(Montel) Technip Energies bets on LNG despite Siberia project exit

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French oil and gas services provider Technip Energies has plans to boost LNG investments in the next two years despite it exiting the Arctic LNG 2 project led by Russia’s Novatek.

“We see how important it is not to part with a controllable and flexible energy source like LNG,” CEO Arnaud Pieton told reporters in a call during a presentation of its annual results on Thursday. “We will have a revival of LNG investments in 2023 and 2024, without a doubt. It is estimated that investment decisions [from our customers] are needed for a capacity … between 50 and 100 million tonnes per year.”

Pieton added that he counts on European demand and that of China now that the country has reopened its borders after three years of Covid-19 curbs.

Technip Energies, which specialises in engineering and technology for the energy industry, signed in October an exit framework agreement to leave within the first half of 2023 Moscow-listed gas producer Novatek’s flagship Arctic LNG 2 project.

“We have no participation in the Arctic LNG 2 project. Zero,” Pieton said.

Moscow’s fuel export cuts to Europe in retaliation for Western sanctions over its invasion of Ukraine left nations scrambling to secure energy supplies for the winter. Some fired up old coal plants or boosted investments in renewables, others turned to LNG.

Asked about the impact of Technip Energies’ withdrawal from Russia, CFO Bruno Vibert said it had resulted in a reduction in the order book of a little over EUR 2bn. He also pointed to “a little less revenue” but, as the firm is not an operator in Russia, it did not have to write down any assets.

Late last year, peer TotalEnergies withdrew its directors from Novatek, which it holds 19.4%, citing “a stake that it cannot sell given the prevailing shareholders’ agreements, as it is forbidden for TotalEnergies to sell any asset to one of Novatek's main shareholders who is under sanction.”

The deconsolidation led the oil and gas giant to record a USD 4.1bn impairment at year-end 2022. Technip Energies’ full-year recurring earnings before interest and taxes (Ebit) increased nearly 5% to EUR 451.1m, bringing its net profit to EUR 320.2m, against EUR 251.4m a year earlier.

Looking ahead, the CEO said there is a need to “accelerate new projects” and to think about “2030 and beyond”, because the LNG infrastructure of the future will be low carbon: “a combination of CO2 capture and more electrification, and also modularised.”