BP ends Russia with up to $ 25 billion hits after Ukraine’s invasion

London — BP has abandoned its stake in Russian oil giant Rosneft at the sudden and costly end of its 30-year operation in an energy-rich country, so far by Western companies in response to Moscow’s invasion of Ukraine. It shows the most important movements.

Rosneft accounts for about half of BP’s oil and gas reserves, one-third of its production, and selling a 19.75% stake costs up to $ 25 billion, the UK said. The company said.

“I am deeply shocked and saddened by the situation in Ukraine, and my heart is directed at everyone affected. This fundamentally BP’s position on Rosneft. I was able to rethink it, “said Bernard Looney, BP’s Chief Executive Officer.

The rapid recession represents a dramatic exit for BP, Russia’s largest foreign investor, with operations in France such as TotalEnergies and Britain’s Shell as the crisis between the West and Moscow intensifies. We are shining a spotlight on other Western companies that are developing.

It also emphasizes increasing pressure from the Western government on their company to shrink its business in Russia as they expand the net of economic sanctions on Moscow.

British business secretary Kwasi Kwaten, who expressed “concerns” to BP’s Rosneft on Friday, welcomed the decision.

“Russia’s provocative invasion of Ukraine must be a call to President Putin to awaken British companies that bring commercial benefits to Russia,” Kwasi Kwaten said on Twitter.

Rosneft has denounced BP’s decision on “unprecedented political pressure,” a Russian news agency reported, saying that 30 years of successful cooperation had been ruined.

Susannah Streeter, senior investment analyst at Hargreaves Landsdown, a UK retail stockbroker, said Rosneft’s “recovery near what is considered full value” is “very difficult” for BP. rice field.

Rooney said last week that BP is sticking to Russia’s business and will comply with Western sanctions on Moscow.

Previously, Putin was very wary of Russia’s nuclear deterrence in the face of western retaliation for invasion of Ukraine, including blocking access to the SWIFT international payment system of some Russian banks. I did.

The prime minister said Norway’s $ 1.3 trillion sovereign wealth fund, the world’s largest, will sell Russia’s assets after the invasion of Ukraine.

Dividend blow

BP said its move and financial impact will not affect short-term and long-term financial goals in its strategy to move from oil and gas to low-carbon fuels and renewables.

However, a write-down of this scale is likely to limit the extent to which BP can continue to accelerate its transition to renewable energy, said Streater of Hargreaves Slan’s Down.

Looney and his predecessor, Bob Dudley, will resign from Rosneft’s board of directors, which BP acquired in 2013 as part of a $ 12.5 billion sale of TNK-BP shares.

A spokeswoman for BP said it had a board meeting on Friday and Sunday, with a decision to quit Rosneft and a joint venture with Russia’s Rosneft.

After withdrawing from Rosneft, there will be $ 11 billion in foreign exchange non-cash costs, which BP will no longer include in the account. BP also said it expects a second non-cash expense of up to $ 14 billion against Rosneft’s “book value.”

BP received revenue in the form of dividends from Rosneft. This totaled approximately $ 640 million in 2021, accounting for approximately 3% of total operating cash flow.

According to a BP spokeswoman, the company currently has about 200 employees in Russia, most of them local staff.

Many other western energy companies operate in Russia, including TotalEnergies, which holds a 19.4% stake in Novatek and a 20% stake in the Yamal LNG project.

“In the current environment, European and American companies with assets in Russia must be considering a similar move,” Eurasia Group analyst Henning Groystein told Reuters.

By Ron Bousso and Dmitry Zhdannikov