BP shareholders get $8bn of profits from sale of Russian stake


Shares in BP leapt today after the FTSE 100 oil giant unveiled plans to return $8bn (£5.3bn) to investors, a day after completing the sale of its troubled TNK-BP Russian joint venture.

BP will make the payment to its investors through a series of share buybacks that are intended to recompense them for the profits it will lose as a result of the TNK-BP sale.

BP chief executive Bob Dudley estimates that the buybacks will be equivalent to at least the next six years’ worth of dividends the oil company would have received had it held on to its 50% stake in TNK-BP.

The company is in a position to finance the buyback from the proceeds of its $26bn cash-and-shares sale of the Russian stake to Rosneft, after the deal was formally completed yesterday.

Santander analyst Jason Kenney said: “It’s good news that they’re returning that amount of cash, probably $2bn to $2.5bn more than what was anticipated.”

Shares in BP jumped 12.16p, or 3%, to 461.56p, as the buyback announcement formally called time on BP’s unhappy — though still profitable — involvement in the joint venture. Since it was set up in 2003, the venture has paid BP about $20bn in dividends, representing about a fifth of the group’s profits.

However, the partnership with AAR — the consortium of billionaire investors that owns the other half —  has frequently been fraught,  with hostilities escalating in 2011 following BP’s attempted tie-up with Rosneft.

The AAR consortium successfully blocked that tie-up in court on the basis that the TNK-BP shareholder agreement entitled them to first refusal on any opportunities within Russia.

The relationship between the two partners quickly became untenable and in October both agreed to sell their half of the joint venture to the state-controlled Rosneft.

BP’s cash-and-shares deal leaves it with a 19.75% stake in Rosneft, making it the second-biggest shareholder after the Kremlin and paving the way for the pair to work together inside and outside of Russia.

Dudley said: “BP is moving on to the next phase of its business in Russia… We look forward now to working closely with Rosneft and together developing opportunities to create value for both companies.”

The buyback should go some way to appeasing BP’s investors who have seen their dividends — and their shares — tumble following the Gulf of Mexico oil spill in 2010.

Before that disaster, BP’s annual payout for 2009 came in at 36.4p a share and accounted for £1 in every £6 of the dividends paid to UK pension funds. Initially the dividend was suspended following the Gulf of Mexico accident, but it has since been reinstated and has risen steadily. However, at 16.67p in 2012, it is still less than half of its peak value.

Teeth should be brushed twice a day to prevent tooth decay
Bryan Cranston as Walter White, in the acclaimed series 'Breaking Bad'
footballChelsea 6 Maribor 0: Blues warm up for Premier League showdown with stroll in Champions League - but Mourinho is short of strikers
Those who were encouraged to walk in a happy manner remembered less negative words
Arts and Entertainment
Princess Olga in 'You Can't Get the Staff'
tvReview: The anachronistic aristocrats, it seemed, were just happy to have some attention
Renee Zellweger as Bridget Jones
ebooksAn unforgettable anthology of contemporary reportage
Life and Style

Board creates magnetic field to achieve lift

There have been various incidents of social media users inadvertently flouting the law

Life and Style
Stack ‘em high?: quantity doesn’t always trump quality, as Friends of the Earth can testify
techThe proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Bourgogne wine maker Laboure-Roi vice president Thibault Garin (L) offers the company's 2013 Beaujolais Nouveau wine to the guest in the wine spa at the Hakone Yunessun spa resort facilities in Hakone town, Kanagawa prefecture, some 100-kilometre west of Tokyo
CSKA Moscow celebrate after equalising with a late penalty
footballCSKA Moscow 2 Manchester City 2: Premier League champions let two goal lead slip in Russia
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Helpdesk Analyst

£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...

Senior Helpdesk Analyst / Service Desk Co-ordinator

£27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...

Senior Pensions Administrator

£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...

Corporate Actions Administrator / Operations Administrator

£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...

Day In a Page

Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Ed Sheeran hits back after being labelled too boring to headline festivals

'You need me, I don’t need you'

Ed Sheeran hits back after being labelled too boring to headline festivals
How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

How to Get Away with Murder

Shonda Rhimes reinvents the legal drama
A cup of tea is every worker's right

Hard to swallow

Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
Which animals are nearly extinct?

Which animals are nearly extinct?

Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
12 best children's shoes

Perfect for leaf-kicking: 12 best children's shoes

Find footwear perfect to keep kids' feet protected this autumn
Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

Arsenal’s ray of light ready to shine again

Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

Moyes’ show of sensitivity thrown back in his face... by Ferguson

Manchester United legend tramples on successor who resisted criticising his inheritance
Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

Lonely Planet’s Best in Travel 2015

UK city beats Vienna, Paris and New York to be ranked seventh in world’s best tourist destinations - but it's not London