BP pays charge of $11B to offload 20% stake in Russia’s Rosneft

By:
on Feb 28, 2022
  • BP has had a stake in the Russian state-owned oil giant for almost a decade
  • Rosneft accounts for a fifth of BP’s profit
  • BP chief executive Bernard Looney has resigned from the Rosneft Board of Directors

BP will offload its stake in Rosneft of just under 20% under pressure from the government, world media wrote. They have had a stake in the Russian state-owned oil giant for almost a decade. Rosneft accounts for a fifth of BP’s profit according to BP’s latest annual results.

More specifically, the Russian oil giant contributed $2.7 billion to the British company’s profits, which corresponds to about a fifth of the total. Forex losses of $11 billion have accumulated over the past several years, which BP will now pay. The value of its stake will incur an additional charge.

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BP chief execs resign

BP chief executive Bernard Looney has resigned from the Rosneft Board of Directors, effective immediately. Bob Dudley, BP-nominated director, promptly followed suit.

Rosneft reacts

Rosneft is angry over 30 years of successful cooperation being ruined due to “unprecedented political pressure”. Helge Lund, BP chairman, has lamented the invasion having tragic consequences throughout the region. BP’s chairman commented:

While BP has indeed operated in Russia for more than 30 years, the attack has changed all that.

It has led the BP board to conclude, after a thorough process, that our involvement with Rosneft, a state-owned enterprise, simply cannot continue.

What happens to the stake?

It won’t be feasible to sell the stake to someone immediately as the buyer may potentially prove inappropriate. BP decided to “divest” instead, meaning it will cut financial ties with the Russian oil company, leave the board, and stop taking a dividend.

It’s too early to say what will happen to the stake according to company officials. There are two likely scenarios, however: selling it or seizing it.

Oil passes $100, Norway’s Equinor divesting too  

Oil surged past $100 (£74) a barrel, hitting a seven-year peak. Shipping giants UPS and FedEx have also suspended operation involving Russia.

UPS announced that packages in the process of being sent to Ukraine and Russia would be returned to their senders at no extra cost if possible. Norwegian energy giant Equinor has stated it would also start distancing itself from Russian joint ventures.

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