BP to sell stake in Russian oil giant Rosneft after Ukraine invasion

The oil giant’s chief executive Bernard Looney is also resigning from the Rosneft board.

Pa Reporters
Sunday 27 February 2022 18:33
A BP service station in Wetherby near Leeds (Danny Lawson/PA)
A BP service station in Wetherby near Leeds (Danny Lawson/PA)

BP will sell its 14 billion dollar (£10.4 billion) stake in oil producer Rosneft, which it co-owns with the Kremlin, after facing pressure from the Government.

The oil firm’s chief executive Bernard Looney is also resigning from the Rosneft board with “immediate effect”, it said in a statement.

The move happened after Russian President Vladimir Putin attacked Ukraine last week in what BP’s chairman called an “act of aggression” with “tragic consequences”.

Business Secretary Kwasi Kwarteng held a virtual call with Mr Looney for around 20 minutes on Friday to discuss the company’s position.

Bernard Looney (Aaron Chown/PA)

BP chairman Helge Lund said: “Russia’s attack on Ukraine is an act of aggression which is having tragic consequences across the region.

“BP has operated in Russia for over 30 years, working with brilliant Russian colleagues.

“However, this military action represents a fundamental change.

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

“We can no longer support BP representatives holding a role on the Rosneft board.

“The Rosneft holding is no longer aligned with BP’s business and strategy and it is now the board’s decision to exit BP’s shareholding in Rosneft.

“The BP board believes these decisions are in the best long-term interests of all our shareholders.”

Mr Looney said: “Like so many, I have been deeply shocked and saddened by the situation unfolding in Ukraine and my heart goes out to everyone affected.

I am convinced that the decisions we have taken as a board are not only the right thing to do, but are also in the long-term interests of BP

Bernard Looney, BP chief executive

“It has caused us to fundamentally rethink BP’s position with Rosneft.

“I am convinced that the decisions we have taken as a board are not only the right thing to do, but are also in the long-term interests of BP.”

BP admitted last year that sanctions on Russia could be problematic for its business, as global leaders are lining up to impose an even more stringent economic retaliation against the Kremlin.

The company said in its annual report that “events in or relating to Russia, including trade restrictions and other sanctions, could adversely impact our income and investment in or relating to Russia”.

Mr Kwarteng said: “I welcome BP’s decision to exit its shareholding in Rosneft oil company.

“Russia’s unprovoked invasion of Ukraine must be a wake-up call for British businesses with commercial interests in Putin’s Russia.”

BP owns a 19.75% stake in the Russian oil company, while the Russian government owns around 40% of the business.

The stake was worth around 14 billion dollars on BP’s books at the end of 2021.

The business said it would reassess the value of the stake and then take that off its results when it presents figures for the first quarter of this year.

It could then try to find a buyer for the shares, or even write them off completely.

AJ Bell investment director Russ Mould said BP might be getting ahead of events, avoiding a seizure by the Russian government, and calming public anger at home.

“We’ll obviously have to find out what price they get. I guess given that they’re keen to sell, they might not necessarily get top dollar for it,” he told the PA news agency.

“But equally, proactively looking to sell is probably better than waiting for the asset to be taken off them by the Russian government in a worst case if they decide to retaliate to sanctions, or coming under public or political pressure to hold a fire sale.

“I’m sure their shareholders will be relieved and pleased perhaps to extricate themselves from a situation that could cause them some considerable reputational difficulty, even if Rosneft accounted for around a sixth of (BP’s) underlying profits last year.”

We now need all other British companies to follow suit, with immediate effect, and the Government to step up with stronger sanctions

Sir Ed Davey, Liberal Democrat leader

It is unclear who might want and be able to afford to buy the stake.

Qatar’s sovereign wealth fund already owns a nearly 19% stake in the company.

Mr Mould added: “Given that Bernard Looney’s antennae are clearly very finely attuned to the E part of ESG (environmental, social, and governance), I guess we probably shouldn’t be that surprised he’s equally attuned and responsive to the S and G issues as well.”

BP’s former chief executive Bob Dudley will also step down from Rosneft’s board, and BP will exit three joint ventures with Rosneft within Russia, which had a book value of around 1.4 billion dollars (£1 billion).

Mr Looney will give up his position on the board of the trustees of the Russian Geographical Society.

Liberal Democrat leader Sir Ed Davey said: “I welcome BP’s decision to pull out of Rosneft because of Putin’s horrifying war in Ukraine. We now need all other British companies to follow suit, with immediate effect, and the Government to step up with stronger sanctions.”

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Please enter a valid email
Please enter a valid email
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Please enter your first name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
Please enter your last name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
You must be over 18 years old to register
You must be over 18 years old to register
Opt-out-policy
You can opt-out at any time by signing in to your account to manage your preferences. Each email has a link to unsubscribe.

By clicking ‘Create my account’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in