Sanctions on Russian gas ‘would be a boon for sellers’

● Sanctions on output from Yamal liquefied natural gas (LNG) project in Russia would cause prices to spike and profit global sellers of the fuel, TotalEnergies CEO Patrick Pouyanne said.

Responding to an analyst’s question on Friday about the impact of possible EU sanctions, Pouyanne said: “If the EU sanctions Yamal LNG, the price of LNG will go up quickly and globally our portfolio will benefit.

“It’s a positive if there were sanctions, not a negative, because the cash from Yamal is quite limited,” he added.

“European leaders understand that their security of supply today relies on LNG and they don’t want again to see price rises ... what I understand is that they might have some ideas, but from 2027 on, not before,” Pouyanne said.

The French energy major has a 20% stake in the Yamal LNG project in eastern Russia, which is majority owned by private Russian

LNG producer Novatek. TotalEnergies also holds a 19.4% stake in Novatek.

Pouyanne said the company hadn’t received a dividend from Yamal LNG since 2023 as sanctions on financial transactions with Russia make it difficult to get money out of the country.

It received about $450m (about R8.5bn) in half-year dividends from Novatek in late 2022. European natural gas prices reached record highs after the loss of Russian supplies in 2022 when the EU imposed financial and other sanctions on Moscow to punish it for invading Ukraine.

New global LNG capacity will be limited until 2027 when more projects come online, meaning Europe will continue to compete with Asian and other buyers for limited cargoes until then, pushing prices higher.

Several EU countries have called for sanctions on Russian LNG, though the required unanimity among members for such a measure to pass does not exist. In 2023 Russia still supplied 14.8% of the EU’s gas as an uptick in discounted LNG cargoes partially replaced some of what previously arrived via pipeline.

European politicians are under pressure to keep energy prices in check and secure supplies after sharp increases saw households and businesses having to limit consumption on fears of not making it through winter.