“Russia’s attack on Ukraine is an act of aggression which is having tragic consequences across the region. BP has operated in Russia for over 30 years, working with brilliant Russian colleagues. However, this military action represents a fundamental change. It has led the BP board to conclude, after a thorough process, that our involvement with Rosneft, a state-owned enterprise, simply cannot continue,” BP chair Helge Lund said in a statement Sunday.
The announcement marks the end of one of the Western world’s largest ever investments in Russia, seen as so politically important that Russian President Vladimir Putin and then British Prime Minister Tony Blair personally attended a signing ceremony for a key part of the deal in 2003.
The world’s biggest computer-chip companies have started halting sales to Russia of the vital electronic components, to comply with U.S.-led sanctions. And the European Union is banning Russian flights from its airspace.
BP’s 19.75 percent stake in Rosneft made up more than half of the British company’s oil reserves.
The investment had long been politically tense, given Rosneft’s ties to the Kremlin. The oil giant is chaired by Igor Sechin, the former deputy prime minister of Russia and a Putin ally. The United States sanctioned Rosneft and Sechin in 2014, after Russia’s first invasion of Ukraine and annexation of Crimea.
It is unclear whether BP will find a buyer for its shares or simply walk away from them. But the company is already essentially erasing Rosneft from its books, saying it will no longer recognize a share of Rosneft’s net income, production or reserves.
“Russia’s unprovoked invasion of Ukraine must be a wake up call for British businesses with commercial interests in Putin’s Russia,” Secretary Kwasi Kwarteng said.
On Friday, after Russia began its invasion, Kwarteng summoned BP CEO Looney to a meeting to express his concern about the Rosneft holding, the Financial Times and other media reported.
A BP spokeswoman confirmed the meeting but said she couldn’t comment on what was discussed.
BP began building its stake in the company and its predecessors in 1997 and has invested many billions in the enterprise over the years.
In a statement, Looney said he is “deeply shocked and saddened by the situation unfolding in Ukraine.”
“It has caused us to fundamentally rethink BP’s position with Rosneft. I am convinced that the decisions we have taken as a board are not only the right thing to do, but are also in the long-term interests of BP.”
Dudley, an American who was in charge of BP’s efforts to clean up after the 2010 Deepwater Horizon oil spill in the Gulf of Mexico and then became the company’s chief executive, couldn’t immediately be reached to comment. Rosneft also couldn’t immediately be reached to comment.