BP to exit Russian State Owned Rosneft Stake

Oil extraction

While the battlegrounds of Ukraine's cities remain the front line, the financial markets have also become a key battleground as leaders move to exclude Russia from the markets needed to finance Putin's war machine.

Over the weekend, a range of new sanctions were announced. A joint EU/US/UK/CA statement confirmed "selected" Russian banks will be expelled from SWIFT and committed to "impose restrictive measures" on the Russian Central Bank to prevent the liquidation of reserves.

Under growing pressure from the UK government, BP PLC announced over the weekend that its involvement with Russian State-Owned Rosneft "simply can not continue". The company has not clarified whether it is looking to sell its 20% stake in Rosneft or write it off in a move that could cost as much as $25 billion.

The decision ends a three-decade history of BP operating in Russia. Its initial involvement coming after the collapse of the Soviet Union has attracted additional scrutiny in recent weeks as the chairman of Rosneft, Igor Sechin is aligned with President Putin, and Rosneft supplies fuel to the Russian army.

BP's latest annual results showed Rosneft accounted for $2.7bn (£2bn) of BP's profits, about a fifth of its total. While its still very early days, if attempts to manage a sale fail and we extrapolate the loss of Rosneft's profit contribution into the BP share price, the share price of BP might fall by as much as 20%, towards £300, giving back all and more of its year to date gains. 

BP Daily Chart 28th of Feb

Source Tradingview. The figures stated areas of Feb 28, 2022. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

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