BP is probably just getting ahead of the game. The value of this investment is likely to be predicted to plummet and need to be written off anyway. The EU will need to dramatically reduce energy dependence on Russia after this. There will no popular support and the long term strategic implications make it untenable.
More like as britain takes russian assets via sanctions, the russians will offset it by taking british assets. So all british assets in russia/ukraine are already lost just like all russian assets in britain are lost.
This is just something their PR team put together to get some good publicity. Like paying media to rename the "BP oil spill" to "Deepwater oil spill". Like branding their company as a green eco-friendly after said BP oil spill. Still one of the largest oil companies in the world, but they are green eco-friendly.
Good for them. The Italian government fought tooth and nail to get an exception for luxury goods in the EU's Russia sanctions package. So clearly Gucci and Prada are not interested in getting ahead of the game. [0]
> The EU will need to dramatically reduce energy dependence on Russia after this
This has been clear for quite some time now, but Germany chose to move in the opposite direction by shutting down its nuclear plants. As long as Russian energy remains cheap, I expect that that Central Europeans will continue to vote with their wallets after the current crisis blows over.
This benefits the US who want ship liquid gas into Europe, the US already sanctioned Germany over NordStream2 but short term this will also reduce CO2 and pollution which goes back to my post on heading for a population collapse by 2040
(https://news.ycombinator.com/item?id=30488972) yet the global population is predicted to peak by 2100 so things are being done.
UK Pension funds will be hit as they tend to invest in the "blue chip" stocks so alot of people planning on retiring might be drawn back into the workforce against their will.
The financially correct way to do it would be to wait for it to plummet first before writing it off. So no, you don't want to get "ahead of the game" in the accounting sense.
Looks like they weren't ahead of the game after all when the market opens and they're not allowed to sell i.e. they've been expropriated. Waiting for the weekend to pass in the hopes in blows over will have been a costly gambit, that stake is (was) worth a third of their market cap.
I agree they're probably getting ahead of the game, but in case they aren't just getting ahead of the game it is a move to be applauded. And really if it is them getting ahead of the game I don't think there's any 'just' to it, lots of companies would be hesitant at this stage to make the move, most managers don't have the vision to get ahead of the game - only, at best, to be where the game is currently at.
As such I have to respect them whether they are doing it as a game playing move, or a moral move.
The value of their investment will be known when they find a buyer...
I don't see too many organizations interested at the moment. Chinese would be the most likely candidates but they may also be wary and stay away for the time being. Or they can pretty much give their shares away to the Russian government or sell them to some Russian organization at a massive discount.
> There will no popular support and the long term strategic implications make it untenable
People just want cheap prices for gas, oil... We don't care too much about what happens in Ukraine, we just want to pay our bills. Nobody is going to be cold or hungry just to harm Russia. Capitalism wouldn't exist otherwise, and capitalism is just what the EU is about.
After USSR was abolished, why NATO was not abolished ? The main aim of NATO is to demolish Russia and divide it in dozens of small countries depending on USA for their survival. Second aim is to control Europe by USA. There is not one single European country which can stand up to USA. Asia is divided because of China, the worse expansionist country the world has seen, Africa is busy in tribal wars, South America is kept poor by USA and indulge in overthrowing governments which are not lackeys of USA. UK, a Pakistani colony, is using Muslims in India for further partition, this time it is hijab insurgency. In 1947, it was Jinnah, this time it is Owaisi, an Iranian migrant. Wpnder when Hindus will wake up.
Only way to dramatically reduce energy is for EU not to have babies and higher mortality rate. As long as they have more "new" people, and each accord with EU lifestyle, you need energy...lots of it. Every form of energy has their cost and limits. Oil or gas is the most accessible. Everything else will need to massively conversion. Fusion is just too far off. Nuclear you need to build a lot of plant which just provide more easy target for bombing. Solar, you need plenty of batteries as well with large land....butvthen very dependent on China cheap solar. Wind and sea waves are very limited as well. For example nuclear, electric vehicle, electric airbus, electric tankers, and so on. And also a lot of people tend to forget (most are babies, children or even teen and not born yet) Soviet at its height of power requires very little money from the west. They still can bomb EU and America back then to kingdom high. Today Russia is significantly richer with China the world factory backing. EU need to rethink its cold war NATO alliance. Just go read up during naughties, Putin try his best to join EU community. But then Obama pissed on him because refusal to kill children and women in Libya and Syria. The irony is EU people think highly of themselves by reacting a lot to Ukraine while celebrating the destruction of Libya and Syria. The correct respond is not need jerk sanctions but reseting of NATO. If you always treat people as shit, you cannot expect they treat you back like Jesus.
Ukraine crisis is only because of the swollen head of the Americans as they were expanding NATO ignoring earlier promises ..As the only super power, they underestimated the Russia..If we blame Putin, for this invasion, Americans should answer for invasions on Iraq, Sudan, Yeman, Afganistan and many others ...
It's interesting how everyone quits Russia over this invasion (which is good, I agree with), yet no one quits that much over climate change, which threatens and kills people all the time.
I wish more people would quit BP, which has done an insane amount of damage over time. Remember Deepwater Horizon [1] ? Hard to believe the company still exists.
What should they quit over climate change? The earth? Is there a specific nation like Russia people can avoid for climate change? You're comparing apples and eggs here.
People should quit BP? Because what? Exxon or Shell are so much better for the environment?
Do you know why there is so much Russia-quitting? Because there is political incentive to do so. There is nowhere near the same amount of unity and consensus among voters of democraric nations when it comes to climate change. It's not the politicians fault either. Inability to convince fellow voters (for whatever underlying reason) is what you should be blaming. It's easy to blame politicians and corporations, that way, you can blame someone and not have to do anything about it.
It's not that surprising. Some states have banned government officials from even using the term "climate change" in official communication[]0]. Society is still very much in conflict about whether or not climate change even exists, which isn't going to change as long as political speech prioritizes reactionary aggression over legitimate research.
The Ukraine conflict OTOH has now escalated to nuclear threats, which poses an imminent risk to pretty much everybody. This is why the EU is now mobilizing after initially staying out it.
Rosneft is a publicly traded company. When you "exit" a position, that usually means you sell the shares onto the market. Public shares are traded on a secondary market, so if they do that some other investors would be buying them. I haven't looked into this story that deeply, but I think it's unlikely that they would be striking a good deal with Rosneft to sell them directly back to the company. Rosneft may decide to buy the shares back from the market itself.
Edit: looking at the BP disclosure, they've decided to make the accounting changes that show they're going to sell the stake, they'll likely be looking for a smart way to offload the shares, probably to some large buyer (not just pressing sell on some brokerage account).
Edit 2: the $25B figure isn't really that accurate. Before this all kicked off, Rosneft had a market cap of around $70B,and BP held about 20%, or $14B. The article sums BP's carrying value for the company ($14B, coincidentally I think), and an accumulated foreign exchange loss of $11B, which had already been charged to equity. The current market cap of Rosneft is about $30B,so the actual hit to BP sharebolders will be something like $8B if they could sell at current prices.
It sounds like BP will be selling their stake to another party. So, BP will receive cash from the other party in exchange for shares in Rosneft. Whether the sale is a smart move for BP ultimately depends on two things: 1) the sale price 2) the expected future cash flows from their stake if they didn't sell.
My guess is that this will be a highly negative EV trade for BP because: 1) they're unloading a huge stake which will result in a depressed share price due to supply/demand imbalance AND 2) share price is probably already undervalued due to the fearful climate.
Didn't they just said they couldn't sell it (who'd buy?) and they just taking it "off the books" and will just stop claiming the money from the dividends?
So now Rosneft gets to keep more money? They did a stock buyback for free? That'll learn'em!
Nowhere, they just abandoned the stake and gave the shares back to Rosneft. BP already paid somebody $25bn for the stake years ago and they are writing down the value of that stake to zero.
"I have been deeply shocked and saddened by the situation unfolding in Ukraine and my heart goes out to everyone affected. It has caused us to fundamentally rethink bp's position with Rosneft," BP Chief Executive Bernard Looney said.
Narrowing in on the words "fundamentally rethink": I suppose that could indicate that BP did not anticipate this series of events unfolding, and that this decision to retreat was not planned in advance?
Is it crazy to think that someone is reimbursing them for this loss, like Western governments perhaps? Or maybe its some kind of opportunity cost calculation at the behest of some ESG man behind the curtain? Not the be too conspiratorial, but I'm trying to make sense of walking away from that kind of money, assuming of course that this is complete and utter bullshit:
> "I have been deeply shocked and saddened by the situation unfolding in Ukraine and my heart goes out to everyone affected. It has caused us to fundamentally rethink bp's position with Rosneft," BP Chief Executive Bernard Looney said.
I’ve read this a few times and as far as I can tell there’s no substantive change in ownership planned. It appears to be something done entirely as a paper transaction like a journal entry.
They are going to write off the investment on the books and no longer recognize the associated pass through revenue and so on.
But as far as I can tell they aren’t going to do anything. It’s all an adjustment to financial statements.
If someone more experienced with this kind of public company jargon speak wants to come in and correct me then great but that’s sure what it seems like is happening.
I think it’s literally just an internal accounting adjustment.
My understanding that Russian Central Bank just announced capital controls, - foreigners are not able to sell any Russian securities. BP won’t be able to sell?
I think China has done similar capital controls before.
You got to salute them for this. While they'll get to write it off as a loss they still will be paying a lot for this. "Write offs" aren't cheap like a lot of the internet seems to think.
War is bad for business, or is it? There is some deep irony here.
The Russian nationalists just kicked out foreign ownership of their oil sector and they didn't even have to deprive anyone of their property rights. The foreigners gave up their stake on their own initiative.
Companies tend to write off their problem accounts (impaired assets) using external events as an excuse ("everyone is doing it mentality")
Im not suggesting they had 25B in nonperforming assets, but sometimes this is a strong motivator to do spring cleaning - and quietly make problems go away, such as bad M&A deals, etc.
I don't see how this hurts anyone except BP shareholders.
It certainly doesn't hurt the Russsians in any way I can see. It seems to me that some Russian individual or organization, perhaps the Russian government itself, will now just scoop up the stake in question on the cheap (or for free), at their expense.
[+] [-] tobyhede|4 years ago|reply
[+] [-] qiskit|4 years ago|reply
This is just something their PR team put together to get some good publicity. Like paying media to rename the "BP oil spill" to "Deepwater oil spill". Like branding their company as a green eco-friendly after said BP oil spill. Still one of the largest oil companies in the world, but they are green eco-friendly.
[+] [-] KKKKkkkk1|4 years ago|reply
[0] https://twitter.com/Barnes_Joe/status/1497194009038626842
[+] [-] huhtenberg|4 years ago|reply
https://www.bbc.com/news/business-60548382
[+] [-] aluminum96|4 years ago|reply
This has been clear for quite some time now, but Germany chose to move in the opposite direction by shutting down its nuclear plants. As long as Russian energy remains cheap, I expect that that Central Europeans will continue to vote with their wallets after the current crisis blows over.
[+] [-] yrgulation|4 years ago|reply
[+] [-] Terry_Roll|4 years ago|reply
UK Pension funds will be hit as they tend to invest in the "blue chip" stocks so alot of people planning on retiring might be drawn back into the workforce against their will.
[+] [-] TedShiller|4 years ago|reply
[+] [-] BbzzbB|4 years ago|reply
https://www.reuters.com/business/finance/russian-cbank-confi...
[+] [-] bryanrasmussen|4 years ago|reply
As such I have to respect them whether they are doing it as a game playing move, or a moral move.
[+] [-] foobiekr|4 years ago|reply
[+] [-] mytailorisrich|4 years ago|reply
I don't see too many organizations interested at the moment. Chinese would be the most likely candidates but they may also be wary and stay away for the time being. Or they can pretty much give their shares away to the Russian government or sell them to some Russian organization at a massive discount.
[+] [-] darwinwhy|4 years ago|reply
[+] [-] lwhi|4 years ago|reply
[+] [-] nickysielicki|4 years ago|reply
[+] [-] filomeno|4 years ago|reply
People just want cheap prices for gas, oil... We don't care too much about what happens in Ukraine, we just want to pay our bills. Nobody is going to be cold or hungry just to harm Russia. Capitalism wouldn't exist otherwise, and capitalism is just what the EU is about.
[+] [-] abc789654567|4 years ago|reply
[+] [-] abc789654567|4 years ago|reply
[+] [-] abc789654567|4 years ago|reply
[+] [-] jansen555|4 years ago|reply
[+] [-] abc789654567|4 years ago|reply
[+] [-] bamboozled|4 years ago|reply
I wish more people would quit BP, which has done an insane amount of damage over time. Remember Deepwater Horizon [1] ? Hard to believe the company still exists.
[1] https://en.wikipedia.org/wiki/Deepwater_Horizon_oil_spill
[+] [-] badrabbit|4 years ago|reply
People should quit BP? Because what? Exxon or Shell are so much better for the environment?
Do you know why there is so much Russia-quitting? Because there is political incentive to do so. There is nowhere near the same amount of unity and consensus among voters of democraric nations when it comes to climate change. It's not the politicians fault either. Inability to convince fellow voters (for whatever underlying reason) is what you should be blaming. It's easy to blame politicians and corporations, that way, you can blame someone and not have to do anything about it.
[+] [-] thr0wawayf00|4 years ago|reply
The Ukraine conflict OTOH has now escalated to nuclear threats, which poses an imminent risk to pretty much everybody. This is why the EU is now mobilizing after initially staying out it.
0: https://www.miamiherald.com/news/state/florida/article129837...
[+] [-] sonicggg|4 years ago|reply
[+] [-] redisman|4 years ago|reply
[+] [-] lazide|4 years ago|reply
[+] [-] dev-3892|4 years ago|reply
I'm kind of an idiot when it comes to finance, and to my uninformed eyes, this looks to me like a $25bln gain for Rosneft. Is that the case?
[+] [-] FastMonkey|4 years ago|reply
Edit: looking at the BP disclosure, they've decided to make the accounting changes that show they're going to sell the stake, they'll likely be looking for a smart way to offload the shares, probably to some large buyer (not just pressing sell on some brokerage account).
Edit 2: the $25B figure isn't really that accurate. Before this all kicked off, Rosneft had a market cap of around $70B,and BP held about 20%, or $14B. The article sums BP's carrying value for the company ($14B, coincidentally I think), and an accumulated foreign exchange loss of $11B, which had already been charged to equity. The current market cap of Rosneft is about $30B,so the actual hit to BP sharebolders will be something like $8B if they could sell at current prices.
[+] [-] fairity|4 years ago|reply
My guess is that this will be a highly negative EV trade for BP because: 1) they're unloading a huge stake which will result in a depressed share price due to supply/demand imbalance AND 2) share price is probably already undervalued due to the fearful climate.
[+] [-] Jyaif|4 years ago|reply
[+] [-] MrPatan|4 years ago|reply
So now Rosneft gets to keep more money? They did a stock buyback for free? That'll learn'em!
[+] [-] selectodude|4 years ago|reply
[+] [-] jka|4 years ago|reply
Narrowing in on the words "fundamentally rethink": I suppose that could indicate that BP did not anticipate this series of events unfolding, and that this decision to retreat was not planned in advance?
[+] [-] xanaxagoras|4 years ago|reply
> "I have been deeply shocked and saddened by the situation unfolding in Ukraine and my heart goes out to everyone affected. It has caused us to fundamentally rethink bp's position with Rosneft," BP Chief Executive Bernard Looney said.
[+] [-] CPLX|4 years ago|reply
They are going to write off the investment on the books and no longer recognize the associated pass through revenue and so on.
But as far as I can tell they aren’t going to do anything. It’s all an adjustment to financial statements.
If someone more experienced with this kind of public company jargon speak wants to come in and correct me then great but that’s sure what it seems like is happening.
I think it’s literally just an internal accounting adjustment.
[+] [-] g42gregory|4 years ago|reply
I think China has done similar capital controls before.
[+] [-] stjohnswarts|4 years ago|reply
[+] [-] chevman|4 years ago|reply
Going to be an interesting week :)
[+] [-] kristianp|4 years ago|reply
[+] [-] olliej|4 years ago|reply
"Cool"
[+] [-] narrator|4 years ago|reply
The Russian nationalists just kicked out foreign ownership of their oil sector and they didn't even have to deprive anyone of their property rights. The foreigners gave up their stake on their own initiative.
[+] [-] IG_Semmelweiss|4 years ago|reply
Companies tend to write off their problem accounts (impaired assets) using external events as an excuse ("everyone is doing it mentality")
Im not suggesting they had 25B in nonperforming assets, but sometimes this is a strong motivator to do spring cleaning - and quietly make problems go away, such as bad M&A deals, etc.
[+] [-] SMVS|4 years ago|reply
[+] [-] SMVS|4 years ago|reply
[+] [-] arbuge|4 years ago|reply
It certainly doesn't hurt the Russsians in any way I can see. It seems to me that some Russian individual or organization, perhaps the Russian government itself, will now just scoop up the stake in question on the cheap (or for free), at their expense.
[+] [-] AniseAbyss|4 years ago|reply
[+] [-] 2lkjltjl2kj|4 years ago|reply
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[+] [-] jl34tjkll|4 years ago|reply
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[+] [-] feyman_r|4 years ago|reply