not reverse the objective of the sanctions against Russia: do not unduly transfer value to Russian interests through the withdrawal of assets.
The current context of European sanctions and Russian laws controlling foreign investment in Russia would prevent TotalEnergies from finding a non-Russian buyer to take over its minority holdings in Russia. Abandoning these holdings without financial compensation would therefore contribute to enriching Russian investors in contradiction to the very objective of the sanctions. In addition, the abandonment of the holdings in which TotalEnergies is a minority shareholder would not have any impact on the operation of the companies in question and, therefore, on their income, since these companies have their own staff and are managed independently. .
– Contribute to guaranteeing the security of energy supply on the European continent, within the framework defined by the European authorities.

TotalEnergies is an energy company from the European continent that must contribute to the security of supply on the continent, which does not have the same domestic resources as other Western countries such as the United Kingdom or the United States, for example.
In accordance with the decisions of the European Union to maintain the supply of Russian gas at this stage, TotalEnergies continues to supply Europe with Liquefied Natural Gas from the Yamal LNG plant under terms of long-term contracts that must be fulfilled as long as the governments consider that the Russian gas is necessary. Contrary to oil supplies, it appears that Europe’s gas logistics capabilities make it difficult to dispense with Russian gas within 2-3 years without consequences for the continent’s energy supply.

However, given the worsening of the situation in Ukraine and the existence of alternative sources to supply Europe, TotalEnergies is unilaterally taking the decision not to enter into or renew any more contracts for the purchase of Russian oil and oil products, in order to stop all purchases of Russian oil. petroleum or petroleum derivatives, as soon as possible and at the latest by the end of 2022.

TotalEnergies has already announced that as of February 25, 2022 it has renounced all trading operations on the spot markets related to Russian oil or oil products. This is also true for Russian natural gas or LNG spot trading.

TotalEnergies has forward contracts for the purchase of Russian oil and oil products, whose longest maturities are December 31, 2022. The main purpose of these forward contracts is to cover the supply of the Leuna refinery located in eastern Germany. and supplied by Russia’s Druzhba pipeline. They also refer to Europe’s diesel supply, which is in short supply in this product (about 12% of Russian diesel imports in Europe in 2021).

In close consultation with the German government, TotalEnergies will terminate the supply contracts for this refinery with Russian oil as soon as possible and at the latest by the end of 2022 and will implement alternative solutions, in particular by importing oil through Poland. Already, a first contract will not be renewed at the end of March 2022.

Regarding diesel, which is in deficit in Europe, unless the European governments indicate otherwise, TotalEnergies will also terminate the contracts for the purchase of Russian diesel as soon as possible and at the latest by the end of 2022. TotalEnergies will mobilize derived products of oil from other continents. , in particular its share of diesel produced by the Satorp refinery in Saudi Arabia.

Dennis Alvarado

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