Market: BP withdraws from Russia after the invasion of Ukraine

by Ron Bousso and Dmitry Zhdannikov

LONDON (Reuters) – BP is divesting its stake in Russian oil giant Rosneft, ending 30 years of business in Russia.

It is the most important decision taken by a Western company in response to Russia’s invasion of Ukraine.

Rosneft accounts for about half of BP’s oil and gas reserves and a third of its production. The sale of this 19.75% stake will result in costs of up to 25 billion dollars (22.4 billion euros), the British company said.

“I was deeply shocked and saddened by the situation in Ukraine and my sympathy goes out to all those affected. It has forced us to fundamentally rethink BP’s relationship with Rosneft,” said BP chief executive Bernard Looney.

The move represents a dramatic exit for BP, the largest foreign investor in Russia, and puts a spotlight on other Western companies with operations in the country, including TotalEnergies and Britain’s Shell.

Rosneft blamed BP’s decision on “unprecedented political pressure”, Russian news agencies reported.

BP announced that its decision would have no impact on its short- and long-term financial objectives.

BP held a board meeting on Friday and another on Sunday at which the decision to leave Rosneft, along with two other joint ventures BP has with Rosneft in Russia, was made, a company spokesperson said. .

The exit from Rosneft will result in a non-cash charge of $11 billion for foreign exchange transactions, which BP will no longer include in its accounts. BP said it also expects a second non-cash charge of up to $14 billion, for the “book value” of Rosneft.

BP received income from Rosneft in the form of dividends that totaled around $640 million in 2021, roughly 3% of its overall operating cash flow.

The company currently has about 200 employees in Russia, most of whom are local employees, the BP spokesman said.

(Report; French version Camille Raynaud)

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