BP is underneath strain to sever its ties with Rosneft over the Russian vitality group’s central position offering gas to Vladimir Putin’s armed forces, that are engaged in a bloody assault on Ukraine.
Rosneft, through which UK-listed BP holds a 19.75 per cent stake, is likely one of the nation’s largest crude oil producers and a important provider of gas to the Russian army.
UK enterprise secretary Kwasi Kwarteng summoned Bernard Looney, chief govt of BP, to a disaster assembly on Friday as the corporate faces calls from opposition MPs to divest its stake in Rosneft.
Kwarteng is “uneasy” about BP’s involvement in Rosneft and requested Looney for a briefing on the corporate’s detailed publicity to Russia and future plans, in keeping with an individual with information of the scenario. “BP left the assembly with little doubt concerning the power of the UK authorities’s concern,” the individual mentioned.
Opposition politicians have known as for BP to divest its Rosneft stake. Labour MP Margaret Hodge, who chairs a cross-parliamentary anti-corruption group, mentioned: “It’s completely surprising that BP — a serious British company — is fuelling the invasion of Ukraine and cashing in on Putin’s maniacal aggression. I absolutely anticipate BP to do the fitting factor by swiftly divesting.”
Sir Ed Davey, chief of the Liberal Democrats, urged BP to surrender its Rosneft funding “with rapid impact”. “It will be completely unacceptable for British firms to revenue from investments in Russia after the unlawful invasion of Ukraine,” he mentioned.
BP has been criticised earlier than for its stake in Rosneft, which has been underneath US and EU sanctions since Russia annexed Ukraine in 2014. These measures had been designed to make sure Rosneft may nonetheless export oil and gasoline however stymie its future progress. Because of this, BP was nonetheless capable of report income of greater than $2.4bn from its Rosneft stake final yr and acquire $640mn in dividends, whereas Looney has continued to sit down on the Russian group’s board.
However the Russian invasion of Ukraine, which has resulted in sweeping sanctions towards Putin’s regime and led to a number of European executives resigning positions on Russian boards, has elevated scrutiny of the partnership. Kwarteng can be recognized to be uncomfortable about Looney sitting alongside Putin on the board of trustees of the Russian Geographical Society. The society is described as an establishment that preserves Russia’s “historic, cultural and ethical foundations”.
A high 20 shareholder in BP mentioned the corporate’s shareholding in Rosneft was more and more problematic however that it might wrestle to discover a purchaser even when it needed to divest its stake.
“It needs to be worrying what that Rosneft gas is getting used for. However what would BP do? They’re a minority shareholder,” the individual mentioned. “The important thing factor is that anybody ready to purchase a giant chunk in a Russian oil firm might be not somebody you’d need to promote to.”
The Russian authorities holds a 40 per cent direct stake in Rosneft, which is the most important oil refiner within the Russian Federation with 13 refineries. Its amenities processed 93mn tonnes of crude oil in 2020 and the corporate offers gas to numerous elements of the Russian state, together with the air pressure.
In December, Rosneft’s aviation gas subsidiary, Rosneft-Aero, sought a contractor to move aviation kerosene from the Yaroslavl oil refinery to a Russian army airfield at Torzhok north-west of Moscow, in keeping with a publicly out there copy of the tender doc offered to the Monetary Occasions by Supply Materials, an investigative journalism organisation.
BP and Rosneft declined to remark.
In an interview with the FT this month, Looney mentioned BP would fear about new sanctions if and once they materialised. “Let’s see what occurs. There are sanctions in the present day, we adjust to sanctions,” he mentioned.
Bob Seeley, a Tory MP and Russia hawk, mentioned that Britain’s curiosity wouldn’t be helped by forcing BP out of its authorized contract with Rosneft, the place it was a passive investor. “It appears like a doubtful tactical transfer….to cite Solar Tzu, ‘techniques earlier than technique is noise earlier than defeat’.”