Technip Energies Shares Plunge After Le Monde Report on Russian Gas Project

(Reuters) — Technip Energies shares plummeted on Thursday after French newspaper Le Monde said the oil and gas company may have failed to comply with European Union sanctions against Russia by continuing to supply equipment to a Russian gas project.

Technip Energies said in a statement after its shares fell as much as 22% that it had always respected international sanctions and its contractual obligations regarding the Arctic LNG2 project in Russia.

"Technip Energies has worked with the relevant authorities and has complied with sanctions gradually imposed by the European Union, the United States and Britain," it said.

Shares in the company, which specializes in engineering and technology for the energy industry, recovered some ground in late Paris trading to shed 13.3% by 1530 GMT, with a trader and an analyst pointing to the Le Monde story as the reason for the drop.

Le Monde said Technip Energies had supplied equipment to the Russian Arctic LNG 2 project between August and October 2022 despite EU sanctions imposed in April 2022 that prohibited the sale, supply, transfer or export of goods and technology suited for use in oil refining and liquefaction of natural gas to any entity or body in Russia.

The equipment delivered by Technip involved two modules for the construction of a liquefaction train worth around 450 million euros, Le Monde said, citing Russian customs records, maritime data and satellite images.

In its article, Le Monde quoted the company as saying it was not in breach of sanctions as the components it delivered to the project were not strategic and were not covered by the EU ban.

Arctic-2 is led by Russian firm Novatek which holds a 60% stake. Other shareholders include French energy major TotalEnergies, China's CNPC and Japan Arctic LNG - a consortium of Mitsui & Co, Ltd. 8031.T and JOGMEC - each holding 10% stake.

In July this year, Technip said it had completed its exit from the Arctic LNG 2 project during the second quarter of 2023 without any negative net financial exposure, having signed an exit framework agreement in October last year.

It had previously said Western sanctions against Russia would reduce its involvement in the project, in which the company had been involved since 2019 to supply engineering work, equipment and the construction of three natural gas liquefaction trains.

"$800 million of market cap came off, it's a very harsh response, and suggests the news scared investors out there," said the analyst, who spoke on condition of anonymity, referring to the Le Monde story.

"It looks to be up for interpretation. Nowhere in the article does it say Technip explicitly overstepped, but it says it may have," the analyst added.

Arctic LNG 2, located on the Gydan peninsula, is set to start operations this year. Before Russia's invasion of Ukraine it had been expected to reach full production capacity of almost 20 million tonnes of LNG a year in 2026.

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