Total goes on with gas project despite Ukraine escalation

Total is pushing ahead with a giant Russian natural gas project in the Arctic as escalating fighting in Ukraine raises the specter of tougher sanctions.

Christophe de Margerie, Total CEO on the future of the $27 billion endeavor led by OAO Novatek said “there’s no reason to think that it won’t happen.”

“We have to do this project,” de Margerie said. “The reserves are there, the market is there and we need it. It is already almost half-completed. There are a lot of companies involved and many of them are American.”

Designed to produce LNG on the Yamal Peninsula, a province above the Arctic Circle estimated to hold enough fuel to meet global demand for five years, the project is central to Total’s plans to boost output and Russia’s bid to export more LNG.

The French company and China National Petroleum Corp. are partners with 20 percent stakes alongside the Russian company, with 60 percent. Uncertainty about how the project will progress has increased after the US and Europe adopted sanctions against Russia following its annexation of Crimea and the Kremlin’s support for pro-Russian separatists in eastern Ukraine. 

The Yamal LNG project due to start in 2017 is part of Total’s strategy to invest billions of dollars in Russia to raise output. Analysts said Russia may become the company’s largest oil and gas supplier by the end of the decade as plans were being laid for shale projects and an increased stake in Novatek.