Kremlin Partnership Places BP at Risk in Russia Crisis
By Stephen Bierman and Nidaa Bakhsh Mar 25, 2014 1:34 PM ET
No business has as much at stake as BP Plc (BP/), as the crisis in the West’s relations with Russia escalates.
The British oil company, whose shares are down 6 percent since Putin deployed troops in Crimea, holds the single biggest foreign investment in Russia -- a 20 percent stake in OAO Rosneft (ROSN) it acquired last year. U.S. sanctions last week against oil-trading billionaire Gennady Timchenko showed willingness to target Russia’s most important industry and Vladimir Putin’s closest associates.
That’s a concern for BP because Rosneft links it directly to Putin’s regime: the state owns 70 percent of Russia’s largest oil producer and it’s run by Igor Sechin, a confidant of Putin for two decades. While current sanctions won’t harm BP’s ability to do business in Russia, analysts said they worry about the long-term prospects for the Rosneft investment against a background of worsening relations between the West and Moscow.
“Tight sanctions would impact BP more than peers given Russia is their second-largest contributor to earnings and production after the U.S.,” said Brian Youngberg, an analyst at Edward Jones in St. Louis. “BP’s placed a big bet on Russia and something like this shows the risk in doing so.”
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http://www.bloomberg.com/news/2014-03-25/kremlin-partnership-places-bp-at-risk-in-russia-crisis.html