BP has yet to sell its stake in Russian oil giant Rosneft, despite pledging to exit nine months ago.
For months, the windfall tax has been front and center in discussions about BP. But behind closed doors is another scandal simmering.
The FTSE 100 giant has yet to exit its stake in Russian oil giant Rosneft, despite pledging to exit nine months ago.
Activists and politicians attacked him last night for his ‘business as usual’ approach and his ‘shocking’ inability to abandon or sell the investment.
‘Business as usual’: FTSE 100 giant BP has yet to exit its stake in Russian oil giant Rosneft, despite pledging to exit nine months ago
BP, which has owned nearly 20 percent of the Russian state-backed energy company since 2013, vowed to cut ties in February after Ukraine was invaded.
BP representatives on the Rosneft board, chief executive Bernard Looney and former boss Bob Dudley, promptly withdrew. This was despite Looney’s saying just weeks before that the £88bn pool was “committed” to Russia.
The British firm took a one-time £18.7bn hit by writing Rosneft’s shareholding off its books, but it still owns the shares and refuses to say how and when this will change.
It’s unclear who he might sell to, as the West has sanctions against Russia, and bidders from other countries may not be willing to get involved either.
Rosneft has also mocked BP from afar, with Rosneft boss Igor Sechin goading Looney in October by saying the company should reconsider its position.
Sechin said: “Despite all the rhetoric, BP remains, I would say, a ‘shadow’ shareholder.”
He added that “I could only wholeheartedly recommend to our colleagues at BP that they remove the issue of the outflow of assets in Russia from the agenda.”
Sechin said Rosneft had booked a £600m dividend for BP in a separate Russian account, which it could still claim. BP has generated a total of £3.75bn in dividends from Rosneft since 2013.
Lord Teverson, a member of the House of Lords defense and international relations committee, said: “It is shocking that BP has not completely disassociated itself from its Russian connections.”
BP representatives on the Rosneft board, CEO Bernard Looney (pictured) and former boss Bob Dudley, retired after the invasion of Ukraine.
BP told the world that it would divest its stake in Rosneft. Instead, she is still involved in a company that finances the Russian war machine.
Financier-turned-activist Bill Browder said: ‘BP is still deeply connected. Surely there’s no appetite for leaving other than being forced by external events and embarrassing PR if they didn’t.
I guess the Russians aren’t making it easy for him. But there is nothing “shadowy” about this: they own 19.75 percent of Rosneft, whether they took the accounting hit or not.
“BP should do what it said it should do and divest from Russia, not do anything to show support for Vladimir Putin or his murderous war in Ukraine.”
Others have withdrawn from Russia, including Shell, which abandoned a major gas project called Sakhalin 2. But Morningstar analyst Allen Good said these exits were easier as companies simply had to abandon individual projects.
The saga comes as oil and gas companies have been subject to a higher windfall tax on North Sea profits. Chancellor Jeremy Hunt raised the Energy Profits Levy to 35 percent in the recent mini-budget, up from 25 percent.
It is unclear how much BP will pay. As higher commodity prices boosted revenue, it reported a staggering £7.1bn in profit in the three months to September.
BP said: ‘BP’s position has not changed. In February we announced our decision to exit Rosneft and other Russian companies. We are continuing to pursue this, we have no further comment on progress.’