BP will sell its 19.75% share in Russian state-owned Russian oil company Rosneft following Russia’s “act in aggression in Ukraine”.
After Thursday’s invasion, the UK government had put pressure on the oil giant to move. Since 2013, it has been holding the Russian shareholding.
Bernard Looney, chief executive of BP, has resigned with immediate effect from Rosneft’s board. Bob Dudley was also nominated by BP.
Rosneft chairman Igor Sechin and Mr Looney, both close friends and allies of Russian President Vladimir Putin, have been members of the board since 2020.
According to the PA Newsagency, Mr Looney was in Russia as recently as October. He appeared on a panel alongside Mr Putin. This was later described by Mr Looney as a “privilege”.
Business Secretary Kwasi Kwarteng met with the BP boss Friday and left him “no doubt” about the seriousness of government concerns over BP’s exposure to Russian interests. According to an official
Helge Lund, chairman of BP, stated that while BP has been operating in Russia for over 30 years and has “brilliant Russian counterparts”, Russia’s attack against Ukraine was “having tragic results across the region” as a fundamental shift.
“It led to the BP board concluding, after a thorough procedure, that our involvement in Rosneft (a state-owned enterprise) simply cannot continue.”
BP’s stake in Russian state oil giant Rosneft was always a source of concern; it was made untenable this week by heavy political pressure.
Igor Sechin is President Putin’s close ally and Rosneft chairman. Rosneft provides fuel for the Russian army.
It was impossible to sell the stake immediately to an inappropriate buyer.
The company decided to “divest”, which means it will cut all financial ties with Rosneft and stop taking a dividend. It will also step back from its two seats on the board.
Officials at the company claim that it is too early to know how this stake will be sold. This will be a major financial hit for BP, but it is a price they had to pay.
Looney stated that he was “deeply shocked” and “saddened” by the current situation in Ukraine. It had forced BP to fundamentally rethink its position with Rosneft.
He stated, “I am certain that the decisions we made as a board were not only the right things to do but also in the long-term interest of BP.”
Kwarteng praised the move and said: “Russia’s unprovoked invasion of Ukraine must be a wake-up call for British businesses that have commercial interests in Putin’s Russia.”
Rosneft accounted for $2.7bn (£2bn), or about a fifth, of BP’s annual profits as of the latest BP results published two weeks ago.
The London-based multinational admitted last year that Russia’s sanctions could pose a problem for its business. This is after several western countries imposed economic sanctions against Russia, including the exclusion of many banks from the Swift international payments system.
After Russia invaded Ukraine, oil prices soared to $100 per barrel
