LONDON—The British government is pressuring British oil giant BP PLC to offload its minority stake in Russian oil company PAO Rosneft, citing the Russian oil giant’s links to the Kremlin and accusing Rosneft of fueling the Russian army’s advance into Ukraine, according to a person familiar with the matter.
It is unclear if the U.K. government, which doesn’t own a stake in BP, could force the sale of BP’s nearly 20% interest in Rosneft.
The issue was raised when BP Chief Executive Officer Bernard Looney held a conversation on Friday with Kwasi Kwarteng, British Secretary of State for Business, Energy and Industrial Strategy, the person said. Mr. Kwarteng expressed deep concern about BP owning the stake.
A BP spokesman confirmed a meeting between Mr. Kwarteng and Mr. Looney but declined to comment on what they discussed.
The British company is the most exposed of oil-and-gas majors to Russia, analysts say, through its 19.75% stake in Russian state-controlled energy company Rosneft, as measured by voting shares. BP’s economic interest in the company—the ownership share that defines financial distributions—was 22% as of late 2021, BP filings show.
BP executives earlier this month played down the potential risks of sanctions as tensions escalated between the countries. The company hasn’t publicly weighed in on Russia’s invasion of Ukraine except to say the company was monitoring the situation.
The BP-Rosneft strategic tie-up dates back more than two decades, and BP’s presence in Russia goes back 30 years, something Mr. Looney cited on a recent call with analysts as evidence of the company’s deep roots and staying power through other geopolitical tensions.
Mr. Looney has been on Rosneft’s board since June 2020. Analysts have projected BP’s dividends from its Rosneft stake to exceed $1 billion this year. The first payment has been expected midyear. In 2021, BP received $640 million in dividends from its Rosneft stake, paid in two installments.
Mr. Kwarteng also expressed concerns about Mr. Looney’s position alongside Russian President Vladimir Putin on the board of the Russian Geographical Society, the person familiar with the discussion said.
According to the organization’s website, Mr. Putin chairs the board, which includes Mr. Looney as well as heads of Russian banks and other entities that have been subject to Western sanctions. The organization supports arts and other cultural causes, according to the website, which says trustees serve voluntarily.
Mr. Looney has served on the organization’s board since 2020, replacing former BP CEO Bob Dudley, according to the BP spokesman. He said Mr. Looney has attended one virtual meeting related to the board role, in April 2021. BP declined to comment further.
Rosneft contributes roughly a third of BP’s oil-and-gas production.
The BP-Rosneft relationship intensified a decade ago, through mutual interest in jointly exploring for oil and gas in the Russian Arctic. At the time, BP was reeling from its April 2010 Deepwater Horizon drilling-rig disaster in the Gulf of Mexico, which was costly financially and reputationally.
BP is Rosneft’s biggest private shareholder, according to the Russian company.
According to a December 2021 Rosneft business update, BP is the “leading British investor in the Russian economy with a total investment of $18 billion." The figure fluctuates based on Rosneft’s value, which has been hammered by the Russia-Ukraine conflict and Western sanctions.
