For months the windfall tax has been at the center of discussions about BP. But behind closed doors another scam is unfolding.
The FTSE 100 giant has not given up its stake in Russian oil giant Rosneft despite promising to exit nine months ago.
Activists and politicians last night attacked it for its ‘business as usual’ approach and its ‘shocking’ inability to divest 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 about 20 percent of the Russian state-backed energy company since 2013, pledged to cut ties in February after the invasion of Ukraine.
BP’s representative on Rosneft’s board, Chief Executive Bernard Looney and former boss Bob Dudley quickly stood down. This was despite Looney saying weeks earlier that the £88bn conglomerate was ‘committed’ to Russia.
The British firm took a one-off hit of £18.7 billion by writing off its Rosneft shareholding from its books, but it still owns the stock and declined to say how and when it would convert.
It is unclear who it might sell to because the West has sanctions on Russia, and bidders in other countries may also be unwilling to join.
Rosneft has also taunted BP from afar, with Rosneft boss Igor Sechin exhorting Looney in October to say the company should reconsider its position.
Sechin said: ‘Despite all the rhetoric, BP remains, I would say, a ‘shadow’ shareholder.’
He said it could ‘only heartily advise our BP partners to remove the issue of exiting assets in Russia from the agenda’.
Sechin said that Rosneft had set aside £600 million in dividends for BP in a separate Russian account, which it could still claim back. BP has paid a total of £3.75 billion in dividends from Rosneft since 2013.
Lord Taverson, who sits on the International Relations and Defense Committee of the House of Lords, said: ‘It is shocking that BP has not been able to fully divest itself of its Russian ties.
BP’s representatives on Rosneft’s board – chief executive Bernard Looney (pictured) and former boss Bob Dudley – stand down after the Ukraine invasion
BP told the world it was disposing of its Rosneft interest. Instead, it is still involved in a company that funds the Russian war machine.
Financier-turned-activist Bill Brower said: ‘BP is still deeply involved. Surely there’s no appetite to leave other than being forced by external events and embarrassing PR if they don’t.
‘I can imagine the Russians are not making it easy for them. But there is nothing “shadow” about this – they own 19.75 percent of Rosneft, regardless of whether they took an accounting hit or not.
‘BP should do what they said they should do and break away from Russia, not do anything that shows support for Vladimir Putin or his murderous war in Ukraine.’
Others, including Shell, have pulled out of Russia, which has abandoned a major gas project called Sakhalin 2. But Morningstar analyst Alan Good said these exits were more straightforward because firms have only had to give up individual projects.
The saga comes as oil and gas companies are being targeted for a higher windfall tax on North Sea profits. Chancellor Jeremy Hunt increased the Energy Profits Levy from 25 per cent to 35 per cent in the recent mini-budget.
It’s unclear how much BP will pay. Higher commodity prices boosted revenues and it posted a staggering £7.1bn profit in the three months to September.
BP said: ‘BP’s position remains unchanged. In February we announced our decision to exit Rosneft and other Russian businesses. We want to continue with it, we have no further comment on the progress.
Credit: www.thisismoney.co.uk /