Total Would Buy Stakes in Further Arctic LNG Projects

The French energy company Total will be keen to buy stakes in all further LNG projects in Russia's far north that Novatek offers it, CEO Patrick Pouyanne said late October 9 on the sidelines of the Oil & Money conference in London. "We would like between 10% and 15% of Arctic LNG 3, 4, 5,6," he said tongue in cheek, recalling that Total already owns almost a fifth of Novatek. "There is no problem with the gas reserves there." 

Novatek CFO Mark Gyetvay had earlier told the conference that drilling at the mouth of the River Ob on the Gydan Peninsula had yielded what look like "an enormous success" and the company would end the year with much higher than expected resources, using the Russian classification system. Gyetvay also said that it was time to "stop with this unpredictability" coming out of Washington today: the world needed all the gas supplies it could get, referring to US hostility to other gas producers and export pipeline projects. 

Pouyanne declined the offer to tell the conference what Total would offer Qatar in order to become involved in the liquefaction expansion project, but that too is of interest to the company in the future: it already has a presence in the giant plant. "Good relations count, but so do offers," he said: "We do not yet know the terms of entry." 

He also said a wave of investment decisions was to come, with some 25 projects needing sanctioning over the coming few years as legacy projects decline. This would help mop up some of the capital the company had built up with the revenues from higher oil prices. "There is no problem regarding allocation of capital," he said. He dismissed worries about cost inflation as there was now spare capacity in the service industry, which he estimated was under-used by about 40%. Further, many of the companies that had needed that capacity in the past had shifted their focus from offshore to onshore US, he said. "Costs are low and will remain low for some time," he said.