May 25, 2022

OverTells Gaming

Complete News World

Ukrainian-Russian War: Live news and video updates

Ukrainian-Russian War: Live news and video updates

British oil giant BP said on Sunday it would “exit” its 20 percent stake in Russia’s state-controlled oil company Rosneft. BP also said its chief executive, Bernard Looney, and his predecessor, Bob Dudley, would step down from their seats on Rosneft’s board.

BP, based in LondonIt has been operating in Russia for more than 30 years, but the invasion of Ukraine “represents a fundamental change,” the company’s chairman, Helge Lund, said in a statement on Sunday. “This has led BP’s board of directors to conclude, after a thorough process, that our involvement with Rosneft, a state-owned company, simply cannot continue.”

BP has come under pressure in recent days from both the British government and opposition lawmakers over Rosneft’s stake. Prime Minister Boris Johnson has taken a hard line against the Russian invasion ordered by President Vladimir Putin, arguing forcefully that Europe needs to quickly reduce its dependence on natural gas imports from Russia.

Under these circumstances, BP’s large acquisition of Rosneft seemed increasingly untenable. The government’s concerns were voiced during a video call between Mr Looney and the Minister for Business, Kwasi Kwarting, on Friday afternoon. BP spokesman David Nicholas said the decision was made by BP’s board of directors “after careful and due consideration”.

Mr. Kwarteng applauded the decision on Sunday. “The unprovoked Russian invasion of Ukraine should serve as a wake-up call for British companies with commercial interests in Putin’s Russia,” He said on Twitter.

It was not clear how BP would accomplish its exit from Rosneft. A BP spokesman said the company would start disposing of its stake, which BP estimated at $14 billion, at the end of last year, but it was not yet known how it would accomplish this. Rosneft shares have fallen in recent days, and the only buyers may be Russian government entities. The opportunity to buy a large slice of one of the world’s largest oil producers may also attract other state-owned companies such as those in China that are willing to bargain shopping in Russia.

BP, upon its exit from Rosneft, may spark protests from investors over the resulting loss in dividends from the Russian stake as well as market value. On the other hand, some analysts welcomed BP’s move.

“While we are surprised that this is happening so quickly, equity investors will now benefit from removing the volatility of the Russian news flow and a much stronger environmental credential,” said Oswald Clint, an analyst at Bernstein Research.

Board resignations will lead to accounting changes at BP. The company will no longer book its share of Rosneft’s profits ($2.7 billion last year), reserves (about 55% of BP’s holdings) and production (about a third).

BP received $600 million in dividends from Rosneft last year, and was expected to receive more this year due to higher oil prices.

BP also said it would write off at least $11 billion in the first quarter of 2022, but potentially much more, in connection with the Rosneft acquisition.

While BP is Russia’s most losing western oil company, it will still be a relatively large player under Mr Looney’s leadership. He was investing heavily abroad Wind and other clean energy activities, although still small compared to the company’s oil and gas.

Moving away from Rosneft corresponds to this new path. “The Rosneft stake is out of sync with BP’s long-term strategic direction,” said Biraj Borkhataria, an analyst at RBC Capital Markets, although “the move away at this time is clearly not ideal from a shareholder value perspective.”

BP’s exit from Rosneft, once accomplished, would draw at least a tentative line on BP’s long experience with Russia, which began early this century with the company investing $8 billion in a joint venture called TNK-BP with a group of Russian oligarchs headed by Michael Friedman.

After a decade of stormy relationships between partners, BP sell his share In the joint venture with Rosneft in 2013 for $12.5 billion in cash plus a 19.75 percent stake in Rosneft.

Other large Western oil companies may feel the cold On the continuation of work in Russia. French giant TotalEnergies has a stake in Russian gas producer Novatek and a stake in a large liquefied natural gas facility in the Russian Arctic. Shell owns a modest stake in a liquefied natural gas facility on Sakhalin Island in Russia’s Far East, where ExxonMobil has been producing oil for a quarter of a century in a joint venture with Rosneft.

Analysts say that Russian operations have already lost their relative importance in the portfolios of the Western oil industry. Russia may have vast amounts of oil and gas, but the appetite to invest there has been curbed by a combination of climate change concerns and sanctions imposed on Russian industry over Mr. Putin’s annexation of Crimea in 2014.

Analysts say higher oil and gas prices and the resulting higher profits may also help cover any profits that will hit companies in Russia this year.