Business in Russia: TotalEnergies withdraws its directors from Novatek
▌As part of the policy for its Russia-related activities published on March 22, 2022, TotalEnergies has begun a phased withdrawal from Russian assets while ensuring that it continues to supply LNG to Europe. ▌
TotalEnergies holds a 19.4% stake in Novatek, a stake which it cannot sell under the current shareholder agreement, which prohibits it from selling assets to any of Novatek’s major shareholders under the sanctions imposed on it.
“The European sanctions that have been in place since the beginning of the conflict have compelled the two directors representing TotalEnergies on Novatek’s board of directors to abstain from meetings of that company’s board of directors, particularly on financial matters. They are therefore no longer able to fully perform their duties on this body, which could pose governance issues for this company.” states the press release of 09.12.2022.
Under these conditions, the Board of Directors of TotalEnergies has decided to resign the Company’s representatives from the Board of Directors of PAO Novatek with immediate effect. Consequently, as the criteria of significant influence within the meaning of the accounting rules followed by the Company are no longer met, the 19.4% stake held by TotalEnergies in Novatek is no longer consolidated in the Company’s accounts.
This leads to recognition in the accounts of the 4thth Approximately $3.7 billion of impairment in Q2 2022. Additionally, TotalEnergies will no longer record reserves for its stake in Novatek, which will impact the 1.7 billion barrels of proven reserves declared at the end of 2021. However, the life of the Company’s proven reserves remains in excess of 11 years of production.
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