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Russia sanctions are creating a "grey" oil market, says TotalEnergies CEO

TOTALENERGIES-RESULTS-RUSSIA:TotalEnergies CEO: Russia sanctions are creating a "grey" oil market
TOTALENERGIES-RESULTS-RUSSIA:TotalEnergies CEO: Russia sanctions are creating a "grey" oil market Copyright Thomson Reuters 2023
Copyright Thomson Reuters 2023
By Reuters
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By America Hernandez

PARIS -Western sanctions against Russia are creating a parallel oil market, the chief executive of French oil major TotalEnergies said on Wednesday.

"We had a relatively transparent, well-functioning global oil market .. I understand the political objective, but I don't think we have fully appreciated the consequences," Patrick Pouyanne told reporters after his company posted a record profit for 2022.

"There is no longer a unified oil market ... With all these bans, we are creating a grey market for oil," he said adding that Russia was "without a doubt capable of selling its products elsewhere.

"The weapon Russia has, is to reduce volumes, and raise prices," Pouyanne said.

Unlike rivals such as BP and Shell, TotalEnergies has kept some of its investments in Russia, including the Yamal venture producing liquefied natural gas in Russia's Arctic.

"This contract for the time being is useful, and we are not the only ones with a Yamal contract, there are other European companies," Pouyanne said.

The group booked $14.8 billion worth of impairments on its Russian holdings in 2022, including a $4.1 billion write-off on its 19.4% stake in Russian group Novatek.

However, it still received $1.48 billion in cashflow from its Russian operations during 2022, including $732 million in the last three months of the year. Capital employed by the group in Russia stood at $2.87 billion at the end of 2022, TotalEnergies said.

Western sanctions on Russia following its invasion of Ukraine have significantly reduced state oil revenues and diverted tens of billions of dollars towards shipping and refining firms, some with Russian connections, Reuters reported earlier on Wednesday.

Most of the winners from the sanctions are based in China, India, Greece and the United Arab Emirates, at least 20 trading and banking sources said. A handful are partly owned by Russian companies.

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