To­tal halts No­vatek stake bids af­ter MH17

Viet Nam News - - Markets -

PARIS —- To­tal has stopped buy­ing shares in Rus­sia’s No­vatek the day of the down­ing of a Malaysia Air­lines flight over Ukraine, but that it is still too early to gauge the im­pact of new sanc­tions against Rus­sia, the French oil ma­jor’s top re­vealed with its sec­ond quar­ter re­sults yes­ter­day.

To­tal is one of the top for­eign in­vestors but it faces a cloud over its fu­ture since the down­ing of the air­craft over Ukrainian ter­ri­tory held by pro-Rus­sian rebels wors­ened the oil-rich coun­try’s re­la­tions with the west and raised the threat of deeper sanc­tions by the EU and United States.

The oil firm fore­cast in April that Rus­sia would be­come its big­gest source of oil and gas out­put by 2020 thanks to its part­ner­ship with No­vatek and their Ya­mal LNG project in Siberia.

“We stopped buy­ing shares in No­vatek the day of the plane ac­ci­dent, con­sid­er­ing all the un­cer­tain­ties that this event could lead to,” Chief Fi­nan­cial Of­fi­cer Pa­trick de La Che­vardiere told re­porters in a con­fer­ence call.

Flight MH17 was downed on July 17 by what Western coun­tries say was a Rus­sian-sup­plied mis­sile, killing all 298 peo­ple on board.

“We have not stopped op­er­a­tions on the Ya­mal project at this stage. We agreed with our part­ners to take stock of the sit­u­a­tion at the end of Au­gust,” he said dur­ing a pre­sen­ta­tion of the group’s sec­ondquar­ter re­sults.

At end-June, To­tal owned 18 per cent of No­vatek, which has seen one of its share­hold­ers hit by US sanc­tions. To­tal had bought a 12 per cent stake in Rus­sia’s sec­ond-largest nat­u­ral gas pro­ducer for $4 bil­lion in 2011 with an op­tion to in­crease its hold­ing to 19.4 per cent within three years.

De La Che­vardiere said the group was not do­ing busi­ness with peo­ple on the US and EU sanc­tion lists, although he said he had yet to see the EU’s lat­est list of mea­sures against Rus­sian oil com­pa­nies, banks and de­fense firms over Moscow’s sup­port for rebels in eastern Ukraine, un­veiled late on Tues­day.

“We need more time to re­view the con­se­quences of these sanc­tions. If these sanc­tions for­bid us to work there, we will be forced to stop work­ing, but we can’t for­get that Rus­sia is a big oil coun­try,” De La Che­vardiere said.

Rus­sia ac­counted for about 9 per cent of the group’s oil and gas out­put in 2013.

The $27 bil­lion Arc­tic Ya­mal penin­sula liq­ue­fied nat­u­ral gas (LNG) project, which plans to ex­port 16.5 mil­lion tonnes of LNG a year, also caused some headaches at French oil ser­vices firm Tech­nip, which last week cut its mar­gin tar­get for its on­shore/off­shore unit for this year and next.

To­tal’'s Lon­don-based ri­val BP, which makes about a third of its crude oil out­put in Rus­sia, also warned that fur­ther Western sanc­tions could harm its busi­ness there and its re­la­tion­ship with Rus­sian state oil group Ros­neft.

Fall­ing pro­duc­tion

In the sec­ond quar­ter of the year, To­tal said its oil and gas pro­duc­tion fell 10 per cent com­pared to the same quar­ter a year ago, to 2.054 mil­lion bar­rels of oil equiv­a­lent per day (boepd).

The main rea­sons were heavy main­te­nance, the de­te­ri­o­ra­tion of the se­cu­rity sit­u­a­tion in Libya, and the loss of the ADCO con­ces­sion in Abu Dhabi, which the emi­rate took over in Jan­uary and is ex­pected to reaward in 2015.

“This year all the main­te­nance was con­cen­trated on the sec­ond quar­ter, ” the CFO said, cit­ing work in the North Sea, Nige­ria and Thai­land.

The same rea­sons im­pacted the group’s net ad­justed profit, which fell 12 per cent year- on- year to $ 3.15 bil­lion, also hit by very weak re­fin­ing mar­gins, which were less than half the lev­els of a year ago in the three months to end-June.

“We went through moments when mar­gins were neg­a­tive dur­ing the sec­ond quar­ter, we cut pro­duc­tion to the tech­ni­cal min­i­mum at some re­finer­ies be­cause the more we pro­duced the more we lost money,” he said, de­clin­ing to say which ones.

The CFO said out­put had hit a bot­tom, and was now ex­pected to rise as projects such as Lag­gan-Tor­more in the North Sea and Ofon Phase 2 in Nige­ria came on stream in the sec­ond half of the year.

De La Che­vardiere said he would give an up­date on the group’s long-term pro- duc­tion tar­gets, 2.6 mil­lion boe/d in 2015 and 3 mil­lion boe/d in 2017, at the an­nual in­vestor day con­fer­ence in Lon­don in Septem­ber.

“But it’s clear that de­lays at Kasha­gan are not good news,” he added, say­ing that the op­er­a­tor did not ex­pect any restart of the gi­ant Kazakh field be­fore 2016.

De La Che­vardiere also said China’s Sinopec had no­ti­fied To­tal that it would not buy its Usan field in Nige­ria af­ter all, a $2.5 bil­lion deal for a stake in the OML 138 block that the French group had an­nounced in Novem­ber 2012.

“I ig­nore their rea­sons. We have launched two days ago the process to find a bank to re­launch the sale process and find a new buyer,” he said.

To­tal pro­posed a div­i­dend of 0.61 eu­ros per share for the sec­ond quar­ter. Rev­enue was up 2 per cent to $62.56bil­lion. —

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