TotalEnergies SE has withdrawn its directors from PAO Novatek effective immediately and will no longer equity account for its 19.4% stake in the company, recording a $3.7-billion impairment in fourth-quarter 2022.
TotalEnergies also will no longer book reserves for its interest in Novatek, with an impact on its end-2021 reported proved reserves of 1.7 billion bbl. The life duration of TotalEnergies proved reserves, however, will remain above 11 years of production.
TotalEnergies cannot sell its stake given prevailing shareholders’ agreements and, in view of European sanctions in force since the beginning of the Russia-Ukraine war, the two directors representing TotalEnergies on Novatek’s board of directors must abstain from voting in meetings, particularly regarding financial matters.
Since the criteria for significant influence on Novatek can no longer be met, TotalEnergies will no longer equity account for its 19.4% stake in Novatek, leading to the $3.7-billion impairment.