TotalEnergies will stop buying oil from Russia by the end of this year as the French oil and gas group steps up measures to cut ties with the country.
Under rising pressure over its continued presence in Russia following the departure of rivals, Total stopped short of setting in motion a full exit. Energy peers BP, Shell and ExxonMobil were among those who announced they would completely end their Russian ventures just days after Vladimir Putin sent troops into Ukraine.
The French company said on Tuesday that it would hold on to its minority stakes in two major liquefied natural gas plants as it saw no way of finding non-Russian buyers for the holdings.
But the group said it was moving towards a “gradual suspension” of its activity in Russia.
Its new policy on oil was “a step in the right direction”, according to Gianluca Ferrari, founding partner at Clearway Capital, an activist investor that has pressured Total’s board to retreat from Russia.
But analysts at RBC Capital Markets questioned whether it would be enough to pacify critics of the company, adding that Total remained stuck “between a rock and a hard place” as it was more entrenched in Russia and exposed to its LNG sector than many rivals.
TotalEnergies said it would not renew contracts to buy Russian oil or oil products, aiming to end these by the end of 2022 at the latest.
It added that it was looking for alternative supplies for its Leuna refinery in Germany, including the possibility of importing oil via Poland. Patrick Pouyanné, TotalEnergies chief executive, had flagged earlier in March that the Leuna site would encounter the greatest difficulties if Russian oil supplies were cut.
Europe has so far resisted an embargo on Russian oil, which the continent depends on for 30 per cent of its supply. It is also highly reliant on Russian gas.
TotalEnergies had said it had come under no pressure from the French government to go beyond existing sanctions, but the international focus on its Russian presence had grown.
Climate activists smeared the lobby of Total’s Parisian headquarters in black paint on Monday in one campaign act. Clearway, meanwhile, had written to Total’s board demanding action on Russia.
“The longer-term risks of sanctions, reputational hit and possible retribution by the Russian state associated with staying in the country far outweigh any short-term financial benefits of remaining,” Ferrari told the Financial Times, adding that the investment firm did not expect Total to pull out overnight but to assemble a withdrawal plan.
Total said it would provide no new capital for its Arctic LNG project in Siberia, which is still under construction.
The company added that it would still ship Russian gas to Europe from its Yamal site.
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Among its ventures in Russia, Total has a 19.4 per cent stake in independent gas provider Novatek; a 20 per cent share in the Yamal plant; and a 10 per cent holding in the Arctic LNG project.
Novatek’s shareholders include the Volga Group, the investment vehicle of Gennady Timchenko, who has been on a US sanctions list since 2014, when Russia annexed Crimea, and has been targeted by the EU’s newest asset freezes.
Total said that selling out now would be difficult and counterproductive. “Abandoning these interests without consideration would enrich Russian investors, in contradiction with the sanctions’ purpose,” Total said.