BP will offload its lucrative holding in Rosneft amid heavy pressure on companies to cut ties with Russia over the conflict in Ukraine.
In a filing, BP says it will exit its 19.75 percent stake in the Russian state-owned oil and gas company, which it has held since 2013.
The UK energy giant also says its two representatives on the Rosneft board, BP CEO Bernard Looney (pictured) and former CEO Bob Dudley, will resign as directors with immediate effect.
‘Russia’s attack on Ukraine is an act of aggression that is having tragic consequences across the region,’ says BP chair Helge Lund in the filing.
‘BP has operated in Russia for more than 30 years, working with brilliant Russian colleagues. But this military action represents a fundamental change.’
The move by BP will be ‘eye-wateringly expensive’ and highlights the tough decisions facing corporate leaders over their business dealings in Russia, says Susannah Streeter, senior investment and markets analyst at stockbroker Hargreaves Lansdown.
‘It marks a huge shift in position for Looney who just two weeks ago indicated that the Rosneft slice remained a core part of BP’s operations, and shows the extent to which corporate Britain is now under pressure to make very stark choices faced with the sharply escalating situation,’ she says.
Over the weekend, Western leaders significantly ramped up sanctions targeting Russian politicians and companies. The measures include forbiding business with certain banks, closing airspace to Russian commercial planes and preventing the Russian central bank from accessing overseas reserves.
In addition, Western allies are reported to be close to banning some Russian banks from the Swift payment system, which is used by financial institutions around the world to manage transactions.
BP came under pressure over the Rosneft stake last week during a call between Looney and UK business secretary Kwasi Kwarteng, according to media reports.
‘I welcome BP’s decision to exit its shareholding in Rosneft oil company,' wrote Kwarteng on his Twitter account following news of 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.'
Separately, Norwegian energy company Equinor has announced it will begin to exit its Russian joint ventures.
‘We are all deeply troubled by the invasion of Ukraine, which represents a terrible setback for the world, and we are thinking of all those who are suffering because of the military action,’ says Anders Opedal, Equinor’s president and CEO, in a statement.
Investors are also starting to sever ties with Russia. Yesterday, the Norwegian government said the country’s huge sovereign wealth fund (SWF) would divest from Russian assets, part of a series of measures targeting the country’s economic interests.
The SWF, the world’s largest, manages around $1.3 tn in assets and holds stakes in more than 9,100 public companies.