Total’s belated Russian exit is still partial

Total CEO Patrick Pouyanné attends a session of the St. Petersburg International Economic Forum in Saint Petersburg, Russia, June 3, 2021. REUTERS/Evgenia Novozhenina

LONDON, Dec 9 (Reuters Breakingviews) - TotalEnergies (TTEF.PA) took its time before realising it would be impossible to sell its stake in Russian gas company Novatek (NVTK.MM). Over nine months since rivals like BP (BP.L) headed for the door, the French group has now seen the light, and is writing down its 19.4% holding, taking a $3.7 billion hit in the fourth quarter.

Novatek is owned and ruled by two oligarchs. One of them, Gennady Timchenko, is known as a 30-year friend of Russian President Vladimir Putin. The war in Ukraine is in its tenth month, and some investors may wonder why Total Chief Executive Patrick Pouyanné entertained for so long the misplaced hope that things might one day return to normal in Russia. Up until now, Total had kept two representatives on the Novatek board. These two directors will now leave “with immediate effect”, the group says, giving a new definition to the word “immediate”.

As Total notes, it cannot abide by a shareholder agreement giving the owners preemption rights on the stake, since Timchenko is hit by Western sanctions. So better to take the loss, and wait for Putin to decide who will inherit the stake and how much it is worth. Fine, but as long as Pouyanné clings to his Yamal project in Siberia, Total’s Russian exit remains piecemeal. (By Pierre Briancon)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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