The key foreign shareholder of Arctic LNG 2, the French TotalEnergies, will withdraw from the project, transferring its ten percent share to the structures of NOVATEK, which already controls 60% in the LNG plant. According to Kommersant, the company’s exit from Yamal LNG and NOVATEK itself is not yet being discussed. The main question is whether NOVATEK will resell the TotalEnergies stake. According to analysts, the departure of the French will not significantly affect the position of the plant included in the SDN List, and the package being sold may be of interest to Chinese companies.
Russian President Vladimir Putin allowed the French TotalEnergies SE to sell 10% in the Arctic LNG-2 project at Gydan, which is under blocking US sanctions. According to the order, the buyer will be NordLine LLC, established by NOVATEK on May 22. As a result, the share of NOVATEK structures in Arctic LNG-2 will increase to 70%.
Terms of the deal were not disclosed. Typically, the discount on the sale of Russian assets by foreign owners is 60%, and there is also an “exit tax” of 35%.
It is also unclear whether this share will remain with NOVATEK itself, or whether the stake will be resold in the future. NOVATEK did not comment on its future plans.
TotalEnergies, as a strategic partner, was the first foreign shareholder to join the Arctic LNG-2 project in 2018. The company paid about $2.55 billion for its share; another $1.5 billion was supposed to be investments in the LNG project, which shareholders contributed in proportion to their participation. In 2022, after the outbreak of hostilities in Ukraine, the French company wrote off the value of all its Russian assets, including the $4.1 billion at which it valued its stake in Arctic LNG 2, after which it stated that it had ceased receiving income from the project.
TotalEnergies still has shares in NOVATEK itself and in the Yamal LNG-2 project (20%), which are not subject to sanctions.
According to Kommersant’s interlocutors in the government, there is currently no talk of TotalEnergies exiting these assets. Chinese CNPC and CNOOC, as well as a consortium of Japanese Mitsui and JOGMEC, each retain 10% in Arctic LNG-2.
The Arctic LNG-2 project, worth more than $25 billion, came under blocking US sanctions in November 2023, after which all foreign shareholders of the project declared force majeure on their obligations. Essentially, this blocked their responsibilities for financing and fulfilling offtake contracts for LNG shipments (each partner has a contract for 1.98 million tons per year). After this, NOVATEK still managed to independently launch the first and second lines of the project with a capacity of 6.6 million tons each (the construction of the third was frozen), however, the LNG plant is operating significantly below the planned capacity: since the beginning of 2026, 15 LNG cargoes have been unloaded at the Chinese Beihai LNG terminal.
Kommersant’s government sources explain the provision of the opportunity for TotalEnergies to exit Arctic LNG-2 by saying that the project in the coming years will concentrate sales only on Asian markets: it is difficult to find buyers in other regions under the conditions of sanctions, and EU countries will stop purchasing Russian LNG from 2027.
In February 2024, the head of TotalEnergies, Patrick Pouyanné, said that Europe is no longer a market for LNG supplies from the project: “Only one market is possible, one or two. But this is no longer our asset.”
Mr. Pouyanne considered the Yamal LNG project one of his “very strong assets.” In February, he said that TotalEnergies plans to continue to remain a shareholder of Yamal LNG and receive dividends, even if the EU ban on imports of Russian gas forces it to terminate the contract to purchase LNG from the plant.
Euler senior analyst Andrey Polishchuk assesses the possibility of a deal as a positive event for the project – Arctic LNG 2 will be able to focus on the Asian market and shareholders in this region. “We believe that a significant increase in supplies from the project is possible this year. In the long term, the repurchased share can be used to attract new shareholders who have technologies or markets. This should contribute to the full completion of the project in the future,” he believes.
Igor Yushkov, an expert at the Financial University under the Government of the Russian Federation, expects that in the future the TotalEnergies package will not belong to NOVATEK. He names Chinese companies as the most likely buyer. “It’s unlikely that anyone else will claim a package on the SDN List. And China is interested in getting maximum profits and a multiplier effect, having the opportunity to earn money as a shareholder of an LNG exporter,” says Mr. Yushkov. An increase in the share of Chinese companies, in his opinion, may lead to the fact that the PRC will be more actively involved in solving the problem of providing LNG logistics, first of all, the formation of a fleet of Arctic-class gas carriers, as well as equipment.
