BP will sell its close to 20-percent stake in Russian oil giant Rosneft, the supermajor said yesterday amid growing pressure from politicians for companies with Russian operations to leave the country.
Besides the sale, BP’s chief executive Bernard Looney and former chief executive Bob Dudley will resign from Rosneft’s board of directors. The report on the news also said BP expects to book a one-time impairment charge on its Rosneft exit, to be reported in May.
In addition to the Rosneft stake, BP will also leave three joint ventures in Russia.
“Russia’s attack on Ukraine is an act of aggression which is having tragic consequences across the region,” said the company’s chairman Helge Lund.
“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.”
The Wall Street Journal reported that the sale of the Rosneft stake could cost BP up to $25 billion, of which $14 billion for the sale itself and the rest coming from foreign exchange losses.
It is, however, yet to be revealed how exactly BP will offload the Rosneft stake in the current chaos following the Russian invasion of Ukraine and the response of the West in the form of a wave of sanctions. The latest move against Moscow was the exclusion of several Russian banks from the SWIFT system.
According to the Financial Times, it could write the holding off, sell it back to the Russian state major, or look for another buyer. Whatever it does, this would increase the pressure on other energy industry majors with Russian operations to pull out. These include TotalEnergies, Shell, and Exxon, as well as commodity trading majors Vitol and Trafigura.
By Irina Slav for Oilprice.com
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The decision was most probably taken under pressure from the British government. It will cost BP an estimated $25 bn according to the Wall Street Journal. Rosneft could buy back BP’s investment at a rock-bottom price.
It will be interesting to see how this sale will impact BP’s future earnings.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London