BP loses $20bn on Russia exit but underlying quarterly profit rises
Energy company BP reported a $20.4 billion loss for the first quarter of the year after the hit it took from pulling out of Russia wiped out extra revenue from rising fuel prices.
The result includes adjusting items before tax of $30.8bn. BP posted an underlying profit of $6.2bn, more than double the income for the same quarter in the previous year, beating analyst expectations of $4.43bn.
Shares in the British company were up 1.5 per cent after it said its underlying profits were on the rise despite the one-off costs of ditching its 20 per cent stake in Russian oil producer Rosneft.
Under pressure to help consumers amid calls for a windfall tax on swelling fuel company revenue, BP also promised to invest up to £18bn ($22.5bn) by 2030 in upgrading Britain’s energy system.
It said it would spend $2.5bn buying back shares from investors before the end of the second quarter after its surplus cash flow rose to more than $4bn.
“Tragic events in Ukraine” overshadowed the first quarter of the year but BP’s “strategy, financial frame and expectations for shareholder distributions” remain unchanged, said chief executive Bernard Looney.
“Our decision in February to exit our shareholding in Rosneft resulted in the material non-cash charges and headline loss we reported today,” he said.
It said charges linked to pulling out of Rosneft, in which it had previously held a 19.75 per cent stake and nominated two directors to the Russian company’s board, amounted to more than $25bn.
The withdrawal was announced three days after Russia invaded Ukraine in February, with BP executives saying the largely state-owned Rosneft was no longer aligned with the British company’s business.
The move came after a wider corporate boycott of Russia amid western sanctions.
Oil and gas prices were increasing before the invasion and lifted BP’s annual profits in 2021 to their highest in eight years. Rivals including Exxon Mobil, Chevron and TotalEnergies have reported a sharp rise in revenue.
Britain’s opposition Labour Party yesterday renewed its calls for a one-off tax to ease the pain for consumers during what it calls a cost-of-living crisis.
But Cabinet minister Anne-Marie Trevelyan, speaking for the government on morning television, said BP needed its revenue to invest in green technology.
“If we strip away their profits, we will not be able to do what is the most important thing … to invest in those clean energies of the future which will also enable us to come away from our reliance on foreign energy,” she told BBC Breakfast.
BP said its investments would include more oil and gas exploration in the North Sea, as well as funding for offshore wind infrastructure and £1bn for electric vehicle charging over the next decade.
It plans to produce hydrogen fuel at two plants, one making green hydrogen through the use of renewable energy and the other producing blue hydrogen from natural gas through steam methane reforming.