In a dramatic move, oil major BP has pulled the plug on one of the west’s biggest Russian investments at a cost of up to $A35 billion.
BP revealed the move on Sunday, becoming the first major western company to abandon an investment in Russia.
Three days after its involvement in Russia was questioned by the UK government, BP announced that it will abandon its 19.75% stake in Russian oil giant Rosneft in the wake of Putin’s invasion of Ukraine.
The British oil and gas giant did not say how it planned to exit its stake – via sale or just abandoning the investment.
But BP said it expects to report a material non-cash charge with its first-quarter 2022 results in May.
Rosneft accounts for around half of BP’s oil and gas reserves and a third of its production.
“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,” BP CEO Bernard Looney said in a statement issued in London.
BP said the move and financial cost will not impact its short- and long-term financial targets as part of its strategy to shift away from oil and gas to low-carbon fuels and renewable energy.
That strategy is already underway and this sale will accelerate the change.
Looney and his predecessor as BP CEO Bob Dudley will both step down from the board of Rosneft, in which BP acquired a shareholding in as part of its $US12.5 billion TNK-BP stake sale in 2013.
“This military action represents a fundamental change,” BP chair Helge Lund said in a statement.
“It has led the BP board to conclude, after a thorough process, that our involvement with Rosneft, a state-owned enterprise, simply cannot continue.”
BP received revenue from Rosneft in the form of dividends which totalled around $US640 million in 2021, roughly 3% of BP’s cash flow from operations.
Rosneft is a major supplier of oil products to the Russian military.
