French energy giant Total is going to acquire a 10 percent stake in a Russian Arctic gas project. The deal was finalized during French President Emmanuel Macron’s visit to St. Petersburg, Russia, thus demonstrating the Kremlin’s ability to find business partners despite Western sanctions. Total is going to buy the stake in the Novatek-led Arctic LNG-2 project, which would produce liquefied natural gas (LNG). This contract solidifies Total’s presence in Russia, the second largest gas producer in the world after the United States.
While the LNG production in Russia is not sanctioned, there are restrictions on the ability of Russian companies to raise financing. The punitive measures were introduced in response to Russia’s role in the conflict in Crimea and alleged meddling in the US presidential elections. When Total’s CEO Patrick Pouyanne was asked whether Total’s involvement in the Arctic LNG project could be “sanctions bullet proof”, he said: “Nothing is sanction bullet proof. The best way to be sanction bullet proof is to have no sanction,” he said.
The final investment in the project is expected in the second half of 2019 as Italy’s Saipem plans to take part in a tender to construct a platform base for the project. Total also has an option to increase its stake by 5 percent while the Russian partner company Novatek wants to keep its own stake at no less than 60 percent. Russia seeks to double its share of the global LNG market from the current 4 percent by 2020. Qatar is currently the world’s biggest LNG exporter, with a 30 percent market share.