Calendar An icon of a desk calendar. Cancel An icon of a circle with a diagonal line across. Caret An icon of a block arrow pointing to the right. Email An icon of a paper envelope. Facebook An icon of the Facebook "f" mark. Google An icon of the Google "G" mark. Linked In An icon of the Linked In "in" mark. Logout An icon representing logout. Profile An icon that resembles human head and shoulders. Telephone An icon of a traditional telephone receiver. Tick An icon of a tick mark. Is Public An icon of a human eye and eyelashes. Is Not Public An icon of a human eye and eyelashes with a diagonal line through it. Pause Icon A two-lined pause icon for stopping interactions. Quote Mark A opening quote mark. Quote Mark A closing quote mark. Arrow An icon of an arrow. Folder An icon of a paper folder. Breaking An icon of an exclamation mark on a circular background. Camera An icon of a digital camera. Caret An icon of a caret arrow. Clock An icon of a clock face. Close An icon of the an X shape. Close Icon An icon used to represent where to interact to collapse or dismiss a component Comment An icon of a speech bubble. Comments An icon of a speech bubble, denoting user comments. Ellipsis An icon of 3 horizontal dots. Envelope An icon of a paper envelope. Facebook An icon of a facebook f logo. Camera An icon of a digital camera. Home An icon of a house. Instagram An icon of the Instagram logo. LinkedIn An icon of the LinkedIn logo. Magnifying Glass An icon of a magnifying glass. Search Icon A magnifying glass icon that is used to represent the function of searching. Menu An icon of 3 horizontal lines. Hamburger Menu Icon An icon used to represent a collapsed menu. Next An icon of an arrow pointing to the right. Notice An explanation mark centred inside a circle. Previous An icon of an arrow pointing to the left. Rating An icon of a star. Tag An icon of a tag. Twitter An icon of the Twitter logo. Video Camera An icon of a video camera shape. Speech Bubble Icon A icon displaying a speech bubble WhatsApp An icon of the WhatsApp logo. Information An icon of an information logo. Plus A mathematical 'plus' symbol. Duration An icon indicating Time. Success Tick An icon of a green tick. Success Tick Timeout An icon of a greyed out success tick. Loading Spinner An icon of a loading spinner.

BP and other North Sea players keeping tabs on UK sanctions against Russia

© Supplied by AP News AgencyBP Russia North Sea
Demonstrators hold placards and flags as they attend a protest outside the Russian Embassy, in London, Wednesday, Feb. 23, 2022.

BP, Wintershall DEA and IOG are among the North Sea firms which are monitoring UK Government sanctions against Russia, and could be impacted as tensions escalate.

Russia’s invasion of Ukraine sent Brent Crude oil beyond $100 for the first time since 2014 and drove up European gas prices, while the UK is imposing sanctions in response to the attack.

London-headquartered BP has a 19.75% holding in Russian state-owned operator Rosneft, one of Russia’s largest oil companies, which has a secondary listing in London.

BP shares dropped more than 4% in morning trading to 365.50p as Vladmir Putin sent troops into eastern Ukraine, with analysts pointing to its holding in Rosneft as the main driver.

The UK Government has already outlined its first tranche of sanctions targeting Russian banks and individuals, aimed at pushing Russia out the Western financial markets.

Meanwhile, Prime Minister Boris Johnson said another “massive package of sanctions” would be put in place to “hobble Russian economy”.

A BP spokesperson said it is monitoring the situation closely.

Alex Kemp, petroleum economist at Aberdeen University, said: “One of BP’s biggest investments is a substantial share in Rosneft, the Russian oil company. That’s one of its biggest investments.

“The market will be thinking there is a problem there, because if western governments impose sanctions then the Russian government may take retaliatory measures – the market thinks there is some risk attached to a very big investment in Russian oil and gas.”

Ashley Kelty, analyst at investment bank Panmure Gordon said: “Investors are worried that sanctions will be expanded to target the energy sector and this will clearly hurt BP if Rosneft is captured by them.

“However the impact is offset slightly by the surge in crude and gas prices.”

BP’s rival Shell, also headquartered in London, has a strategic agreement with state-owned Gazprom.  Shell was forced to give up control of the Sakhalin project in 2006, but still holds a modest stake.

French-headquartered TotalEnergies owns 19% of Novatek, Russia’s largest LNG firm. TotalEnergies shares were down more than 3% in morning trading.

© Bloomberg
Mikhail Fridman, billionaire and co-founder of LetterOne Holdings SA, center, pictured in Spain last year.

Wintershall DEA, Europe’s largest independent exploration and production firm, cancelled a press conference on its annual results this morning due to the situation in Ukraine.

The UK is only a small portion of the Wintershall DEA business, however Russian state-owned Gazprom is involved in its Sillimanite field on the UK-Dutch border.

Wintershall DEA is minority owned by Letter ONE group, which is in turn controlled by Russian oligarch Mikhail Fridman.

In a statement today, Wintershall DEA chief executive Mario Mehren said: “The Russian President has ordered a military operation against Ukraine. We view this military escalation of the conflict with great concern and dismay. People are dying. We are shocked by what is happening.

“The latest military escalation also shakes the economic cooperation between Russia and Europe that has been built up over decades and will have far-reaching consequences. To what extent cannot yet be foreseen.”

Another North Sea company with links to Gazprom is IOG, which is working towards first gas for its flagship Saturn Banks development in the North Sea.

IOG signed a deal in July to sell gas from Saturn Banks to Gazprom Marketing and Trading, a London-listed subsidiary of the Russian firm.

The North Sea operator made no comment on the matter.

There are no sanctions in place against Gazprom Marketing and Trading at present and it should be noted the deal was made as part of a competitive process involving 10 bidders. Should sanctions come through against Gazprom, it is a seller’s market given high gas prices.

North Sea firms experienced a similar issue in 2019, when Serica’s Rhum field was impacted by US sanctions on Iran due to the National Iranian Oil Company (NIOC) holding partial ownership.

Southwark development well © IOG
The Noble Hans Deul rig drilling through the Blythe platform, which is part of IOG’s Saturn Banks

For UK operators, the government is currently consulting on climate checkpoints on the licensing regime.

The Committee on Climate Change supported “stringent tests” on North Sea licensing, but stopped short of a ban on exploration.

The UK is not reliant on Russia for its gas, however the GMB Union said energy security remains a key issue supporting the need for new oil and gas fields.

GMB National Secretary, Andy Prendergast, said: “No politician should rule out new fields – we’d be cutting our nose off to spite our face to get to net zero by relying on Russian and Qatari gas.

“As we all know, net zero doesn’t actually mean zero carbon – the UK will still be using oil and gas in 2050 under all the projections.

“Tens of thousands of jobs are linked to the sector – we need a long-term plan for quality decommissioning jobs, and linking continued production to the highest environmental and labour standards.’

Recommended for you

More from Energy Voice

Latest Posts