BP heading towards net-zero carbon quicker than others.

BP said it will ‘exit’ its 20% holding in Rosneft.

Rosneft accounts for half of BP’s proven oil and gas reserves and one-third of its production.

What is an ‘exit’?

Is it a sale or a complete write-down?

It takes time to sell a $20 billion stake in a stock that the world doesn’t want to touch.

Or does BP accept payment in lieu of the government nationalising Rosneft securities?

It’s believed that BP’s Rosneft holding is worth $25 billion, while there is talk of a write-down provision or hit equalling $14 billion.

This is all quite notable when you consider BP’s market cap is $91 billion.

Interestingly, BP’s stock is trading at the same price (368p) when this news was announced on February 27, 2022.

Perhaps the market doesn’t believe that they will ‘sell’ or ‘exit’ once ‘things smoothen over’?

Keep in mind that in August 2020, BP announced its desired shift to reduce its oil and gas production by 40% by 2030.

BP has said it will no longer report reserves, production or profit for Rosneft.

Has BP just met its 2030 production reduction in a foul swoop, 8 years before schedule?

This could turn out to be a cleverly opportunistic move by BP’s CEO, Bernard Looney and his team.

Other companies such as BHP are also trying to reach their decarbonisation targets with the selling or transfer of selected assets but under less drastic conditions.

March 18, 2022

by Rob Zdravevski

rob@karriasset.com.au