BP to abandon 20% stake in Russian oil giant Rosneft

BP has decided to abandon its stake in Russia’s state-owned oil giant Rosneft in response to Moscow’s invasion of Ukraine, in a move that will have huge financial consequences for the UK firm.

Rosneft accounts for around half of BP’s oil and gas reserves and a third of its production, while BP is the biggest foreign investor in Russia. The London-listed oil major didn’t explain how it plans to divest its 19.75% stake in Rosneft, but said doing so will result in charges of up to US$25 billion.

“I have been deeply shocked and saddened by the situation unfolding in Ukraine and my heart goes out to everyone affected. It has caused us to fundamentally rethink BP’s position with Rosneft,” chief executive Bernard Looney said.

This abrupt end to three decades of BP operating in energy-rich Russia places the spotlight on rival energy firms with operations in the country, such as Total and Royal Dutch Shell, to also sever ties as part of a widening net of economic sanctions from the West.

“Russia’s unprovoked invasion of Ukraine must be a wake up call for British businesses with commercial interests in [President Vladimir] Putin’s Russia,” said the UK’s business minister Kwasi Kwarteng.

However, Hargreaves Lansdown senior investment analyst Susannah Streeter said it will be ‘highly difficult for BP to recover anywhere near what was considered to be the full value’ of Rosneft. She added that the write down is also ‘likely to limit the extent to which BP can continue to accelerate its transition towards renewables’.

@RGNonline