MPs told parliament that BP should donate its Russian wartime profits to Ukraine reconstruction, or that ministers should impose a special windfall income tax on the oil giant to force it to do this.
British oil giant Royal Dutch Shell has 19.75% of Rosneft. This is one of the Kremlin’s most valuable oil assets. It signalled its intention to leave Russia nine months ago after Russia invaded Ukraine.
Although the company suffered a PS18.7bn loss by writing off its shareholding, it still holds the shares in the Russian state-controlled company.
On Wednesday, MPs representing all political parties pressed the government to allow BP to leave the country in a parliamentary debate.
Global Witness has found that a dividend Rosneft offered to BP is worth approximately PS580m. This amounts to a third of the UK’s direct aid to Ukraine in this year.
Dame Margaret Hodge (Labour MP) raised an urgent question to the Commons Wednesday. She said: “It’s utterly shameful that a large publicly-listed British company profited from the sale oil that is funding Putin’s war.
“BP must choose to donate all of its Russian dividends to Ukraine reconstruction, or the government must force them to.”
According to The Guardian, Oleg Ustenko (chief economic advisor to Volodymyr Zelenskiy the Ukrainian president), wrote last week to Bernard Looney, chief executive of BP, asking him to cut ties with Rosneft.
Hodge stated that BP’s claim it is a shareholder in BP is laughable. They should listen to Zelenskiy, the chief economic advisor and donate their wartime profits for the reconstruction of Ukraine and the victims of war.
James Cartlidge (exchequer secretary to Treasury), spoke on behalf of the government. He stated: “The government doesn’t comment on individual commercial decision and the process for divesting from Russia will prove complicated for companies that need to comply with financial sanctions.
Julian Lewis, Conservative MP, stated: “What we are looking for is a way for government to intervene to prevent private companies from drilling a hole into the bucket while we pour in water at its top.
“Is it possible to confiscate, impound or levy taxes on money raised in such an unacceptable manner?”
Cartlidge stated that assets worth PS18.4bn were frozen by the UK under its sanctions regime after Russia’s invasion in Ukraine. He stated that the government wants to see divestment, and “support companies in action”, and added: “I’m glad to look at what else can be done in these space.”
BP has yet to provide an update on its plans to sell Rosneft’s stake. Rosneft has paid out PS3.75bn in dividends over the past three years. The west has placed sanctions on Russia, and it is possible that the sale of this stake in Rosneft could prove difficult. Also, uncertainty about the regulation of Russia’s oil industry might deter potential buyers from other countries.
BP stated last week that it has not received dividends since the decision. Any payments to UK companies would be made into a “highly restricted Russian bank account” from which money cannot be transferred without Russian government approval.
Many UK companies left Russia at the beginning of the war. However, there are still a few British businesses, such as GlaxoSmithKline and Glencore, that remain.
Separately, it is believed that oil and gas companies will meet with the chancellor, Jeremy Hunt in Aberdeen, on Friday. Hunt imposed a stiffened windfall tax last month on North Sea operators and a levy of electricity generators on fossil fuel companies.