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Total Joins $25 Billion Russian Arctic LNG Project

French Total will buy a 10-percent stake in Russian Novatek’s LNG-2 project in the Arctic, Novatek’s chief, Leonid Mikhelson, said, as quoted by Reuters. France’s President Emmanuel Macron is visiting Russia for the St. Petersburg economic forum this week and the Total deal was signed during his visit.

Total already holds a 20-percent stake in Novatek and is one of the partners developing the company’s first LNG project in Yamal, along with Chinese CNPC and Silk Road Fund. This second deal for Arctic LNG-2 could be finalized in the first quarter of 2019, Mikhelson said, adding that the project could be worth around US$25.5 billion. The final investment decision may be made in the second half of 2019.

Total, Novatek’s CEO also said, will have an option of increasing its stake in the project by 5 percent, but the Russian company intends to maintain a share of at least 60 percent in Arctic LNG-2.

Total was recently forced to reconsider its participation in the South Pars field development in Iran by President Trump’s reimposition of economic sanctions on Iran. The company has not yet pulled out of the project, but it has said it will have to unless the U.S. Treasury Department grants it a sanction waiver. The EU is also trying to shield its companies from the Iran sanctions.

Related: Who’s To Blame For High Gasoline Prices?

Russia’s LNG industry is not subject to sanctions, which focus on unconventional oil and gas, but, as Total’s chief executive Patrick Pouyanne put it to reporters in St. Petersburg, “nothing is sanction bullet proof”.

Yamal LNG began operation last December and has already shipped two million tons of LNG. The facility, when completed, will have an annual capacity of 16.5 million tons of the liquefied fuel.

Arctic LNG 2 could have a capacity of 19.8 million tons, and could go into operation in 2023.

By Irina Slav for Oilprice.com

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