The US and the EU have announced new economic sanctions against Russia, including measures that may impact on international oil companies.
The decision was made as Western governments accuse Russia of supplying arms to separatist rebels in Ukraine and blame the government for complicity in the shooting down of the flight MH17.
BP is one of the biggest foreign investors in Russia, holding a 20% stake in the Russian state-owned oil company Rosneft.
This investment earned BP an underlying net income of $1 billion (£590m) in the second quarter, playing a big part in the firm’s quarter-on-quarter improvement. After the end of the quarter, BP also received a $700 million (£412m) dividend payment.
However, the sanctions now threaten Rosneft’s value and a significant portion of BP’s projected profits.
“If further international sanctions are imposed on Rosneft or new sanctions are imposed on Russia or other Russian individuals or entities, this could have a material adverse impact on our relationship with and investment in Rosneft, our business and strategic objectives in Russia and our financial position and results of operations,” BP said on Tuesday.
The EU sanctions include a measure restricting the exportation of energy technology to Russia. It is expected that proposed oil projects, including those put forward by Rosneft, could be delayed as a result.
BPs shares rose slightly after it announced its profits jump yesterday after a month of decline, but are now down again as investors weigh up the risks incurred by the sanctions.
The new measures also close the European capital market to Russian state-owned banks.
Further details on the exact nature of the EU sanctions are expected on Wednesday. They will take affect later this week.
Photo: Mike Mozart via Flickr
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