BP Will Exit 20% Stake In Russian State Oil Giant Rosneft, To Take Charge Of Up To $25 Billion


By Tyler Durden,

Following days of intense pressure from the U.K. government, UK energy giant BP Plc said it will exit its 19.75% stake in Russian oil company Rosneft, a dramatic reversal after Russia’s invasion of Ukraine as Western nations are trying to inflict as much economic pain as possible on Moscow. BP had held its stake in Rosneft since 2013. BP is Rosneft’s biggest private shareholder, according to the Russian company.

Additionally, BP chief executive officer Bernard Looney is resigning from the board of Rosneft with immediate effect. The other Rosneft director nominated by BP, former BP group chief executive Bob Dudley, is similarly resigning from the board.

BP chair 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.”

BP chief executive officer Bernard Looney added: “Like so many, 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. 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. Our immediate priority is caring for our great people in the region and we will do our utmost to support them. We are also looking at how bp can support the wider humanitarian effort.”

Bernard Looney has been a director of Rosneft as one of two BP-nominated directors since 2020. Bob Dudley has been a director of Rosneft since 2013.

According to the Rosneft website, Putin chairs the board, which includes Looney as well as heads of Russian banks and other entities that have been subject to Western sanctions. The organization supports arts and other cultural causes, according to the website, which says trustees serve voluntarily.

In December 2021 Rosneft reported that BP is the “leading British investor in the Russian economy with a total investment of $18 billion.” The figure fluctuates based on Rosneft’s value, which has been hammered by the Russia-Ukraine conflict and Western sanctions.

BP said that the resignations will require BP to change its accounting treatment of its Rosneft shareholding and, as a result, it expects to report a material non-cash charge with its first quarter 2022 results, to be reported in May. The company didn’t give details but said the carrying value of the asset stood at $14 billion.

And with BP set to spark a firesale in the already depressed shares, the next question as the FT's Chief Political Correspondents Jim Pickard notes, is "who will the buyer be and at what price."

Here, all eyes fall on Beijing which will be happy to snap up Russian assets at firesale prices.


Source : https://www.zerohedge.com/markets/bp-will-exit-20-stake-russian-state-oil-giant-rosneft

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