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Monday, March 20, 2023

BP Offloads Stake in Rosneft, Amid Ukraine Conflict

Following Russia’s “act of aggression in Ukraine,” BP plans to sell its 19.75 percent interest in Russian state-owned oil company Rosneft.

Since Thursday’s invasion, the UK government has been pressuring the oil giant to make the move.

Since 2013, it has had a stake in the Russian firm.

Meanwhile, Equinor, the Norwegian energy behemoth, has announced that it will begin the process of selling its Russian joint ventures.

Bernard Looney, the chief executive of BP, and Bob Dudley, another BP-nominated director, have both resigned “with immediate effect” from the Rosneft board.

According to Russian news outlets, Rosneft claimed that thirty years of effective collaboration had been wrecked and blamed BP’s decision on “extraordinary political pressure.”

Mr. Looney has been a member of the Rosneft board of directors since 2020, alongside the company’s chairman, Igor Sechin, a close friend and ally of Russian President Vladimir Putin.

Mr Looney was last in Russia in October, according to the PA News agency, when he sat on a panel with Mr Putin, which he afterwards called as a “honor.”

According to an official, Business Secretary Kwasi Kwarteng visited with BP’s CEO on Friday and left him “no question about the gravity of government worries regarding BP’s overexposure to Russian interests.”

While BP has operated in Russia for more than 30 years and had “great Russian colleagues,” BP chairman Helge Lund said Russia’s aggression on Ukraine was “having devastating effects throughout the region” and signified a “fundamental change.”

“It has prompted the BP board of directors to determine, following a comprehensive review, that our partnership with Rosneft, a state-owned company, simply cannot continue.”

Mr Looney said the situation in Ukraine had “seriously surprised and upset” him, and it had led BP to reassess its relationship with Rosneft.

“I am sure that the decisions we as a board have made are not only the correct thing to do, but also in BP’s long-term interests,” he added.

“Russia’s unprovoked invasion of Ukraine must be a wake-up call for British enterprises with financial interests in Putin’s Russia,” Mr Kwarteng said.

Rosneft accounted for $2.7 billion (£2 billion) of BP’s earnings, or almost a fifth of the total, according to the company’s latest annual figures, which were released two weeks ago.

The multinational, which has its headquarters in London, admitted last year that sanctions against Russia could be problematic for its business, and the sale of the Rosneft stake comes after a series of economic sanctions against Russia were imposed, including the exclusion of several Russian banks from the Swift international payment system.

It’s too early to determine how or to whom BP’s share in Rosneft will be sold, according to the company. When it writes down foreign exchange losses that have built over the previous few years, the company will incur a $11 billion penalty, as well as another charge related to the value of its share.

Since Russia’s annexation of Crimea in 2014, the US and EU have imposed sanctions on Rosneft.

Equinor, a Norwegian energy company, became the second major European oil and gas company to declare its exodus from Russia on Monday, announcing that it will begin the process of selling its Russian joint ventures.

“We see our position as untenable in the current scenario,” Equinor CEO Anders Opedal said in a statement.

It comes after the world’s largest sovereign wealth fund, Norway’s $1.3 trillion (£970 billion) sovereign wealth fund, declared on Sunday that it will freeze and dispose its Russian assets.

“We have decided to put the fund’s investments on hold and have started the process of selling out,” stated Norwegian Prime Minister Jonas Gahr Stoere.

At the end of 2021, the fund’s Russian assets were valued $2.83 billion (£2.11 billion). It owns shares in Russian energy companies Gazprom and Lukoil and is the fourth largest stakeholder in Russian bank Sberbank.

Following Russia’s invasion of Ukraine, oil prices soared beyond $100 (£74) per barrel, reaching their highest level in more than seven years.

FedEx and UPS, two of the world’s largest delivery companies, have likewise halted all operations in and out of Russia. Packages in transit to Ukraine and Russia will be returned to their senders for no additional cost, according to United Parcel Service Inc. (UPS).

Cedric Blackwater
Cedric Blackwater
Cedric is a journalist with over a decade of experience reporting on local US news, and touching on many global topics. He is currently the lead writer for Bulletin News.

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