Shareholders urge Total to quit Russia or face divestment

The Total Coupole tower, which houses the head office of Total Source: iStock/HJBC

TotalEnergies SE has been warned by two U.K. shareholders that they would divest their stakes if the French company fails to exit its businesses in Russia. 

The Church of England Pensions Board and the Church Commissioners for England are turning up the heat on the energy major’s Chief Executive Officer Patrick Pouyanne, a sign of the pressure companies are facing to isolate Russian President Vladimir Putin’s regime. TotalEnergies has said it will stop buying Russian crude and investing in new projects in the country, but it continues to hold stakes in Novatek PJSC and other projects. 

The French government has so far allowed TotalEnergies to make its own decision regarding the Russian business as long as it respects sanctions. On the other hand, the U.K. has actively been asking companies to stop dealings with Moscow. BP Plc and Shell Plc have said they’ll leave, potentially taking tens of billions of dollars in writedowns in the process. 

Companies are under such intense scrutiny that Shell was forced to apologize this month after it received heavy criticism for purchasing a cargo of Russian crude oil.

Russia’s invasion of Ukraine shows “it is clear that TotalEnergies’ position is incompatible with maintaining a social license to operate,” the heads of responsible investment at the two U.K. funds wrote in a joint letter to Pouyanne dated Tuesday. “We would underline the seriousness of our request and that we will need to consider our position as shareholders in TotalEnergies if further steps are not forthcoming.”

A representative for TotalEnergies couldn’t immediately be reached for comment. 

The stakes are high for the company, which has made Russia one of its priorities for its expansion in liquefied natural gas. It owns almost a fifth of gas producer Novatek as well as a 20 per cent interest in the Yamal LNG project, Russia’s biggest producer of the superchilled fuel. It also has a 10 per cent stake in the Arctic LNG 2 development under construction, and stakes in the Kharyaga oil field, and the Termokarstovoye gas and condensate field.

Russia accounted for about five per cent of TotalEnergies’ $29.1 billion cash flow from operations last year, and the company is getting a dividend of about $500 million from Novatek, Pouyanne said last month. The company would lose 14 per cent of its LNG supply if it were to cut ties with Russia this year, according to BloombergNEF.

© 2022 Bloomberg L.P.

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