For several months, the contingency tax has been at the center of discussions about BP. But behind closed doors, another scandal smolders.
The FTSE 100 giant has yet to give up its stake in Russian oil giant Rosneft, despite promising to exit nine months ago.
He was attacked by activists and politicians last night for his “business as usual” approach and his “shocking” inability to exit or sell investments.
‘Business as usual’: FTSE 100 giant BP still hasn’t given up its stake in Russian oil giant Rosneft despite promising to exit nine months ago
BP, which has owned almost 20% of the Russian state energy company since 2013, vowed to cut ties in February after invading Ukraine.
BP representatives on the Rosneft board of directors, chief executive Bernard Looney and former boss Bob Dudley, quickly resigned. This is despite Looney saying just weeks earlier that the £88bn group is “committed” to Russia.
The British firm suffered a one-time hit of £18.7bn by writing off a stake in Rosneft from its books, but it still owns the shares and refuses to say how or when that will change.
It’s unclear who it might be selling to as the West has imposed sanctions on Russia and bidders in other countries may also be reluctant to get involved.
Rosneft is also mocking BP from afar, with Rosneft CEO Igor Sechin goading Looney in October by saying the company should rethink its position.
Sechin said: “Despite all the rhetoric, BP remains, I would say, a ‘shadow’ shareholder.”
He added that he could “only heartily advise our colleagues at BP to remove the issue of exiting assets in Russia from the agenda.”
Sechin said Rosneft had transferred a £600m dividend for BP to a separate Russian account that it could still claim back. Since 2013, BP has received a total of £3.75 billion in dividends from Rosneft.
Lord Teverson, who sits on the House Foreign Relations and Defense Committee, said: “It is shocking that BP has not completely shed its ties to Russia.
BP representatives on the board of directors of Rosneft – chief executive Bernard Looney (pictured) and former boss Bob Dudley – resigned after the invasion of Ukraine.
BP has told the world that it is getting rid of its stake in Rosneft. Instead, he remains connected to a company that finances the Russian war machine.”
Financier-turned-activist Bill Browder said: “BP is still closely connected. Of course, they have no desire to leave other than to be forced by external events and a shameful publicity stunt if they didn’t.
“I can imagine that the Russians are not making it easy for them. But there is nothing “shady” in this – they own 19.75% of Rosneft, regardless of whether they suffered an accounting blow or not.
“BP should do what they said and separate from Russia, not do anything that shows support for Vladimir Putin or his bloody war in Ukraine.”
Others have left Russia, including Shell, which pulled out of a major gas project called Sakhalin II. But Morningstar analyst Allen Goode said the exit was easier as companies simply had to pull out of individual projects.
This saga began when oil and gas companies became the target of a higher windfall tax in the North Sea. Chancellor Jeremy Hunt raised the tax on energy profits to 35 percent in the recent mini-budget from 25 percent.
It is not yet clear how much BP will pay. As higher commodity prices boosted earnings, the company posted a staggering £7.1bn profit in the three months to September.
BP said: “BP’s position has not changed. In February, we announced our decision to withdraw from Rosneft and other Russian companies. We are continuing to work on this, we have no further comment on the progress.”
Credit: www.thisismoney.co.uk /