By Sarah Young and Dmitry Zhdannikov
LONDON, March 4 Oil major BP stands by
its investments in Russia, chief executive Bob Dudley said on
Tuesday amid calls from U.S. officials to isolate Russia and
reduce economic cooperation with Moscow over the Ukrainian
"In terms of Russia, we absolutely stand by our investment
in Russia," Chief Executive Bob Dudley, a U.S. citizen, told an
investor conference on Tuesday.
U.S. Secretary of State John Kerry has condemned Russia's
"act of aggression" in Ukraine and threatened economic sanctions
by the United States and allies to isolate Moscow.
The British oil major is the biggest foreign investor in the
Russian oil sector through its stake of under 20 percent in the
Kremlin's state oil champion Rosneft.
Russia is responsible for over a quarter of BP's oil output
worldwide and more than a third of its oil and gas reserves.
"We have had good results, Rosneft had good results this
year, and so that's just part of our big portfolio of things,"
said Dudley, who has a history of difficult relationships with
Russian officials during his time as an oil executive in Moscow.
Dudley had to flee Russia, 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 Dudley was
chief executive at the time.
TNK-BP was ultimately sold to Rosneft for $55 billion last
year, giving BP a stake in Rosneft and putting an end to years
or bitter although very profitable relations with the oligarchs.
Analysts praised the deal at the time but said they were
concerned about BP's exposure to Rosneft, run by an ally of
President Vladimir Putin - Igor Sechin - one of the architects
of Putin's mass oil sector nationalisation.
"It was only 11 months ago that the merger, or the
acquisition by Rosneft, of TNK-BP occurred, it has been a
remarkably fast integration of the organisations on the
structure, there are a lot of industrial synergies," said
The company sought to reassure investors over the U.S.
appeals court decision on Monday to reject a BP bid to block
businesses from recovering money over the 2010 Gulf of Mexico
oil spill, even if they could not trace their economic losses to
"There is plenty of capacity within the existing provision
for things that we will come up," Brian Gilvary, chief financial
officer, told the same presentation.
"It's a different company now, the company can weather
things," Dudley added.
"WHAT INVESTORS WANT TO HEAR"
Dudley and his management team focused their marathon
presentation on BP's ongoing work to become "a smaller and
simpler company" following accomplished and planned asset
divestments of almost $50 billion.
The firm will now focus on growing operating cash flows by
2018 and redistributing surplus cash through buybacks.
"I think we will confuse our investors if we start talking
about us considering large M&A. I don't think that's what our
investors want to hear from us. It's a really strong plan that
we can lay out and work towards, generate the operating
cashflow, look forward to distributions to shareholders, have a
progressive dividend policy. That's the path we're on," said
As part of the ongoing review of assets BP will separate its
onshore U.S. oil and gas assets into a new wholly-owned business
to improve the competitiveness of its shale gas portfolio there.
A number of big oil companies, including rival European
operators Shell and BG, have struggled after
making big investments in U.S. shale which have left them
exposed to depressed gas prices, dragging on their profits.
But Gilvary said that the U.S. onshore business was not
being separated because it was loss-making.
"On an earnings basis, this business today is comfortably in
profit, it's not making a loss today in this quarter. It is
deeply strategic to us in the future. That business will be
repositioned so that we can really make sure that we can find
the value inside that business," he said.