BP counts cost of Rosneft exit, but oil prices send underlying profits soaring

The group pledged to invest up to £18nn into UK energy by 2030 amid mounting pressure to help with the cost-of-living crisis.

03 May 2022

BP has swung to a quarterly loss after taking a mammoth 25.5 billion US dollar (£20.4 billion) hit following its move to quit Russia, but soaring oil prices saw underlying profits hit their highest for more than a decade.

The group plunged to a 23 billion US dollar (£18.4 billion) replacement cost loss for the first three months of the year after booking a hefty impairment charge for its decision to ditch its near-20% stake in oil producer Rosneft, which it co-owned with the Kremlin, in response to the Ukraine war.

But, with the one-off charge stripped out, its underlying replacement cost profits more than doubled to 6.2 billion US dollars (£5 billion) from 2.6 billion US dollars (£2.1 billion) a year ago thanks to the rocketing cost of crude.

The oil giant unveiled plans to invest up to £18 billion into the UK energy system by 2030 amid mounting Government pressure to help with the cost-of-living crisis and growing calls for a windfall tax on oil and gas firms.

Business Secretary Kwasi Kwarteng last week wrote to the oil and gas industry saying it must also set out plans for investment in clean energy during a meeting in the coming weeks.

But Labour is backing calls for a windfall tax on the companies to provide more direct help for cash-strapped households and businesses.

Chancellor Rishi Sunak has appeared to distance himself from such a tax, instead looking to companies making big profits to invest the cash back into the UK.

In a move to address this, BP pledged alongside its quarterly results to invest in North Sea oil and gas, while driving down operational emissions, and said it is also working on a range of lower carbon energy projects in the UK, which are set to create jobs and develop new skills.

It also further boosted returns to investors on the back of its underlying profit haul, announcing another 2.5 billion US dollars (£2 billion) in share buybacks.

Chief executive Bernard Looney said: “In a quarter dominated by the tragic events in Ukraine and volatility in energy markets, BP’s focus has been on supplying the reliable energy our customers need.

“Our decision in February to exit our shareholding in Rosneft resulted in the material non-cash charges and headline loss we reported today.

“But it has not changed our strategy, our financial frame or our expectations for shareholder distributions.”