MOSCOW (MRC) -- BP, the UK oil company with the single-biggest foreign investment in Russia, warned that more sanctions against the country could hurt its business, said Hydrocarbonprocessing.
BP, with a 20% stake in OAO Rosneft, stands to lose the most from further sanctions in response to Russia’s annexation of Crimea. The European Union and the US are acting to intensify punitive measures aimed at key sectors of the economy -- finance, defense and energy.
"Any future erosion of our relationship with Rosneft, or the impact of further economic sanctions, could adversely impact our business and strategic objectives in Russia, the level of our income, production and reserves, our investment in Rosneft and our reputation," BP said in an earnings statement.
BP reported a 34% increase in second-quarter profit, beating analyst estimates, including USD1 billion underlying net income from Rosneft. That compares with USD218 million from the Russian company a year earlier. BP received a USD690 million dividend from Rosneft last week and doesn’t expect this to be at risk next year. Its stake is worth USD15 billion.
"To date, these sanctions have had no material adverse impact on BP or Ruhr Oel GmbH," a joint refining venture between BP and Rosneft, it said. "However, BP will continue to keep this under review."
EU governments agreed Tuesday in Brussels to bar Russian state-owned banks from selling shares or bonds in Europe and restricted the export of equipment to modernize the oil industry, a key prop for Russia’s economy, two EU officials told reporters.
A Dutch court ruled Monday in favor of former Yukos Oil Co. officials, ordering Russia to pay USD50 billion for seizing what was once the country’s largest oil producer. The decision risks dragging Rosneft and natural gas exporter OAO Gazprom into extended legal wrangling. The state-run companies may be targeted because they were beneficiaries of expropriated Yukos assets. "We are monitoring events in Russia,” CEO Bob Dudley, who was re-elected to the Rosneft board in June, said at a media briefing in London. “Sanctions are a matter for governments to resolve through dialog and diplomacy."
Earnings adjusted for one-time items and inventory changes rose to USD3.6 billion from USD2.7 billion a year earlier, the London-based company said in the statement. That beat the USD3.4 billion average estimate of 13 analysts in a Bloomberg News survey. While total energy production declined because of disposals, the company brought online projects with better returns, it said. US output rose 28% in the quarter from a year earlier, boosted by new assets in the Gulf of Mexico.
As MRC wrote before, BP Zhuhai is in plans to start a new purified terephthalic acid (PTA) plant in China. A Polymerupdate source in China informed that the plant is likely to start in Q4, 2014. The exact start-up schedule of the plant could not be ascertained. To be located in Zhuhai province, China, the plant will have a production capacity of 1.25 million mt/year.
BP is one of the world's leading international oil and gas companies, providing its customers with fuel for transportation, energy for heat and light, retail services and petrochemicals products for everyday items.
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