The stocks of the British energy giant British petroleum plummeted by almost 7 per cent following the announcement of the company that it had sold selling off of its almost 20 per cent stake in the Russian oil giant Rosneft over the weekend as a reaction to the invasion of Ukraine by Russia.
About half of BP’s oil and gas reserves and one third of the total production of the company are accounted for by the state-owned Rosneft.
The two companies have been in a partnership for more than three decades and the sale of the 19.75 per cent stake owned by BP will end that decades old relationship. The sale will result in charges of up to $25 billion, BP said on Sunday.
Even though some of the losses were later recovered by BP stocks, it was still among the worst performers on Britain’s blue-chip FTSE 100 index.
BHP is also the largest foreign investor for Russia and this sudden and dramatic exit from the market now creates an expectation for other Western companies that have operations and business interests in Russia to follow suit as the war between Russia and Ukraine escalates and enters the fifth day and most Western countries directly coming out in support of Ukraine.
Currently, there are about 200 odd staff that BP has in Russia and the majority of them are local Russian residents, the company said that its latest decision to divest its stocks in its Russian partner will have no impact on financial goals for both the short and the long term. This latest decision would also not affect its strategy to shift to low-carbon fuels and renewable energy, BP reiterated.
Following the departure from Rosneft, the British energy giant will incur a non-cash foreign currency charge of $11 billion, which BP will no longer disclose in its financial statements. BP also said it expects a second non-cash charge of up to $14 billion for Rosneft’s “carrying value.”
(Adapted from Latestly.com)