British Energy Major BP Takes A $25 Billion Hit As It Exits From State-owned Russian Oil And Gas Company Rosneft

UK supermajor BP said on Sunday it is exiting its share in the state-owned Russian oil and gas company. BP has held a 19.75% stake in Rosneft since 2013. BP acquired its Rosneft shareholding in 2013 as part of the $12.5 billion sale of a stake in TNK-BP.

"BP chief executive officer Bernard Looney is resigning from the board of Rosneft with immediate effect. The other Rosneft director nominated by BP, former BP group chief executive Bob Dudley, is similarly resigning from the board." the company said in a statement.

“Russia’s attack on Ukraine is an act of aggression which is having tragic consequences across the region. bp has operated in Russia for over 30 years, working with brilliant Russian colleagues. However, this military action represents a fundamental change. It has led the bp board to conclude, after a thorough process, that our involvement with Rosneft, a state-owned enterprise, simply cannot continue." BP chair Helge Lund said:

"We can no longer support BP representatives holding a role on the Rosneft board. The Rosneft holding is no longer aligned with BP’s business and strategy and it is now the board’s decision to exit BP’s shareholding in Rosneft. The BP board believes these decisions are in the best long-term interests of all our shareholders.” he added.

The decision to completely exit the Rosneft holding will result in charges of up to $25 billion at the end of the first quarter, BP said.

BP said it will take two non-cash charges in the first quarter to reflect the change, including an USD 11 billion charge for foreign exchange losses that have accumulated since 2013.

Rosneft's partnerships with Western oil and gas companies have been stymied before.

Kwasi Kwarteng, the U.K.'s secretary of state for business and energy, said he welcomed BP's decision.

"Russia's unprovoked invasion of Ukraine must be a wake up call for British businesses with commercial interests in Putin's Russia," Kwarteng said in a tweet.

In 2011, Exxon Mobil, led at the time by future U.S. Secretary of State Rex Tillerson, signed a deal with Rosneft to potentially drill in the oil-rich Russian Arctic. But Exxon ended that partnership in 2017, citing U.S. and European sanctions against Russia.

(With inputs from PTI)