PARIS -TotalEnergies said on Wednesday it had recorded a first-quarter impairment of about $4.1 billion partly related to Arctic LNG 2, a liquefied natural gas development project in the Russian Arctic that has been hit by sanctions against Russia.
The Arctic LNG 2 facility, located on the Gydan peninsula, was expected to start operations in 2023. However, the plans have been under threat following sanctions by Western powers against Russia in response to its Feb. 24 invasion of Ukraine.
“TotalEnergies has drawn upon the consequences of what has happened. This provision of around $4 billion shows that TotalEnergies is starting to turn the page,” said a spokesperson for the French oil and gas company.
The $21 billion Arctic LNG 2 project is key for Russia’s plans to raise its share of the global liquefied natural gas (LNG) market to 20% by 2035, expanding its annual LNG output to 120 million-140 million tonnes from around 30 million tonnes at present.
Analysts have said Russia will need to rethink its aim of attaining the 20% share target in the wake of European Union sanctions against it over the conflict in Ukraine.
Russia’s Novatek holds a 60% stake in the Arctic LNG 2 project, while 10% stakes are held by TotalEnergies, Japan Arctic LNG – a consortium of Mitsui & Co and JOGMEC – and Chinese firms CNPC and CNOOC.