British Energy Giant BP Reconsiders Position in Russian Owned Rosneft

BP stated on Sunday that it would sell its 19.75 percent interest in Rosneft, a Russian-controlled oil business.

BP did not say how or when it would sell its stake in Rosneft. It might write off the stock, sell it back to Rosneft, or sell it to someone else. Analysts have speculated that a state-backed Chinese or Middle Eastern company would be interested in buying the stake, but BP is expected to have difficulty finding a buyer. The Qatar Investment Authority already owns a significant portion of Rosneft.

The company also announced that it would no longer declare Rosneft reserves, production, or earnings, and that its CEO, Bernard Looney, would resign from the company's board of directors "with immediate effect."

Since 2020, Looney has been on the board of Rosneft as one of two BP-nominated directors. According to the corporation, Dudley had been a director since 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, which had previously described itself as "one of Russia's largest foreign investors," said the changes would result in a "material" charge in the company's first-quarter results. It stated that as a result of the accounting adjustments, its operational profit in 2025 will be nearly $2 billion lower than expected. The energy giant has been doing business in Russia for almost three decades, but the Russian invasion of Ukraine has caused the it to reconsider its position.

According to The Wall Street Journal, BP has been under increasing pressure from the British government to sell its ownership in the corporation. British officials are reportedly accusing Rosneft of fueling the Kremlin's drive into Ukraine.

Kwasi Kwarteng, the UK's business secretary, said on Twitter that he welcomed BP's decision after meeting with the corporation last week.

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

According to the Journal, Rosneft was responsible for nearly a third of BP's oil and gas production.

Other oil and gas companies and commodities traders with stakes in Russia-controlled companies including Shell, TotalEnergies, ExxonMobil, Trafigura, and Vitol, may face increased pressure as a result of BP's move, which came as Norway's public wealth fund announced it was divesting of all of its Russian assets.

BP has been criticized in the past for holding a 19.75% interest in Rosneft, which has been subject to US and EU sanctions since Russia took Crimea in 2014. However, the Russian invasion of Ukraine, which resulted in broad sanctions against Putin's leadership, has raised questions about the partnership.

BP said it expects to announce a large non-cash charge with its first-quarter 2022 results in May as a result of disposing its investment.