BP’s decision to divest its 20% stake in Russian state oil giant Rosneft was almost a foregone conclusion after it was accused of “fueling the invasion of Ukraine”. And Shell quickly followed suit, which is selling off its stake in the Sakhalin-2 liquefied natural gas project, he said Bloomberg.
The two companies “will write off billions of dollars,” but the moves have a bigger meaning. In just two days, the British energy giants have dumped decades of Russian investment and likely locked themselves out of the world’s largest energy exporter forever.” US titan Exxon announced plans to follow him; France’s Total is reviewing its Russia deal.
Given that the total cost of shedding Rosneft could reach $25 billion (including $11 billion in foreign exchange losses), the immediate hit to BP stock was “a modest 4%,” noted Nils Pratley in The guard. The decline might have been steeper if the board had “risked serious reputational damage” by ignoring “the UK government’s pleas”. The damage to Shell is much less, at around $3 billion.
Neither company has outlined the “mechanisms” of their exits. BP can either look for a buyer – at a sell-off price – “or accept any token amount of devalued rubles” that Rosneft is willing to offer. “The latter looks more likely.”
BP CEO Bernard Looney and his predecessor Robert Dudley have now stepped down from Rosneft’s board of directors. Welcome news, Alistair Osborne said in The times. But BP should have ended its tumultuous relationship with Russia years ago. “How much proof did it take that Putin is not a business partner?”
In time, a greener, cleaner BP could thank Ukraine for forcing its hand, George Hay said Reuters Breaking Views. It is now “losing an asset that is of increasing concern for environmental, social and governance reasons”.
https://www.theweek.co.uk/business/955959/bp-and-shell-the-significance-of-big-oil-walking-out-of-russia BP and Shell: The Significance of Big Oil’s Exit from Russia