‘BP can improve Russian, West relations’

BP is talking to politicians across the world seeking to calm shareholders over BP exposure to Russia.

BP Chief Executive Bob Dudley. Picture: AFP.

LONDON - BP can help enhance relations between Russia and the West and is talking to politicians across the world, its executives said on Thursday as they sought to calm shareholders' concerns over the oil major's large exposure to Russia.

Russia and the West are in a stand-off over Ukraine that is reminiscent of the Cold War. In the last few days, tensions have risen in the mainly Russian-speaking eastern part of Ukraine.

Britain's BP is one of the most exposed oil majors to Russia through its stake of just under 20 percent in the Kremlin's state oil champion Rosneft the world's largest listed oil producer by output volumes.

"We will seek to pursue our business activities mindful that the mutual dependency between Russia as an energy supplier and Europe as an energy consumer has been an important source of security and engagement for both parties for many decades," Chief Executive Bob Dudley said.

"That has got to continue and I think we play an important role as a bridge," he told the annual shareholders' meeting.

The United States and European Union have imposed visa bans and asset freezes against Russian and Ukrainian individuals in response to Moscow's annexation of Crimea.

They have said they are willing, if necessary, to levy a further round of sanctions aimed at key sectors of the Russian economy such as energy, banking and mining.

On Thursday, questions about Russia dominated the shareholders' meeting overshadowing other usually topical issues such as executives' pay or the ongoing settlement with businesses and individuals suing over the massive 2010 Gulf of Mexico oil spill.

Two shareholders asked Dudley what he would do if Russian President Vladimir Putin decided "to annex BP's position in Rosneft". Another asked why BP was investing in Russia and what it was telling about its investments to the UK foreign office.

Mike Everett, governance director at Standard Life Investments, which holds over 253 million shares in BP on behalf of its clients, sought clarifications on BP's statements that it maintains "significant influence" over operations at Rosneft.

"Other than Mr Dudley's position on the Board of Rosneft could you give some concrete examples of the 'significant influence' you have over its operations?" said Everett.


Dudley said BP was having discussions with Rosneft about staffing and engineering.

"None of us know what can happen in Ukraine," he said while adding Europe and Russia were so interdependent on energy supplies that "neither side can just turn this off".

Russia provides over a quarter of BP's oil output worldwide and more than a third of its oil and gas reserves.

Dudley said last month the company "absolutely" stands by its investments in the country.

BP's chairman Carl-Henric Svanberg said investors should not over-estimate BP's exposure to Russia as the firm has comparable investments of $15 billion in Azerbaijan and Angola and all of those are dwarfed by investments in the United States.

He also said he saw no risk of asset expropriation: "Ideas of expropriation will hit them (Russia) dramatically. I can't see why that should happen".

"We are in close contacts with political leaders in different parts of the world, and of course here in the UK," said Svanberg.

Dudley, a US citizen, had strained relations with Russian officials during his time as an oil executive in Moscow.

He was forced to flee the country, saying he feared for his security during a 2008 dispute between BP and a group of Russian oligarchs over corporate governance at TNK-BP, where he was then chief executive.

TNK-BP was ultimately sold to Rosneft for $55 billion last year, giving BP a stake in Rosneft.