BP is abandoning its stake in Russian oil giant Rosneft in an abrupt and costly end to three decades of operating in the energy-rich country, marking the most significant move yet by a Western company in response to Moscow‘s invasion of Ukraine, according to Reuters.
“Rosneft accounts for around half of BP’s oil and gas reserves and a third of its production and divesting the 19.75% stake will result in charges of up to $25 billion,” the British company said, without saying how it plans to extricate itself.
The rapid retreat represents a dramatic exit for BP, the biggest foreign investor in Russia, and puts the spotlight on other Western companies with operations in the country including France’s Total Energies and Britain’s Shell, amid an escalating crisis between the West and Moscow.
It also underscores growing pressure from Western governments on their companies to curtail operations in Russia as they widen a net of economic sanctions against Moscow.
British Business Secretary Kwasi Kwarteng, who on Friday had expressed „concern” over BP’s Rosneft, welcomed the decision.
“Russia’s unprovoked invasion of Ukraine must be a wake up call for British businesses with commercial interests in (President Vladimir) Putin’s Russia,” Kwarteng said on Twitter.
Rosneft blamed BP’s decision on “unprecedented political pressure”, Russian news agencies reported, saying 30 years of successful cooperation had been ruined.
Earlier, Putin put Russia’s nuclear deterrent on high alert in the face of Western reprisals for his invasion of Ukraine, which included blocking access to the SWIFT international payment system for some Russian banks.
BP said its move and financial hit will not impact its short and long term financial targets within its strategy to shift away from oil and gas to low-carbon fuels and renewables energy.
BP held a board meeting on Friday and another on Sunday where the decision to quit Rosneft, as well as two other joint ventures BP has with Rosneft in Russia, was taken, a spokesperson for the company said.
It will take an $11 billion foreign exchange non-cash charge after the exit from Rosneft, 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 “carrying value” of Rosneft.