The Daily Telegraph

BP in line for £1.2bn from Putin energy war

Power company eligible for payouts despite pledging to ditch stake in Russian-owned Rosneft

- By Rachel Millard

BP IS in line for dividends worth hundreds of millions of pounds from Russia’s oil and gas giant Rosneft even after pledging to ditch its stake in the company.

The FTSE 100 oil and gas giant has yet to sell its 19.75pc of Rosneft and so is entitled to its share of Rosneft’s 441bn rouble (£6.4bn) payout for 2021, worth roughly £1.2bn. Just before Russia’s invasion of Ukraine, BP was paid a dividend of $464m (£404m) by Rosneft to cover the first half of 2021, but is still entitled to payment for the second half of the year.

It is unclear whether it will ever get the second payment, however, as Russia hits back at sanctions imposed in the West over its war on Ukraine.

Russia initially banned companies from paying dividends to overseas shareholde­rs, and then blocked payments to companies in “unfriendly” countries, including Britain and the US.

Funds are instead put into restricted accounts, with approval from Russia needed to take the money out of the country. BP does not therefore recognise this as dividend income.

Days after Russia’s invasion of Ukraine in February, BP pledged to sell the Rosneft stake it has held since 2013 and has written it down to zero in its accounts. It has limited sale options, with Russia preventing sales of certain assets and a limited pool of buyers.

Igor Sechin, Rosneft’s chief executive, said in June that BP remained its largest private shareholde­r.

Before the invasion, BP’S chief executive Bernard Looney and former chief executive Bob Dudley both held seats on Rosneft’s board.

Both quit the seats as BP announced its plans to sell the stake in February, with Mr Looney telling staff he was “deeply shocked and saddened” by the situation in Ukraine.

BP has booked charges of $25bn on its decision to write down the investment, and no longer includes any share of Rosneft earnings in its accounts.

The stake accounted for about half of BP’S oil and gas reserves and a third of its production.

Rosneft confirmed dividend payouts yesterday as it announced a 13pc rise in profits to 432bn roubles.

Production rose 1.5pc to 4.85m barrels of oil per day.

Mr Sechin said: “In the interests of our shareholde­rs and in full compliance with the dividend policy, in June 2022 the annual general meeting approved dividends. As a result, our shareholde­rs, including BP, received over 441bn roubles as dividends for 2021.”

While many traders have been shunning Russian products, oil import bans in the EU and the UK are not set to come into force until the end of 2022.

Mr Sechin said the results were “stable” despite “adverse external factors and unlawful sanctions”.

While most Western oil majors have pledged to get out of Russia, Norway’s Equinor is the first to have done so fully, at the start of this month.

Sources told Reuters that it had sold its main assets to Rosneft for one euro, while forgoing future liabilitie­s and investment commitment­s.

BP’S rival Shell is also exiting Russia, recently walking away from its stake in the major Sakhalin-2 liquefied natural gas plant after the state took full control of the project. It says it has also stopped spot purchases of liquefied natural gas from Russia, although it still has some long-term contractua­l agreements.

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