BP divests its stake in Rosneft

BP HAS announced that it will divest its stake in Russian state oil company Rosneft, following Russia’s attack on Ukraine.

BP has been involved in Russian oil and gas since 2003 when it set up the joint venture TNK-BP with Alfa-Access-Renova (AAR), a consortium of Russian billionaires. In 2013, Rosneft bought BP’s stake in TNK-BP for US$12.5bn along with giving BP a 19.75% share in Rosneft.

BP has been under pressure recently due to its connection to Rosneft. According to The Financial Times, Rosneft has been providing fuel to the Russian army for its invasion of Ukraine. UK Business Secretary Kwasi Kwarteng met with BP CEO Bernard Looney on Friday to discuss BP’s involvement in Rosneft.

BP then announced on Sunday that it will be divesting its stake in Rosneft, although it has not specified when this will take place or how it will be done, such as writing off the shareholding or finding another buyer. According to the BBC, Rosneft activities accounted for US$2.7bn of BP’s profits last year, around a fifth of its total.

Looney and Former BP Group Chief Executive Bob Dudley are resigning from the board of Rosneft with immediate effect. Looney is also resigning his position on the board of trustees of the Russian Geographical Society, of which Russian President Vladimir Putin is also a trustee. BP will also exit its other businesses with Rosneft, which includes an interest in three joint ventures with a value of around US$1.4bn.

Kwarteng said on Twitter: “I welcome BP’s decision to exit its shareholding in Rosneft oil company. Russia’s unprovoked invasion of Ukraine must be a wakeup call for British businesses with commercial interests in Putin’s Russia.”

Helge Lund, Chair of BP, 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.”

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. 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.”

The Financial Times reports that the move will put pressure on other oil majors and commodity traders that have Russian investments, such as Shell, TotalEnergies, and ExxonMobil. Equinor has already announced that it will stop new investments into Russia, and has started the process of exiting its Russian joint ventures. Equinor has been in a cooperation agreement with Rosneft since 2012. The Financial Times also reported that Norway is divesting its US$1.3trn sovereign wealth fund from Russian assets. The oil fund had US$3.1bn in shares in Russia at the end of 2021 and it will now freeze its shares while making plans to divest from the Russian market.