TotalEnergies SE has completed the transfer of its 10% interest in Russia's Arctic LNG 2 project to NordLine LLC, a subsidiary of project operator Novatek, ending its direct ownership in the sanctioned LNG development, the company said in a release Aug. 27.

As part of the agreement, TotalEnergies retains rights to reimbursement of about $1.3 billion related to shareholder loans previously provided to the project, subject to applicable sanctions.

The transaction had been disclosed previously. During the company's second-quarter earnings call July 23, chief executive officer Patrick Pouyanné said Novatek had approached TotalEnergies regarding a transfer of the stake and that Russian authorities had approved the transaction in June. He said the deal was in the interests of both companies. TotalEnergies had previously recorded about $4.1 billion of impairments related to the project. 

TotalEnergies began separating from Arctic LNG 2 in early 2022 following Russia's invasion of Ukraine. In March 2022, the company said it would no longer provide capital to the project and would stop booking proved reserves associated with it, citing uncertainty related to sanctions and development of the project.

TotalEnergies in 2018 originally acquired a 10% interest in the 19.8-million tonne/year Arctic LNG 2 project on the Gydan Peninsula in West Siberia and later held an aggregated economic interest through its stake in Novatek. The project reached final investment decision in 2019.

While TotalEnergies has exited Arctic LNG 2, it retains interests in Novatek and Yamal LNG. During the July earnings call, Pouyanné said Yamal LNG continues to generate cash distributions, although sanctions have complicated transfers from Russia to Europe. He estimated that the company's LNG marketing business tied to Russian supply generates about $300-400 million/year in cash flow.