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French engineering group Technip Energies has launched a staunch defence of the way it pulled back from a major liquefied natural gas project in Russia last year, rejecting allegations in a media report that it had potentially breached European sanctions in the process. 

Arnaud Pieton, Technip’s chief executive, told analysts on Thursday the group was not under “any form of investigation” after Le Monde newspaper raised questions over some of its deliveries to the Russian Arctic LNG 2 project. That caused the group’s shares to drop 13 per cent on October 19, shaving €550mn off its market value. 

“We are very confident that we have at all times fully complied with sanctions,” Pieton said after the group published better than expected third-quarter revenues. He said the company had “at all times worked with the relevant authorities” and had been obliged to carry out activities not covered by sanctions while it was trying to exit Russia, referring to some of the deliveries it honoured.

Technip shares rose 6 per cent to €21.82 by Thursday afternoon after the group’s comments and its earnings. They are still trading slightly below the nearly €23 per share they were at before the investigation was published, however. 

The case has highlighted some of the pitfalls still faced by companies trying to extricate themselves from Russia following the invasion of Ukraine last year, particularly in an oil and gas sector that has been hit by US and European sanctions, but which is still allowed to export Russian liquefied natural gas to Europe. 

Technip reported revenue of €4.4bn in the first nine months of 2023, down from €4.8bn a year earlier largely as it discontinued all of its Russian activities, but ahead of analysts’ estimates. Net profit was €207mn, down from €222.9mn over the same period last year.

“Despite a strong set of results above consensus, they’re still a good 5 per cent below where they were trading before [the story] went out. The damage is still done on the share price and market cap,” said Victoria McCulloch, an energy research analyst at RBC Capital Markets. 

In May 2022, EU sanctions came into force banning the export to Russia of materials or technologies used in LNG projects. Backed by independent Russia gas group Novatek, the Arctic LNG 2 project in western Siberia was a major $7.6bn contract for Technip to provide engineering and construction services awarded in 2019. 

The French group said it rushed to demobilise its workers on the project to comply with EU sanctions by the imposed deadline and completed an “orderly exit” from the project in the second quarter of 2023. In its report, Le Monde questioned the delivery of two modules or parts for the project in July 2022.

Technip has previously stated that the modules were not covered by specific sanctions as they were more generic parts not related to the gas liquefaction process, and had been assembled before the curbs kicked in. 

It has since completely discontinued its Russian activities, and foregone roughly €2bn in payments from the Arctic LNG 2 contract.



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