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LONDON, March 9 (Reuters Breakingviews) – TotalEnergies (TTEF.PA) is becoming an embarrassment for Emmanuel Macron. The 120 billion euro French group refuses to clarify the fate of its 19% stake in Novatek (NVTK.MM), the Russian oil firm it has partnered with since 2011. If the French president wants to retain his credibility as a strong advocate of sanctions against Russia, he needs his country’s only oil major to play ball.
Rivals BP and Shell (SHEL.L) announced their intention to exit Russia shortly after President Vladimir Putin launched his attack on Ukraine. Arguing that selling the stake now would realise a major loss is hardly convincing. Total’s stake, valued at $11 billion in October, is already worthless. Novatek was a penny stock before trading in its instruments was suspended.
Total has a long history in Russia. Current Chief Executive Patrick Pouyanné read more is enthusiastic about Arctic oil and gas reserves. And good taste in the choice of business partners is not a commercial requirement. Novatek is owned by two Russian oligarchs, one of whom, Gennady Timchenko, was hit by recent European Union sanctions due to his close ties to Putin.
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Pouyanné’s predecessor, Christophe de Margerie, who initiated the Novatek partnership in 2011, was among the cheerleading Western CEOs who saw Russia as a great place to do business. He died in a 2014 plane accident in Moscow hours after dining with then Prime Minister Dmitry Medvedev – and just a few months after Russia had annexed Crimea.
The French government isn’t known for shying away from making its opinions known – and prevailing – in major corporate matters. Although its explicit legal options are limited, it has multiple ways to convince or pressure Total to retreat before its, and France’s, reputation takes too big a hit.
As a company hailing from a hostile country, staying in Russia would also leave Total exposed to the Kremlin’s whims. Ultimately, Moscow will decide whether Total stays or goes, and if the latter, to whom and for how much it sells out. Believing that Total’s Russian past guarantees its future with Putin is a dangerous delusion.
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CONTEXT NEWS
– France’s TotalEnergies said on March 3 that it supported “the scope and strength” of European sanctions imposed on Russia, but declined to comment on the fate of its stake in Novatek, the Russian oil group in which it holds a 19.4% stake.
– Asked about the French group’s Russian activities, Finance Minister Bruno Le Maire said on March 1 that there was a “problem of principle to work with political or economic figures close to Russian power”, and indicated that he would talk with Total Chief Executive Patrick Pouyanné.
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Editing by Ed Cropley and Oliver Taslic
Our Standards: The Thomson Reuters Trust Principles.
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
Register now for FREE unlimited access to Reuters.comLONDON, March 9 (Reuters Breakingviews) – TotalEnergies (TTEF.PA) is becoming an embarrassment for Emmanuel Macron. The 120 billion euro French group refuses to clarify the fate of its 19% stake in Novatek (NVTK.MM), the Russian oil firm it has partnered with since 2011. If the French president wants to retain his credibility as a strong advocate of sanctions against Russia, he needs his country’s only oil major to play ball.Rivals BP and Shell (SHEL.L) announced their intention to exit Russia shortly after President Vladimir Putin launched his attack on Ukraine. Arguing that selling the stake now would realise a major loss is hardly convincing. Total’s stake, valued at $11 billion in October, is already worthless. Novatek was a penny stock before trading in its instruments was suspended.Total has a long history in Russia. Current Chief Executive Patrick Pouyanné read more is enthusiastic about Arctic oil and gas reserves. And good taste in the choice of business partners is not a commercial requirement. Novatek is owned by two Russian oligarchs, one of whom, Gennady Timchenko, was hit by recent European Union sanctions due to his close ties to Putin.Register now for FREE unlimited access to Reuters.comPouyanné’s predecessor, Christophe de Margerie, who initiated the Novatek partnership in 2011, was among the cheerleading Western CEOs who saw Russia as a great place to do business. He died in a 2014 plane accident in Moscow hours after dining with then Prime Minister Dmitry Medvedev – and just a few months after Russia had annexed Crimea.The French government isn’t known for shying away from making its opinions known – and prevailing – in major corporate matters. Although its explicit legal options are limited, it has multiple ways to convince or pressure Total to retreat before its, and France’s, reputation takes too big a hit.As a company hailing from a hostile country, staying in Russia would also leave Total exposed to the Kremlin’s whims. Ultimately, Moscow will decide whether Total stays or goes, and if the latter, to whom and for how much it sells out. Believing that Total’s Russian past guarantees its future with Putin is a dangerous delusion.Follow @pirrebri on TwitterCONTEXT NEWS- France’s TotalEnergies said on March 3 that it supported “the scope and strength” of European sanctions imposed on Russia, but declined to comment on the fate of its stake in Novatek, the Russian oil group in which it holds a 19.4% stake.- Asked about the French group’s Russian activities, Finance Minister Bruno Le Maire said on March 1 that there was a “problem of principle to work with political or economic figures close to Russian power”, and indicated that he would talk with Total Chief Executive Patrick Pouyanné.Register now for FREE unlimited access to Reuters.comEditing by Ed Cropley and Oliver TaslicOur Standards: The Thomson Reuters Trust Principles.Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.