BP Exits Russia’s Rosneft at Cost of $25bn
British oil giant, BP, has announced the exit of its 19.75% shareholding in Russian energy firm Rosneft following the invasion of Ukraine. In a statement, BP also announced the resignation of the company’s chief executive officer Bernard Looney from the Rosneft board.
Rosneft accounts for around half of BP’s oil and gas reserves and a third of its production, divesting the stake will result in charges of up to $25 billion.
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 BPs position with Rosneft,” Looney said in a statement.
At the same time, former BP group chief executive Bob Dudley has also resigned from the board with immediate effect. BP did not elaborate on how the exit was arrived at but stated that the whole process would take up charges of up to $25 billion by the end of the first quarter.
According to Helge Lund, BP’s chair, the Russian invasion of Ukraine no longer aligns with the company’s business strategy.
“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 shareholding in Rosneft. The board believes these decisions are in the best long-term interests of all our shareholders,” said Lund.
The UK-listed oil group added that it would no longer report reserves, production, or profit from Rosneft following the exit.
Additionally, BP noted that changes in the accounting treatment of the Rosneft shareholding would lead to what the company termed as “material non-cash charge.”
However, BP notified shareholders that the company’s financial frame and distribution guidance remains unchanged.
BP’s announcement comes as more countries continue piling sanctions on Russia after the government began military action in Ukraine.
Recently, Looney was summoned by United Kingdom authorities to discuss BP’s position in Russia. Notably, the UK is among the leading countries pushing for tougher sanctions against Russia.
“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,” said Looney.
Earlier, BP had acknowledged that sanctions on Russia could be challenging for its business in the country. The company added it will continue to comply with all relevant international trade rules and sanctions.
Norway to divest sovereign fund
Also, Norway’s $1.3 trillion sovereign wealth fund, the world’s largest, will divest its Russian assets the Norwegian prime minister said on Sunday.
The fund’s Russian assets, consisting of shares in some 47 companies as well as government bonds, were worth 25 billion Norwegian crowns ($2.83 billion) at the end of 2021, down from 30 billion crowns a year earlier, the government said.
“We have decided to freeze the fund’s investments and have begun a process of selling out (of Russia),” Prime Minister Jonas Gahr Stoere told a news conference.
At the end of 2020, the last time the fund gave a breakdown of its Russian assets, it held government bonds worth 6.7 billion crowns and equities worth 23.3 billion crowns, according to Norges Bank Investment Management (NBIM).
The most valuable stake in an individual firm at the end of 2020 was in Sberbank, where it held 0.83% worth 6.0 billion crowns at the time, making the fund the fourth-largest shareholder, according to Refinitiv Eikon data.
The second and third largest stakes at the end of 2020 were in energy firms Gazprom and Lukoil.
# BP Exits Russia’s Rosneft at Cost of $25bn
Read: Russia’s Invasion Rattles Financial Markets, Assets Swing
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