BP and Equinor exit Russia after attack on Ukraine

28 February 2022

BP announced on February 27 that it will exit its 19.75% shareholding in Rosneft and that two BP-nominated directors will also resign from the Russian oil company’s board with immediate effect. In a similar move, Equinor also announced on February 28 that is has decided to stop new investments in Russia, and to start the process of exiting Equinor’s Russian Joint Ventures.

Image: BP

The announcements come after Russia attacked Ukraine on February 24 and began an invasion. BP’s Chief Executive Bernard Looney announced his resignation from the Rosneft board along with former BP Group Chief Executive Bob Dudley. BP has held a 19.5% shareholding in Rosneft since 2013 which saw the energy major have two nominated directors sit on the Rosneft board.

In a statement, BP said that as a result of the resignations of its nominated directors, it has determined that it no longer meets the criteria set out under International Financial Reporting Standards (IFRS) for having “significant influence” over Rosneft. The move to divest its shareholding will result in charges of up to $25 billion, BP said.

BP Chair Helge Lund said: “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. We can no longer support bp representatives holding a role on the Rosneft board. The Rosneft holding is no longer aligned with bp’s business and strategy and it is now the board’s decision to exit bp’s shareholding in Rosneft. The bp board believes these decisions are in the best long-term interests of all our shareholders.”

A day later on February 28, Norwegian energy major Equinor said that its Board of Directors had decided to start the process of exiting Russia. Equinor has been in Russia for over 30 years and entered a cooperation agreement with Rosneft in 2012.

“We are all deeply troubled by the invasion of Ukraine, which represents a terrible setback for the world, and we are thinking of all those who are suffering because of the military action,” Anders Opedal, President and CEO of Equinor, said in a statement. “In the current situation, we regard our position as untenable. We will now stop new investments into our Russian business, and we will start the process of exiting our joint ventures in a manner that is consistent with our values. Our top priority in this difficult situation is the safety and security of our people,” added Opedal.

At the end of 2021 Equinor had $1.2 billion in non-current assets in Russia. The company expects that the decision to start the process of exiting Joint Ventures in Russia will impact the book value of Equinor’s Russian assets and lead to impairments, it said in the statement.