Energy Majors Exiting Russian Interests

Following recent developments in the Russia-Ukraine conflict, energy majors BP and Equinor have revealed that they are exiting Russian interests.

The board of BP announced Sunday that the company will exit its 19.75 percent shareholding in Rosneft, which it has held since 2013. 

Additionally, BP revealed that its 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 also resigning from the board, BP outlined. Looney had been a director of Rosneft since 2020, while Dudley had been a director since 2013.

BP noted that the resignations will require BP to change its accounting treatment of its Rosneft shareholding and, as a result, BP said it expects to report a material non-cash charge with its first quarter 2022 results, to be reported in May. 

“Russia’s attack on Ukraine is an act of aggression which is having tragic consequences across the region,” BP Chair Helge Lund said in a company statement.

“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,” he added in the statement.

“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,” Lund went on to say. 

Commenting on the development, Looney said, “like so many, I have been deeply shocked and saddened by the situation unfolding in Ukraine and my heart goes out to everyone affected”.

“It has caused us to fundamentally rethink BP’s position with Rosneft. I am convinced that the decisions we have taken as a board are not only the right thing to do, but are also in the long-term interests of BP,” he added.

“Our immediate priority is caring for our great people in the region and we will do our utmost to support them. We are also looking at how BP can support the wider humanitarian effort,” Looney continued.

In a statement posted on his Twitter page, the UK’s business and energy secretary, Kwasi Kwarteng, said, “I welcome BP’s decision to exit its shareholding in Rosneft oil company”.

“Russia’s unprovoked invasion of Ukraine must be a wake up call for British businesses with commercial interests in Putin’s Russia,” Kwarteng added in the statement.

I welcome BP’s decision to exit its shareholding in Rosneft oil company.

Russia’s unprovoked invasion of Ukraine must be a wake up call for British businesses with commercial interests in Putin’s Russia.

— Kwasi Kwarteng (@KwasiKwarteng) February 27, 2022

At the time of writing, Rosneft’s website was down.

Terrible Setback for the World

Equinor’s board of directors announced Monday that it has decided to stop new investments into Russia and start the process of exiting Equinor’s Russian joint ventures.

As of the end of 2021, Equinor had $1.2 billion in non-current assets in Russia. The company said it expects the decision to start the process of exiting joint ventures in Russia will impact the book value of Equinor’s Russian assets and lead to impairments.

Equinor, which has been in Russia for over 30 years and entered a cooperation agreement with Rosneft in 2012, said it will present a commitment to contribute funding to the humanitarian effort in Ukraine early this week.

“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,” Anders Opedal, the president and CEO of Equinor, said in a company statement.

“In the current situation, we regard our position as untenable. We will now stop new investments into our Russian business, and we will start the process of exiting our joint ventures in a manner that is consistent with our values. Our top priority in this difficult situation is the safety and security of our people,” Opedal added in the statement.

“We have employees from both Ukraine and Russia, and we are proud of how our people from different backgrounds and nationalities collaborate – with mutual respect, as one team in Equinor,” the Equinor president and CEO continued.

To contact the author, email andreas.exarheas@rigzone.com