Washington Approves More U.S. LNG Exports For Europe – OilPrice.com

French TotalEnergies will include a $4.1-million impairment on its balance sheet over Russia sanctions that have led to difficulties with its massive Arctic LNG2 project, the company said on Wednesday.

TotalEnergies SE has decided to no longer book proved reserves for the Arctic LNG 2 project, “given the uncertainty created by the technological and financial sanctions on the ability to carry out the Arctic LNG 2 project currently under construction and their probable tightening with the worsening conflict,” the company said in a press release.

The company also noted “additional risks” that emerged on April 8th withg new sanctions from the European Union prohibiting export from EU countries of goods and technology for use in the liquefaction of natural gas benefitting a Russian company.

“As a result, TotalEnergies has decided to record in its accounts, as of March 31, 2022, an impairment of 4.1 B$, concerning notably Arctic LNG 2,” TotalEnergies stated.

TotalEnergies’ partner in Arctic LNG 2 is Russian Novatek, with TotalEnergies accounting for a 10% stake.

The final investment decision for this project was made in 2019. The project would have had a production capacity of 19.8 million tons per year and was expected to export its first LNG cargo by 2023, with a second train in 2024 and a third in 2026.

TotalEnergies refused to withdraw from Russia-affiliated projects while supergiants BP, Exxon and Shell bowed to Western pressure and sanctions. However, it is now clear with the impairment that the Arctic LNG 2 has a very uncertain future, affecting the French oil giant.

Earlier this week, Technip Energies, the European engineering contractor for Arctic LNG 2, told investors in an earnings call that sanctions are affecting the pace of work on the project but that Technip “remained committed”.

Technip said it still “expects the balance sheet position of the project and contract protections to be sufficient to fulfill contractual obligations” in compliance with sanctions, he added.

By Charles Kennedy for Oilprice.com

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Washington Approves More U.S. LNG Exports For Europe – OilPrice.com

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