French oil and gas company Total is in the final stage of negotiating the equivalent of $4 billion of financing with Russian banks to fund the Yamal LNG project, the company's CFO told analysts on April 27.
Total's CEO Patrick Pouyanne had expected to get the funds by the end of last year but international sanctions on Russia have hampered fundraising efforts.
"For Yamal, project financing of $4 billion equivalent is being finalized with Russian banks as we speak and significant progress has been made recently with Chinese banks for over $12 billion equivalent," CFO Patrick de La Chevardiere said.
The total investment needed for the Russian Yamal project, which is 50.1% owned by Novatek and 20% owned by Total, is estimated at $27 billion.
Both the Russian and Chinese finance deals could be signed as early as this week, de La Chevardiere told analysts. He added that the figures were in dollar equivalent and dollars won't finance the project because of the sanctions.
"For production, the target is end of 2017, that is the target given by Novatek. For commercial contracts, 95% of the LNG is already sold mainly to Asia using oil-linked formula," he said after Total reported a better than expected net profit in the first quarter of the year.
Asked about M&A opportunities in the oil and gas sector in the current price downturn, Total's finance head said prices were still too high for acquisitions to make commercial sense and the company was looking instead at assets such as reserves that it could acquire and develop.
De La Chevardiere said that Total expected to make a final investment decision (FID) on its Uganda project next year after the land-locked country said it will build a pipeline for its oil through Tanzania rather than Kenya.
George Cazenove, spokesman for Tullow Oil, which also has oil reserves in Uganda, said that the earliest the projects in Kenya and Uganda could reach a final investment decision was at least 18 months after the settling of the pipeline route.
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