BP Weighs Selling Rosneft Stake Back to Russian Explorer

(Bloomberg) -- BP Plc may seek to sell its roughly 20% stake in Rosneft PJSC back to the state-controlled Russian explorer at a huge discount, according to people familiar with the matter, after the invasion of Ukraine forced the U.K. oil major to make a rapid exit from the country.

London-listed BP considers a deal with Rosneft as the most realistic transaction because it would struggle to sell down on the market or find another buyer for the stake, given the sanctions on Russia, the people said, asking not to be identified as the matter is private. BP has already warned it could take a hit of as much as $25 billion as a result of quitting Russia, where it's been active for three decades.

A representative for BP declined to comment. Rosneft didn't immediately reply to a request for comment.

Shares of BP were up 0.2% at 8:55 a.m. Tuesday in London, giving the company a market value of about 70.9 billion pounds ($95.2 billion).

The British company is dumping the holding after coming under growing pressure from the U.K. government over the alliance in the wake of Russian President Vladimir Putin's invasion of Ukraine. Deliberations are ongoing and BP has taken no firm decisions on how to proceed with the stake sale, the people said.

BP has a longer history in Russia than many of its peers. It was one of the first oil majors to establish a presence in Russia after the collapse of the Soviet Union. While its stake in Kremlin-controlled Rosneft had a lot of symbolism, in some practical ways the alliance was shallower than it appeared.

BP didn't have direct stakes in any of Rosneft's fields nor physical access to the hydrocarbons they produced. The principal financial benefit of the stake came from a dividend, which last year was $640 million and in 2020 was zero. BP's total operational cash flow in 2021 was $23.6 billion.

The invasion of Ukraine is causing a mass exodus of companies from Russia. On Monday, Shell Plc said it will end partnerships with state-controlled Gazprom PJSC, including the Sakhalin-II liquefied natural gas facility, and its involvement in the Nord Stream 2 pipeline project. Both projects are worth about $3 billion.

Read more: Foreign Companies From Shell to Daimler Are Abandoning Russia