* Q2 net adj profit down 12 pct to $3.15 bln
* Yamal development operations continuing, review in August
* Says impact of Russia sanctions on Yamal LNG uncertain
* Says production bottomed out in the second quarter
* Shares down as much as 3.1 pct (Adds shares, analyst comment, detail)
By Michel Rose
PARIS, July 30 (Reuters) - French oil major Total stopped buying shares in Russia's Novatek when aMalaysian airliner was shot down over Ukraine, but it is stilltoo early to gauge the impact of western sanctions againstRussia, Total said.
Total is one of the top foreign investors in Russia but nowfaces a cloud over its future there since the downing of flightMH17 on July 17 over Ukrainian territory held by pro-Russianrebels worsened the oil-rich country's relations with the Westand raised the threat of deeper sanctions.
The oil company had forecast in April that Russia wouldbecome its biggest source of oil and gas by 2020 thanks to itspartnership with Novatek and their Yamal LNG project in Siberia.
"We stopped buying shares in Novatek the day of the planeaccident, considering all the uncertainties that this eventcould lead to," Chief Financial Officer Patrick de LaChevardiere told reporters in a conference call.
"We have not stopped operations on the Yamal project at thisstage. We agreed with our partners to take stock of thesituation at the end of August," he said during a presentationof the company's second-quarter results.
Shares in Total fell as much as 3.1 percent, the biggestdecliner in an index of European oil and gas companies.Total's net adjusted profit fell to $3.15 billion, less than a$3.27 billion consensus analyst forecast cited by Bernstein.
"Results are one reason, it's true, but let's not forgetRussia, to which the group is very exposed," a Paris-based fundmanager said of the share price drop that wiped 3.7 billioneuros off the market capitalisation of France's biggest company.
Russia accounted for about 9 percent of Total's oil and gasoutput in 2013.
At the end of June, Total owned 18 percent of Novatek, whichhas seen one of its shareholders hit by U.S. sanctions. Totalbought a 12 percent stake in Russia's second-largest natural gasproducer for $4 billion in 2011 with an option to increase itsholding to 19.4 percent within three years.
De La Chevardiere said Total was not doing business withpeople on the U.S. and EU sanction lists, although he said hehad yet to see the EU's latest list of measures against Russianoil companies, banks and defence firms over Moscow's support forrebels in eastern Ukraine, unveiled late on Tuesday.
"We need more time to review the consequences of thesesanctions. If these sanctions forbid us to work there, we willbe forced to stop working, but we can't forget that Russia is abig oil country," he said.
The $27 billion Arctic Yamal peninsula liquefied natural gas(LNG) project, which plans to export 16.5 million tonnes of LNGa year, also caused some headaches at French oil services firmTechnip, which last week cut its margin target for itsonshore/offshore unit for this year and next.
Total's London-based rival BP, which gets about athird of its crude oil output from Russia, also warned furtherWestern sanctions could harm its business there and itsrelationship with Russian state oil group Rosneft.
PRODUCTION BOTTOMED OUT
In the second quarter of the year, Total's oil and gasproduction fell 10 percent compared to the same quarter a yearago, to 2.054 million barrels of oil equivalent per day (boepd).
The main reasons were heavy maintenance, the deteriorationof security in Libya and the loss of the ADCO concession in AbuDhabi, which the emirate took over in January and is expected tore-award in 2015.
"This year all the maintenance was concentrated on thesecond quarter," the CFO said, citing work in the North Sea,Nigeria and Thailand.
The same reasons affected net adjusted profit, which fell 12percent year on year, also hit by a very weak refining margin,which was less than half the level of a year ago in the threemonths to the end of June.
"We went through moments when margins were negative duringthe second quarter, we cut production to the technical minimumat some refineries because the more we produced the more we lostmoney," he said, declining to say which ones.
Margins have started to improve in the third quarter, butremain "very volatile", Total said.
"Weak set of numbers from Total and the stock will rightlybe weak today," said Bernstein analysts, who have an"outperform" rating on the stock.
"Results seem to be impacted by high levels of maintenancein both the upstream and downstream resulting in lower volumesand higher costs," they wrote.
The CFO said output had hit a bottom and was expected torise as projects such as Laggan-Tormore in the North Sea andOfon Phase 2 in Nigeria came on stream in the second half of theyear.
De La Chevardiere said he would give an update on thegroup's long-term production targets - 2.6 million boe/d in 2015and 3 million boe/d in 2017 - at an annual investor dayconference in London in September.
"But it's clear that delays at Kashagan are not good news,"he added, saying that the field's operator did not expect anyrestart of the giant Kazakh field before 2016.
The group will also unveil a new cost-cutting plan inSeptember.
De La Chevardiere also said China's Sinopec had notifiedTotal that it would not buy its Usan field in Nigeria after all,a $2.5 billion deal for a stake in the OML 138 block that theFrench group had announced in November 2012.
"I don't know their reasons. We have launched the processtwo days ago to find a bank to relaunch the sale process andfind a new buyer," he said.
Total proposed a dividend of 0.61 euro per share for thesecond quarter. Revenue was up 2 percent to $62.56 billion. (Additional reporting by Alexandre Boksenbaum-Granier andBlaise Robinson; editing by Andrew Callus and Tom Pfeiffer)