Skip to main content

BP Chief Executive Bernard Looney in February, 2020. In announcing the impending exit from Rosneft on Sunday, Mr. Looney said the decision was “not only the right thing to do,” but was in the best long-term interests of BP.TOBY MELVILLE/Reuters

Energy giant BP announced on Sunday that it will drop its one-fifth share in Russian oil company Rosneft, saying it’s the right thing to do, fiscally and morally, after the country invaded Ukraine last week.

The move opens the door for other private companies to hit Russia with quasi-sanctions for the attack, as international pressure on the Kremlin mounts.

BP has held 19.75 per cent of Rosneft’s shares since 2013. The London-based company’s chief executive, Bernard Looney – who resigned from the Rosneft board Sunday – said Moscow’s aggression toward Ukraine had caused BP to fundamentally rethink its position on the investment.

Rosneft accounts for around 5 per cent of the world’s oil production. Until BP succeeds in selling its stake, it will remain the Russian company’s largest foreign investor. Britain’s business secretary, Kwasi Kwarteng, last week held talks with Mr. Looney to express concern over BP’s large interests in Russia.

Western powers hit Russian central bank with sanctions

Ottawa looks for ways to block Russian broadcaster RT

As Russia invades Ukraine, energy security has suddenly become as important as defense policy

In announcing the impending exit from Rosneft on Sunday, Mr. Looney said the decision was “not only the right thing to do,” but was in the best long-term interests of BP.

“Our immediate priority is caring for our great people in the region and we will do our utmost to support them,” he said.

BP spokesperson David Nicholas told The Globe and Mail Sunday evening that while selling the company’s interest in Rosneft was a complex and serious discussion for the board, “it was a clear decision, and it wasn’t a difficult decision.”

BP’s books will take a significant hit as a result of the move. Mr. Nicholas said that will include an $11-billion charge, in addition to however much value Rosneft sheds by the end of the quarter. Its current value on BP’s books stands at $14-billion, he said.

It remains to be seen who will pick up BP’s chunk of the company.

Daria Melnik, an oil analyst with Rystad Energy, said in an e-mail that China and India are the main candidates, and that they would likely be offered stakes in the Russian company for “a huge discount ... due to very high geopolitical risks.”

Ms. Melnik said the other option would be for Rosneft or the Russian government to buy out BP’s shares.

Mr. Nicholas said there is no timeline on a deal.

Jeremy McCrea, the director of energy research with Raymond James, said BP’s move sets an unusual precedent.

“The fact that BP is doing this just within the first few days [after Russia’s invasion] indicates maybe there’s going to be some more companies following suit,” he said, particularly if Canada or other countries are hesitant to hit Russia hard with sanctions.

And that could make things tough for a country that uses a lot of technology and equipment developed in North America, he said.

“It’s an interesting dynamic that I don’t think that we’ve seen with historical wars, but it’s going to be interesting to see how this actually plays out,” he said.

Tens of thousands of people across Europe marched in protest against Russia’s invasion on Sunday.

In Berlin, about 100,000 protesters descended on the Brandenburg Gate, not far from the Russian embassy, many draped in blue and gold flags and carrying signs that expressed support for Ukraine and decried Russian President Vladimir Putin’s actions.

“The last time there was a war on European soil was during the Second World War,” protester Lioba Donner told The Globe. “It just feels like my history book is coming alive, and this is not a good feeling.”

Another protester, Veronika Pfender, said she was born in Ukraine and has lived in Germany for the past seven years. Holding a sign saying “Putin hands off Ukraine,” she said attending the protest was “a way of showing solidarity, of showing the anger. Because it’s not okay, what’s going on.”

With a report from Reuters

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.