U.K. oil corporation BP announced that it would immediately sell its nearly 20% stake in Russian state-owned energy firm Rosneft amid the ongoing Ukraine crisis.
BP purchased the 19.75% stake in Rosneft in 2013, according to the announcement Sunday. As part of the move, the London-based Big Oil company will also exit all other related business ventures it had with Rosneft.
“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,” BP Chairman Helge Lund said in a statement. “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.”
Lund added that BP’s board concluded that Rosneft is “no longer aligned with BP’s business and strategy.” The decision is also in the best long-term interest of shareholders, he said.
The company’s divestment from Rosneft also means CEO Bernard Looney and former CEO Bob Dudley will resign from the Russian firm’s board of directors.
“Like so many, I have been deeply shocked and saddened by the situation unfolding in Ukraine and my heart goes out to everyone affected,” Looney said in a statement. “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.”
Last week, the British government pressured BP to explain its ties to Russian energy interests in light of Russia’s full-scale military invasion of Ukraine, Bloomberg reported. Looney attended a closed-door meeting with U.K. Business and Energy Secretary Kwasi Kwarteng.
“Welcome news that BP is joining the rapidly growing list of organisations and governments isolating Russia over Putin’s brutal and miscalculated invasion of Ukraine,” British Prime Minister Boris Johnson tweeted Sunday.
But the move potentially opens the door for Chinese state-run companies to scoop up BP’s Rosneft stake, analysts and bankers said in the aftermath of the announcement, according to The Wall Street Journal. In a meeting with Chinese President Xi Jinping on Feb. 4, Russian President Vladimir Putin announced a 10-year $80 billion crude oil deal between Rosneft and the state-run China National Petroleum Corporation.
China became the world’s largest importer of crude oil in 2017.
BP’s shares dipped nearly 8% in pre-market trading Monday morning as a result of the announcement.
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