Shares in BP have fallen by 7% after it said it would offload its 19.75% stake in state-owned Russian oil giant Rosneft “with immediate effect” following the invasion of Ukraine
The UK-listed energy giant said on Sunday that the move would result in accounting charges of up to $25bn.
BP’s decision to offload the stake – an interest it has held for nearly a decade – is the most visible sign so far of mounting pressure on British corporate interests in Russia.
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Chief executive Bernard Looney said he was “deeply shocked and saddened” by events in Ukraine
The major omission from its statement announcing the move was how, exactly, it would dispose of a stake worth many billions of pounds in a company controlled by what has become a pariah state.
BP’s initial 7% share price fall when trading opened on Monday knocked about £5bn off its market value.
That was despite the company standing to gain from rising oil prices, which jumped back above $105 a barrel in early trading on Monday.
The company’s chief executive Bernard Looney had been summoned on Friday to be told of the UK government’s “concern” over its Rosneft shareholding, leaving him with little room for manoeuvre.
On Sunday, Mr Looney and predecessor Bob Dudley quit Rosneft’s board with immediate effect.
Mr Looney said he had “been deeply shocked and saddened by the situation unfolding in Ukraine, and my heart goes out to everyone affected”.
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BP’s shares fell on the announcement
“It has caused us to fundamentally rethink BP’s position with Rosneft,” he added.
Meanwhile, energy group Equinor – which is majority-owned by the Norwegian state – said on Monday it will start the process of divesting from its joint ventures in Russia after the invasion of Ukraine.
“In the current situation, we regard our position as untenable,” Equinor chief executive Anders Opedal said.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “The decision to exit the Rosneft stake will be an eye wateringly expensive one for BP, but the shocked board clearly felt they had no option but to pay the high price and distance the business from Russia’s aggression.
“It marks a huge shift in position for CEO Bernard Looney who just two weeks ago indicated that the Rosneft slice remained a core part of BP’s operations, and shows the extent to which corporate Britain is now under pressure to make very stark choices faced with the sharply escalating situation.
“Just how BP will manage this exit is unclear but it looks like it will be highly difficult for the company to recover anywhere near what was considered to be the full value of the stake, estimated to be $14bn at the end of 2021 and it will also strip BP of lucrative dividends which were due to pour in from the Russian business.”