In a surprise announcement on Sunday, UK oil and gas major bp announced to withdraw its 19.75% stake in Russian state-supported oil and gas major Rosneft, in what promises to be an expensive move by the global giant.
It is estimated that this decision will cost bp approximately $25 billion in asset and foreign exchange losses. This morning, bp’s shares fell 7% in response to the announcement.
In addition to the divestment, bp CEO Bill Looney resigned with immediate effect from the Rosneft board, as did former CEO and current bp-nominated board member Bob Dudley.
Looney stated in a company press release: “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 bp’s position with Rosneft. 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. Our immediate priority is caring for our great people in the region and we will do our utmost to support them. We are also looking at how bp can support the wider humanitarian effort.”
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bp chair Helge Lund said: “Russia’s attack on Ukraine is an act of aggression which is having tragic consequences across the region. bp has operated in Russia for over 30 years, working with brilliant Russian colleagues. However, this military action represents a fundamental change. It has led the bp board to conclude, after a thorough process, that our involvement with Rosneft, a state-owned enterprise, simply cannot continue.
“The bp board believes these decisions are in the best long-term interests of all our shareholders.”
The company’s decision reportedly follows pressure from the UK government, with the Financial Times reporting last week that UK Energy Minister Kwasi Kwarteng had called on the company to explain their holdings in Rosneft. The announcement on Sunday was welcomed by both Kwarteng, and UK prime minister Boris Johnson.
According to Reuters, bp’s interests in Rosneft represent approximately half of its global oil and gas reserves, totalling 20% of company profits in 2021.
bp’s decision will end a 30-year business partnership with Rosneft.
