Following government pressure, BP is set to offload its 19.75 per cent stake in Rosneft, the Russian state-owned oil firm.
BP’s move comes after Russia launched its invasion of Ukraine last week and will see the British firm end nine years of association with Rosneft, after it purchased its share in the business back in 2013.
Following talks with UK business secretary Kwasi Kwarteng last Friday, BP said in a statement that it had been left in “no doubt about the seriousness of government concerns about BP's overexposure to Russian interests”.
The statement added: “It has led the BP board to conclude, after a thorough process, that our involvement with Rosneft, a state-owned enterprise, simply cannot continue.”
Bernard Looney, BP’s chief executive, has also resigned from his position on the Rosneft board alongside Bob Dudley, another sitting director of the Russian company nominated by BP.
Looney said that Russia’s offensive in Ukraine had left him “deeply shocked and saddened” and forced BP to reconsider its relationship with Rosneft.
He said: “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.”
Russian news outlets have reported that Rosneft blamed BP’s decision on “unprecedented political pressure”, adding that a successful business relationship lasting for thirty years had been cast asunder.
BP’s chairman, Helge Lund, conceded that although the business had operated for so long in Russia and had “brilliant Russian colleagues”, last week’s move from the Kremlin was having “tragic consequences across the region” and had changed circumstances dramatically, forcing swift action.
How BP intends to jettison its stake in Rosneft is unclear at this early stage. Meanwhile, Kwarteng has said that Russia’s offensive in Ukraine must serve as a "wake-up call" for other British businesses with "commercial interests in Putin’s Russia."
BP had suggested in 2021 that sanctions against Russia could have an impact on its business activities, with Rosneft having accounted for £2 billion of its profits according to its latest annual results. Rosneft had already been affected by sanctions issued by the US and EU going back to 2014, when Russia incurred on Ukrainian territory and annexed the Crimean Peninsula.
The invasion has also seen oil prices surge, with a barrel of crude oil now costing £74, its highest price in over seven years.
Elsewhere, major Norwegian energy firm Equinor has announced that it will divest from its joint ventures in Russia, with its chief executive Anders Opedal referring to the company’s position under current circumstances as “untenable”.
Norway confirmed over the weekend that it would freeze and divest its Russian assets within its £970 billion sovereign wealth fund. The fund’s assets in Russia were worth £2.11 billion at the end of last year.
Photo by Red Dot on Unsplash
