MOSCOW (MRC) -- BP is seeking to divest the near 20% stake in Russian state-oil company Rosneft it has held since 2013 in the starkest sign yet of the corporate backlash against Moscow’s invasion of Ukraine, reported Financial Times.
The UK-listed oil group said in a statement on Sunday that it would no longer report reserves, production or profits from Rosneft, and its chief executive, Bernard Looney, would resign from the Rosneft board “with immediate effect”.
BP did not specify how and when it might divest the Rosneft stake. It could write off the shareholding, sell it back to Rosneft or find another buyer. Analysts have speculated that a state-backed Chinese or Middle Eastern group might be interested in the shareholding, but it is thought that BP could struggle to find a bidder. The Qatar Investment Authority is already a major Rosneft shareholder.
BP said the changes in the accounting treatment of the Rosneft stake would lead to two “material non-cash” charges in its first-quarter results that could amount to as much as USD25bn: an USD11bn charge related to foreign exchange losses, and the difference at that time between the “fair value” and the “carrying value” of the stake, which is currently USD14bn.
The other BP-nominated director, Bob Dudley, BP’s former chief executive, will also step down from Rosneft’s board, the oil major said.
Helge Lund, BP’s chair, described Russia’s invasion of Ukraine as an “act of aggression which is having tragic consequences across the region”.
He said BP had operated in Russia for more than 30 years, “working with brilliant Russian colleagues”.
“However, this military action represents a fundamental change,” he added. The board had concluded that the company’s involvement with Rosneft “simply cannot continue”, Lund added.
BP’s move, which came as Norway’s sovereign wealth fund said it was divesting of all of its Russian assets, will increase pressure on other oil and gas majors and commodity traders with investments in Russia, such as Shell, TotalEnergies, ExxonMobil, Trafigura and Vitol.
As MRC informed before, earlier this month, during the visit of the delegation headed by the President of the Russian Federation Vladimir Putin to Beijing (PRC), negotiations were held between PJSC Rosneft Oil Company and China National Petroleum Corporation (CNPC) and the Agreement was signed on the supply of 100 million tons of oil to China through Kazakhstan for 10 years.
Crude oil will be processed at factories in northwest China to meet the country's needs for petroleum products. The Company's total supplies to China since 2005 amounted to 442 million tons of oil. Rosneft is the leading oil exporter to PRC, providing 7% of the country’s total demand in raw annually. Rosneft is also one of the leading suppliers of petroleum products to China. Since 2009, the Company has exported about 41 million tons of petroleum products.
Rosneft is the world's largest public oil company. The company accounts for about 5% of global oil production, and its proven reserves in the international category will exceed 5 billion tons of oil equivalent. The structure of Rosneft includes the Angarsk Polymer Plant and Ufaorgsintez (part of the structure of Bashneft) after the closing of the deal to purchase Bashneft on October 12, 2016. The main shareholder of Rosneft is the state-controlled Rosneftegaz (50% plus one share), and the British BP owns another 19.75%.
BP is one of the world's largest oil and gas companies, serving millions of customers every day in around 80 countries, and employing around 85,000 people. BP's business segments are Upstream (oil and gas exploration & production), and Downstream (refining & marketing). Through these activities, BP provides fuel for transportation; energy for heat and light; services for motorists; and petrochemicals products for plastics, textiles and food packaging. It has strong positions in many of the world"s hydrocarbon basins and strong market positions in key economies.
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